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Holly LaFon
Holly LaFon
Articles (9200)  | Author's Website |

Herbalife Plunges 9% as Carl Icahn Pares Stake

Several months after short-seller Ackman exits

May 25, 2018 | About:

Six years after buying a stake in Herbalife (NYSE:HLF), investor Carl Icahn (Trades, Portfolio) said Friday he would eliminate as many as 11.4 million shares of the company, where he is the largest stakeholder.

Icahn, who began a position in Herbalife in 2012, offered the shares in the company’s self-tender offer. If all of his available shares sell, he will own a remaining 34.3 million shares and continue as the company’s largest holder. As a result, shares plunged 9% to $54 a share on Friday.

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“For almost six years, we have been one of Herbalife’s strongest, most loyal supporters; we stood by the Company through a half-decade long short-selling campaign; and we never sold a share, even after our investment doubled,” he said. “But, given that our Herbalife investment has become an outsized position, representing approximately 24% exposure to total NAV, it is only prudent for IEP to reduce its exposure.”

Since Jan. 16, 2013, when Icahn revealed that he had built a stake in Herbalife, the stock has soared 125%.

Icahn started investing in Herbalife after his rival Bill Ackman (Trades, Portfolio) of Pershing Square Capital Management declared it a pyramid scheme and took a short position in late 2012. At the time, Icahn called CNBC during an interview with Ackman, calling him a “liar.”

"I've really about had it with this guy. He's like the crybaby in the schoolyard,” he said.

Pershing finally exited his involvement in Herbalife in February at a scathing loss.

Over the past five years, Herbalife has watched revenue grow at an annual rate of 7.7%. Ebitda grew at 4% and free cash flow grew at 1.2% over the same period, while earnings declined at a rate of 9.3%.

For the first quarter, Herbalife reported a 7% year-over-year increase in net sales to $1.2 billion. Diluted earnings per share also rose to $1.08 from 98 cents, beating expectations on a return to U.S. growth.

For the second quarter of 2018, Herbalife said it expects a net sales increase in a range of 8.5% to 12.5%.

See Carl Icahn (Trades, Portfolio)'s portfolio here.

About the author:

Holly LaFon
I'm a financial journalist with a master of science in journalism from Medill at Northwestern University.

Visit Holly LaFon's Website


Rating: 3.0/5 (1 vote)

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Comments

sww
Sww - 6 months ago    Report SPAM

It's still not too late to take the money and run (from a pyramid scheme). $54 == pre-split $108

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