Herbalife has effectively beat back a hedge fund titan in its war to reclaim its corporate image and global legitimacy. Whether you view this as a proxy for the world of network marketing or not, it is a massive win for the executives at Herbalife and those that have been following this story.
A critically acclaimed documentary was even filmed about this battle, Betting on Zero, the specifics of which can be found here: http://www.imdb.com/title/tt3762912/
Here are a couple more notes of distinction as Bill Ackman has given up his ‘billion dollar bet’ on proving that Herbalife was a pyramid scheme:
- Pershing Square’s Bill Ackman has finally thrown in the towel on his firm’s short position in Herbalife (HLF -1.2%), covering shares after extended losses. Instead, he has opened a separate bet exclusively in put options that will limit the risk to 3% of the firm’s capital.
- Mr. Ackman initially reported his short position in the nutritional and health products company in late 2012 claiming the stock would eventually be worthless once authorities realized that it was running an illegal pyramid scheme.
- Authorities never completely came around to his view and bargain-hunting investors steadily drove the price northward. Shares are up ~50% this year, for example, aided by the company’s share repurchases.
Again, this particular fight even brought in another massive investing titan by the name of Carl Icahn. It became such a hot button issue that the two men argued fiercely on television and in private not only about their positions on the stock, but each others personal integrity and morality connected to the fight. One of those arguments was famously caught on CNBC right here: https://www.cnbc.com/video/2013/01/25/missed-the-big-fight-watch-it-now.html
Big, big win for Herbalife.