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We welcome Carl Icahn's Herbalife (HLF) investment, Bill Ackman tells CNBC, saying his...
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Friday, February 15, 7:44 AM ETWe welcome Carl Icahn's Herbalife (HLF) investment, Bill Ackman tells CNBC, saying his conclusion about the company (pyramid scheme) is unaffected by who's on the other side of the trade. To everyone who thinks Ackman is just going to roll over and cover, one trader suggests Icahn selling this pop is more likely. "He proved his point."
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This news story has 16 comments:
Bill Ackman is terminally insecure. Icahn can sense this, and will conduct himself accordingly.
Ackman blew up his first hedge fund, Gotham partners. He was lending money to a failing retailer, and attempted to recoup by shorting and badmouthing MBIA. It didn't work, and he was out of business, temporarily. He came back and exacted vengeance against MBIA, vindictive son of a bitch, he organized an operation against the company.
So now Billy is losing money again, betting on junky retailers, and he decides to bail himself out by doing a hack job shorting something, in this case, Herbal Life.
You can bet that studious types are studying Ackman's filings, and wondering whether betting against all of them would be a good idea. It's very likely that Ackman will go down in flames, richly deserved.
Disclosure: Long $MBI and Short $HLF
If and when MBI recovers what they are owed under Representations and Warranty claims, the only remaining economic loss will be the result of the effects of S&P downgrades on the ALM business.
That and the dilution, which occurred when the company raised capital at the height of the financial crisis, under a storm of naked short-selling orchestrated by Ackman.
Ackman had two episodes with MBI. The first was with Gotham Partners and he blew himself up on that one. The second was his vengeance, with Pershing.
You can invest any way you want, but as for me I don't want to be near anything Ackman is involved with, either alongside him or against him. The little stinker is trouble, bad trouble.
You think, maybe, Icahn owns a bucket full of Feb $40 calls? They expire tomorrow, and before Icahn's revelation they were worth a dime. Now, they're 50 times that much, as of this morning. A huge killing for somebody.
Notably, Icahn is capable of putting a floor under this stock if he wants to buy more common in a tender.
Icahn can exercise his calls anytime he wants and take the common. Now the other side of those call options will be forced to buy common to deliver to Icahn if he exercises his right to buy.
Look at that 13D statement: "The Reporting Persons have conducted significant analysis with respect to the Issuer. The Reporting Persons have concluded that the Company has a legitimate business model, with favorable long-term opportunities for growth. The Reporting Persons intend to have discussions with management of the Issuer regarding the business and strategic alternatives to enhance shareholder value, such as a recapitalization or a going-private transaction."
Take a close look at the transaction dates.
Ackman is screwed. Icahn intends to put him down. Look at a 2 year chart of CVI to see his impact there and what will happen to HLF as Icahn implements his strategy.
That should heat things up!
Regardless, this could be the much needed catalyst the company needed.
Cheers!
I'm looking forward to seeing Ackman get his butt kicked. And well deserved too.