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We welcome Carl Icahn's Herbalife (HLF) investment, Bill Ackman tells CNBC, saying his...

We 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."
Comments (16)
  • Carl Icahn is a very capable poker player. Look it up online, you will find plenty of references.

     

    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.
    15 Feb 2013, 07:50 AM Reply Like
  • Great financial theater isn't it. Billy welcomes Carl's investment like Edward II welcomed a red hot poker up his backside... can you say physical delivery... love seeing the Ackman's groupies get fried as well. Time for the SEC to go after the 100 page power point crowd as well, if there is anything left of em.
    15 Feb 2013, 08:43 AM Reply Like
  • Very well put Tom.
    15 Feb 2013, 02:45 PM Reply Like
  • Yes, but he was right about $MBI. Ackman wasn't really organizing an operation against MBIA, he was investigated by Elliot Spitzer of all people and suffering withdrawals and whatnot, not really organizing much of anything. So are you saying he got lucky on MBIA collapsing?

     

    Disclosure: Long $MBI and Short $HLF
    17 Feb 2013, 12:15 PM Reply Like
  • He was right about MBI the second time, after they had insured enough toxic RMBS and CDO's, full of fraudulent mortgages and adverse selected CDS.

     

    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.
    17 Feb 2013, 12:40 PM Reply Like
  • As per the NY Times, most of Icahn's position, more than 11 million is composed of call options. So he doesn't own more than a couple of million actual shares at best. The numbers being thrown around stating that he "owns" 13 million shares are misleading.
    15 Feb 2013, 07:56 AM Reply Like
  • http://seekingalpha.co...
    15 Feb 2013, 07:57 AM Reply Like
  • Ackman's "conclusion" may remain unaffected, but his net worth sure isn't, this morning.

     

    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.
    15 Feb 2013, 07:58 AM Reply Like
  • Icahn has invested a net of $214.1 million in common and deep into the money call options for May 2013 and January 2015, and he has sold equivalent numbers and expirations of put options in a bullish risk reversal strategy. Total call exposure is 11.542 million. Total stock exposure is 2.472 million shares. His average risk per share is $15.27. If the stock closes at $46 today, he is up $108.22 million plus the reduction in value in the put options.

     

    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.
    15 Feb 2013, 08:32 AM Reply Like
  • I don't read Erich McKitterrick's Options Volatility Sonar daily as I should. Wonder if he flagged unusual options activity in HLF?
    15 Feb 2013, 09:14 AM Reply Like
  • Icahn took on the options over 13 days, from Jan 28th to Feb 14th. I saw nothing unusual during that time. Options activity has been relatively bearish over the past month. Additionally, Ackman has options contracts that are both European and American settlement.
    15 Feb 2013, 09:24 AM Reply Like
  • The European ones can be easily gamed...
    15 Feb 2013, 10:43 AM Reply Like
  • Ichan filed a Form 3. He's a director now... http://bit.ly/VZ67QX
    That should heat things up!
    15 Feb 2013, 11:01 AM Reply Like
  • Incorrect, Icahn is a 10% or greater shareholder on the Form 3/4 filed yesterday.
    15 Feb 2013, 12:31 PM Reply Like
  • It says "BO" which I believe means Beneficial Owner.

     

    Regardless, this could be the much needed catalyst the company needed.

     

    Cheers!
    15 Feb 2013, 07:11 PM Reply Like
  • Ackman is running scared. He took a huge gamble to try to protect his fund. At the same time, he showed no concern for the investors, the over 5,000 Herbalife employees who own HLF in their 401 (k) plans or in telling the truth.

     

    I'm looking forward to seeing Ackman get his butt kicked. And well deserved too.
    17 Feb 2013, 12:54 AM Reply Like
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