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Carl Icahn Boosts Stake in Herbalife and S&P Nears Record Territory

March 08, 2013 | About:
The Dow Jones Industrial Average (DJIA) continues to make new highs and it looks like it will make a new record high thanks to a very strong employment report in which February non-farm payroll numbers increased 236,000, easily beating the 160,000 economists were expecting. At the same time, the unemployment rate fell to 7.7%, its lowest rate since December 2008. Construction jobs continue to be strong as that sector of the economy added 48,000 new jobs in February and 25,000 new jobs in January. With these numbers, the Dow is poised to end the week on a strong note and in record territory. The S&P 500 is also very close to making new highs. The all-time closing high in the S&P is 1,565 and the intraday high is 1,576.

It has been a busy week for Carl Icahn as it was revealed he had built a 100 million-share stake in Dell (DELL) and is basically demanding a $9 special dividend and is threatening years of litigation. Now yesterday he increased his Herbalife (HLF) stake to 15.55% as he added another 2 million shares. Keep in mind, under an agreement with the board, Icahn has the right to purchase up to 25% of Herbalife. The fight is certainly getting interesting but Ackman only needs to get the attention of one fed to investigate his claims. You have to love their CNBC argument.

For the most part, Gurus have been net sellers of Herbalife. It wasn’t until last quarter and after Ackman’s large short position became public that a couple of Gurus became bullish. They are:

Google (GOOG) is in the news as it plans to lay off 1,200 jobs from its Motorola Mobility which would represent 10% of the unit’s staff. This comes on top of 4,000 jobs cut that occurred in August and will affect employees in the U.S., China and India. Google made its largest acquisition ever by buying Motorola Mobility for $12.5 billion last year, aiming to use Motorola Mobility's patents to fend off potential lawsuits on its Android mobile platform and expand beyond its software business. The layoffs come at a time when Google’s stock is making all-time highs.

Google has been a mixed bag for Gurus has bulls and bears have lined up on both sides. My guess is that those reducing or selling their positions are simply taking profits.

Google bulls or Gurus who have been adding to or establishing a position include:

Google bears or Gurus who have been reducing or sold out completely include:

About the author:

I'm in love with value investing and in particular Joel Greenblatt's "magic formula". I run a well diversified portfolio

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Vgm - 1 year ago
Regarding HerbaLife, Jim Chanos was on CNBC a couple of days ago saying he had been short HLF at the end of 2012 but had now covered.
Earningsyield premium member - 1 year ago

My guess is he covered after Ackman came out, but who knows? He's a huge bear on Chinese Real Estate and if you believe that , you might be interested in last week's episode of 60 minutes.

Vgm - 1 year ago

The implication for me is that Chanos does not believe HLF is going to zero as Ackman seems to believe. That's significant, given Chanos' prowess as a short.

Thanks, yeah, I'm aware that Chanos is a huge bear on Chinese real estate. Has been for some time. The Hong Kong market seems to be an exception. Third Avenue have a huge bet there, though they reduced their exposure according to the latest commentary.

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