Friday, February 15, 2013

Herbalife (HLF) Color

Carl Icahn is looking to squeeze the life (shorts) out of HLF.  I looked at his 13D Filing with the SEC, and most of his stake is based in options.  Look at the table below to see.  If there is a (1), (2), (3), or (4) after the value than it is an option position.  To make matters even more important.  He has not once bought the stock over 40 and he mentioned that his average price is around 36.  So what's going on?

Carl is an activist investor, and probably the best ever.  Icahn and Ackman had a Televised battle over HLF that was epic.  Per the document below, Icahn added 90% of his position in OPTIONS AFTER HIS TV BATTLE.  Is he looking for revenge?

Bill Ackman has a 20 million share (or $800 million) of his companies capital.  If the stock price were to climb greatly, Ackman would have to COVER his shares.  Again, this is his company and shareholders' monies.  The difference is that Icahn is betting $215 million of his OWN money.  He's worth over $10 BILLION.

My take:  I still believe its a pyramid scheme and have a short position that I monitor EXTREMELY closely. My average price is over 42.5.  Carl is looking to get a squeeze on the stock and will sell into a major move.  Drama Continues...



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3 comments:

  1. Kinda worried about shorting here:

    1) Seems like hedge fund guys want to teach Ackman a lesson

    2) Remember six years ago Whitney offered to take Heralife private again at $38.

    3) I know people in these MLMs. They are brainwashed. You've declared war on them. They will protect their turf, make more sales, so whatever it takes.

    4) That being said, I could see this going back and forth between 35 and 45. As long as the FTC stays out.

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  2. They are trying to teach Ackman a lesson, I agree.

    I wouldn't short this under 40...Anything over is fair game. The fact that the stock traded down from 45-39 on Friday says a lot. I'm waiting or an investigation to begin, and the stock drops a ton. May cover then.

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