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And the War Continues: Short-Seller Jim Chanos Comments on Herbalife

January 18, 2013 | About:
A video posted by Reuters yesterday featured famed short-seller, Jim Chanos, zeroing in on Herbalife (HLF), the stock in the middle of a heated betting war between several hedge fund managers.

Although Chanos was reluctant to reveal his actual position on Herbalife, he did view his opinions about companies like Herbalife in general, which discloses his stance on the multi-level marketing business model that Herbalife is comprised of.

“I know that there are a number of bulls in the company that say this is nothing than a glorified 12-step program or it’s a way for weight loss,” Chanos said. “But I’m a little bit skeptical about that argument as well because there are so many competing venues for weight loss that don’t have the multi-level marketing aspect.”

To summarize the eventful happenings in the past couple of months, Gurus Bill Ackman and David Einhorn have basically been superfluously vocal about their thoughts on Herbalife being a pyramid scheme, the primary reason for them shorting the stock. Ackman’s 342-page presentation about Herbalife even persuaded Guru, Whitney Tilson of T2 Partners to announce his short position on the company as well.

“I am short a tiny smidge of Herbalife… and a number of other multi-level marketers,” Tilson said.

Meanwhile, activist investor, Daniel Loeb countered the three shorts earlier this month with an 8 percent long position on the company. Carl Icahn later joined Loeb by confirming he too, was buying a stake in Herbalife.

When Reuters asked Chanos whether he would publicly comment on the company, he said, “All I’m going to say is we’ve studied the industry very carefully…and we’ll leave it at that.”

Herbalife’s market value looks like it craves stability, as it teeters from recovery after dropping about 15 percent during Ackman’s blowup.

Herbalife is priced at $43.31, down 0.48 percent at mid-day trading.

View Chano’s interview with Reuters below.



Although GuruFocus does not cover any short positions, you can view Jim Chanos' long positions in his Current Portfolio. Also view his undervalued stocks, his high-yield companies and his top growth stocks.

About the author:

Dianne Tordillo
Dianne Tordillo is staff writer for GuruFocus.com. She reports on a variety of financial news, primarily dealing with investor portfolios and stock trades. Her articles also highlight insider trades, as well as the many useful features of GuruFocus.

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