"The entire $1 billion is outstanding as of the end of the third quarter. Also noted during our last earnings call, was our belief that we have identified a strategy that would allow us to accelerate the repurchases beyond our consolidated US GAAP equity position.
This process is complete, and we now have the ability to repurchase stock beyond our consolidated equity position, should we decide to do so"
However, if Herbalife is going to use these funds to buy on the open market, they are limited by rules including the below daily share back limitation per the Journal Of Accountancy
On any single trading day, the company can't purchase more than the greater of either one round lot (100 shares) or the number of round lots that is closest to 25% of the company's stock's average daily trading volume in the four previous calendar weeks.
I estimate today's share buyback by Herbalife is limited to around 300,000 shares. However starting Monday, Herbalife's daily share buyback can dramatically increase.
|This week volume estimate||80 million shares traded|
|Last week volume||9.2 million shares traded|
|2 weeks back volume||10.2 million shares traded|
|3 weeks back volume||16.5 million shares traded|
|4 week total volume||115.9 million shares traded|
If we divide this 4 week total of 115.9 million by 4 weeks, we get a 28.975 million average share volume per week. After we divided the 28.975 million volume by 5 days , we get an average 5.795 million shares traded per day over that 4 week time period.
So to determine the daily share buyback limitation, we have to take that 5.795 million X 25% which equals 1.45 million shares per day Herbalife can start buying back on Monday.
Let's assume Herbalife has already used $100 million of that $1 billion share buyback for this discussion. So if Herbalife was able to buy back shares at slightly above today's share price, they could potentially buy back 30 millions shares (using a $30 per share price) over the next twenty days.
$900,000,000 divided by $30 per share = 30 million shares
30 million divided by 20 days = 1.5 million shares per day
NOTE: If Herbalife's stock doesn't go to zero and Bill Ackman lives up to his promise that he won't cover his short position, he will have a big problem to deal with.
Disclosure: I am long HLF.