1. How to use GuruFocus - Tutorials
  2. What Is in the GuruFocus Premium Membership?
  3. A DIY Guide on How to Invest Using Guru Strategies
Articles (4624) 

Why Activist Investor Robert Chapman Has Put 35% of His Portfolio into Ackman Short Herbalife

January 03, 2013 | About:

Activist investor Robert Chapman has put an astounding 35% of his portfolio into Herbalife, which has of course recently been in the news because Bill Ackman has shorted the company, calling it a pyramid scheme.

Here is his explanation why:


Here is CNBC discussing the situation:

About the author:


Rating: 4.3/5 (10 votes)


Gusto.duel - 4 years ago    Report SPAM
Thank you for posting. However the author's logic is not something I agree with.

FTC may launch an investigation despite it being busy with MSFT, AAPL (Google sttled already)

The commodity/overpriced aspects of the HLF products escapes the article, entirely.

Wonder how relevant is the sample for the distributor's survey mentioned in there?

What about Belgium?

Sjzhao2003 - 4 years ago    Report SPAM
Thanks for sharing!

The merit of the short vs. long case aside, it would be a shame if some well-known big time investors take advantage of their media-savvy and celebrity status for personal gains (NYT has a recent article on this as well). Shouldn't a focused value investor spend all of his/her valuable time on fundamental research? The fact that mere questions during conference calls by a "guru", not to mention the pretty heavy-handed 360-page ppt stack, can move the market so much tells a pretty sad story about the investing public.

I do agree with the author that SEC should require disclosure of short positions just as they do longs. That'd take a big step toward a more level playing field.
Batbeer2 premium member - 4 years ago


>> Shouldn't a focused value investor spend all of his/her valuable time on fundamental research?

An investor spending time on research is trying to outperform at the expense of someone:

- less informed

- less well capitalized (forced seller)

- less savvy

- more susceptible

- disinterested and/or

- disheartened

Last year, my stock picks outperformed most indexes.* Unless it was sheer luck, it was because I have an edge on the last three items on that list; not the first three. One could argue I preyed on the weak** so I'm in no position to judge Ackman.

What is your edge? You tell me that and I will tell you who you are taking money from.

IMHO, those who bailed out of Herbalife because of Ackman's presentation got precisely what they deserved.

*Check out the OSTK comments to see precisely how superior returns come at the expense of someone else's loss.

**I like to think I'm just trying to be nice. I'll buy from you when no one else will and sell when there's no one else selling.

Paulwitt - 4 years ago    Report SPAM
ESI is down 19.3% today on heavy volume. The news is they have to pay a settlement to Sallie Mae of $46 million.

My comment:

high-frequency trading + short sellers = superb value investing. Thank you high-frequency traders + short sellers!

*I picked up a few shares today to add to the event-driven part of my portfolio

Please leave your comment:

GuruFocus has detected 3 Warning Signs with Herbalife Ltd $HLF.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.

Performances of the stocks mentioned by CanadianValue

User Generated Screeners

pbarker46Low short
HOLKLSUCut the Mustard Chemicals Meta
oskouiJap - PioEY
oskouiCanada - PioEY
OGCAMGUpdated Bad Current Ratio 2017
sbeccuegf10YR 10% BOOK
sbeccuegfBANKS 10 ROE
stewloewySL-Default Template
rmaluskiOE + Div Growth Hold List
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)