The prolonged agony of Bill Ackman's Herbalife short position, and the Carl Icahn meta-bullying that it allowed to exist, might soon be coming to an end.
Pershing Square Capital's Bill Ackman revealed a new strategy on Wednesday in his years-long bearish position on Herbalife.
Before you get too excited, the strategy is not rending his garments and prostrating his wounded body before the gods and Carl Icahn, begging for the cold relief of mercy.
"We've been entirely right on our Herbalife investment in terms of the fundamentals of the business. We've been wrong on the share price. A big part of that is the fact that companies repurchase a huge amount of shares," Ackman said on CNBC's "Squawk Box."
"A big part of this is trying to cause a short squeeze. We just did something, which we will announce later this afternoon," he added. "What we did recently in the last few weeks is we converted our entire [Herbalife] short position into a put position. And as a result there is no longer an opportunity to squeeze Pershing Square."
The Ack-Man will not surrender his sword against Herbalife, but he will be trying out some new armor so as to prevent Uncle Carl to keep stabbing him from behind. And that armor will be in the form of a put that multiple reports are saying is designed to risk only 3% of Pershing Square's total capital. What's less clear is who is making a market for him on this and what his timeframe is.
Clearly, Bill Ackman believes in the marrow of his soul that Herbalife is still going to zero at some point in the future. So are we looking at a situation in which Ackman puts like $300 million to work on Herbalife using $15 puts with a $67 strike price that expire in 2020?
We hope not.
He can do better.
Why doesn't Bill just send Carl Icahn an Edible Arrangement of only pineapple with a note that says "You wanna get nuts? Let's get NUTS! Regards, Bill," get involved with a shady online brokerage, and buy puts at $5 for a strike price of like $30? With $300 million, he could blow a gaping hole in HLF's options table. It also gives Ackman a binary trade of either losing $300 million in a kamikaze attempt to take out Carl Icahn, or making like a trillion bucks on the dumbest bet of his life. Money he would collect from the ashes of Herbalife should it go to zero before the beginning of 2020.
This is where Bill Ackman needs to go, you guys, do the darkest timeline. One in which he comes for all his enemies and exacts painful revenge using the most insane tactics ever employed in finance. And then make them dance naked while he throws Chipotle queso at their trembling bodies.
For in the hellscape of 2021, Dark Lord Ackman rules the night!