Six years after buying a stake in Herbalife (HLF, Financial), 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.
“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.
