So Bill Ackman’s earth-shattering, research-redefining, can’t-miss company-killing “deathblow” didn’t exactly pan out yesterday, what with Herbalife shares soaring 25% yesterday as investors shrugged, “that’s all you got?” Now, it’s unclear what this exactly means for Pershing Square investors, since Ackman’s ninja restructuring of his $1 billion short last year makes precise P&L calculations impossible, but suffice it to say it means nothing good.
Nothing good for Ackman, anyway, but very good for new old buddy Carl Icahn, who remains a big believer in diet shakes in spite of Ackman’s best efforts to “get him out of the stock.” Two-hundred-and-thirty-four million dollars good. Good enough to let Uncle Carl leave the matter magnanimously unmentioned while also generously picking up the check at their next rendezvous at Marea.
It won’t be long, however, before it is the great Ackman throwing down his Black Card in triumph, according to Bill Ackman, because Herbalife can only buy back the total number of shares it has issued to prop up its stock price in the face of his hard truths, and when it runs out of stock to buy or money with which to buy it, well, then, we’ll all see.
“The company is pulling out all the stops today,” Mr. Ackman of Pershing Square Capital Management said at a presentation in midtown Manhattan. “When there is really bad news like this, they will use all of the remaining fire power to buy back the stock to blunt the accusations….”
“If I were the SEC, I would take a very close look at the timing of Herbalife’s buyback program and how they’re spending that money,” Mr. Ackman added. “You can only prop up a stock for so long.”
Icahn Makes $234 Million as Ackman Fails With Herbalife [Bloomberg]
Ackman on Herbalife’s Rally: ‘You Can Only Prop Up a Stock For So Long’ [WSJ MoneyBeat blog]