Whatever you might think of Bill Ackman, you’d have to forgive him for thinking that nothing makes sense vis-à-vis a certain diet-shake company anymore. Board member under indictment in Brazil for embezzlement? Stock goes up. Shareholders sue the company for fraud? Suit dismissed, stock goes up. Federal Trade Commission all but says Ackman’s right about Herbalife being a pyramid scheme and that the company will have to make all of the changes Ackman predicted would bankrupt it? Stock goes waaaay up.
Time and again he’s shown Herbalife to be a no-good pyramid-scheming fraud that’s ripping off the poor and disenfranchised among us, and time and again the Carl Icahns of the world say, “Sounds like a great business model,” and get rewarded for it. So you might also be willing to forgive him for taking any tiny morsel of good news and celebrating it like an Olympic gold medal.
In an SEC filing on Wednesday, Fidelity Investments, the second largest investor in Herbalife, said it had cut its stake in the firm to 7.4 million shares, a 14 percent reduction from the 8.6 million shares it reported owning at the end of June.
"The fact that Fidelity is selling is a good sign," said Bill Ackman, the billionaire hedge fund manager who bet $1 billion that Herbalife's stock would collapse….
"There is no longer a bull case to be made for this stock," Ackman said on Thursday evening. With the stock price up 22 percent this year, he is sitting on several hundred million dollars of paper losses.
We’re a long way from “this stock will go to zero by the end of 2015,” but it’s a start.