Customize Consent Preferences

We use cookies to help you navigate efficiently and perform certain functions. You will find detailed information about all cookies under each consent category below.

The cookies that are categorized as "Necessary" are stored on your browser as they are essential for enabling the basic functionalities of the site. ... 

Always Active

Necessary cookies are required to enable the basic features of this site, such as providing secure log-in or adjusting your consent preferences. These cookies do not store any personally identifiable data.

No cookies to display.

Functional cookies help perform certain functionalities like sharing the content of the website on social media platforms, collecting feedback, and other third-party features.

No cookies to display.

Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics such as the number of visitors, bounce rate, traffic source, etc.

No cookies to display.

Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.

No cookies to display.

Advertisement cookies are used to provide visitors with customized advertisements based on the pages you visited previously and to analyze the effectiveness of the ad campaigns.

No cookies to display.

Loading...
Most Recent Stories

Loeb Versus Ackman – Sharks Eating the Sharks….

If you’re not familiar with what’s going on with Herbalife stock these days you’re missing out.  I don’t generally pay too much attention to individual stock stuff, but this is shaping up to be one of the great modern investment battles.

In one corner, you’ve got Bill Ackman who runs Pershing Square Capital, a $11B fund that is involved in primarily activist investing. Ackman very publicly attacked Herbalife in recent weeks stating the company was a pyramid scheme and worth $0.  Yes, zero.  Ackman’s fund has reportedly taken a 9% stake in the company on the short side.

Enter Dan Loeb.  Loeb is the founder of  Third Point, a $10B fund specializing in…activist investing (among other strategies).  Loeb has reportedly taken a 8.2% position in the stock citing a $60 price target.  In other words, Loeb is essentially taking the other side of Ackman’s bet.

What’s so interesting about this battle is not only that these are two of the most high profile hedge fund managers in America, but that they both like to put on a show.  Loeb is well known for publicly lashing out at executives who don’t perform in-line with Loeb’s expectations.  Ackman is a bit less public, but put on quite the spectacle with the recent Herbalife presentation.

I have to admit that I think the public attack on Herbalife felt all wrong from the start.  Not that I think Ackman’s position is wrong.  I have no idea – micro is not my expertise.  Herbalife could be a pyramid scheme as he claims.  But I just didn’t like the very public assassination of the company and the big show that was put on.  It all appeared very odd.  Particularly when one considers the huge options trades that were made right before the presentations (which are now the subject of an SEC investigation).  It just felt all wrong to me.  The timing was odd, the presentation appeared intentionally malicious, etc.  It just felt like hedge funds contributing to society in a way that was largely void of value….That’s just my personal feeling around the whole thing.  I could be totally wrong.

But now we’ve got the sharks eating the sharks. We’re talking about one of the great investment battles that will ever play out in real-time.  Someone’s fund is going to take a huge hit due to this one position.  It’s extremely unusual to know who is shorting a stock.  It’s even more unusual to know that one high profile investor is directly taking the other side of the trade.  I don’t know who is going to be right.  But it will certainly be fun to watch.

Comments are closed.