Hedge Fund Manager Ackman Exits Losing Bet Against Herbalife

Herbalife Building

On Wednesday, Feb. 28, hedge fund manager William Ackman told CNBC’s Scott Wapner that his Pershing Square Capital company has exited its bet against Los Angeles-based nutritional supplement maker Herbalife.

The announcement came five years after Ackman’s on-air verbal confrontation with billionaire Carl Icahn, an Herbalife investor, on CNBC. In December 2012, Ackman launched a campaign against Herbalife, backing his claims with a $1 billion short position in Herbalife stock. The following month, during a call with Wapner, he accused Herbalife of being “a well-managed pyramid scheme.” Icahn responded during the call, calling Ackman a liar.

Ackman kept up the attack and expected Herbalife shares to go down, enabling him to profit on his short sale of the stock. However, the bet proved unsuccessful, and last November, after Herbalife shares had climbed 51 percent for the year, Ackman announced he had closed out the short position he had in the shares and converted it into a bet using put options. During Wednesday’s call with Wapner, he said he had unwound the position. Herbalife shares jumped 9 percent to an all-time high that day.

Ackman’s attack led to a lengthy investigation of Herbalife by the Federal Trade Commission. Former CEO Michael O. Johnson led the company through a multi-year federal investigation. In July 2016, Herbalife and the FTC reached a settlement resolving the investigation.

On Wednesday, Herbalife CEO Rich Goudis released a statement: “The performance and resiliency of our company is rooted in our purpose to make the world healthier and happier. For those who aren’t familiar with us, or may misunderstand us, don’t be afraid to get to know us.”

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