Carl Icahn Unleashes Dogs of War in Herbalife (HLF) Battle
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Price: $12.13 +1.93%
Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 1.8%
Revenue Growth %: +4.0%
Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 1.8%
Revenue Growth %: +4.0%
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On Thursday evening, tough-talking activist investor Carl Icahn put his money where his mouth is in his fight against Pershing Square's Bill Ackman. A dispute between the two investors turned nasty last month during a live interview on CNBC, but at the time Icahn said little about his investment in highly disputed stock, Herbalife (NYSE: HLF). Today speculation about Icahn's stake in the company was put to rest when the tycoon announced a 14 million share investment in the multilevel marketing company, or about 13 percent of the shares outstanding.
Interestingly, prior to the bitter on-air fight on CNBC on January 25th, Icahn's position in Herbalife was relatively minor, filings show. Since then it has obviously ballooned, telegraphing the activist's conviction in the company, or perhaps his intense hatred of Ackman. A third possibility is that Icahn is highly confident in his ability to squeeze Ackman's short position.
In tonight's filing, Icahn expressed his intention to discuss "strategic alternatives" with management, a chilling proposition for Ackman since a going private transaction would essentially force Ackman to buy back his position. During their debate, Icahn warned Ackman this was a possibility. Ackman responded to Icahn by saying, smugly, that he was free to tender shares in the company. Based on today's filings, Icahn might be crazy - or angry - or brilliant enough to do just that.
Shares of Herbalife moved higher by over 20 percent following the announcement. The huge move is a testament to investor's faith in Icahn and his ability to organize individual investors into a powerful force for activism. If anyone can spearhead the mother of all short squeezes, it is Icahn.
In Ackman's defense, the fact that Icahn appears to have made an "emotional" decision may prove helpful, but aside from this argument it is clear the hedge fund manager is in a dire position, and it may get worse before it gets better. Sorry Ackman.
Interestingly, prior to the bitter on-air fight on CNBC on January 25th, Icahn's position in Herbalife was relatively minor, filings show. Since then it has obviously ballooned, telegraphing the activist's conviction in the company, or perhaps his intense hatred of Ackman. A third possibility is that Icahn is highly confident in his ability to squeeze Ackman's short position.
In tonight's filing, Icahn expressed his intention to discuss "strategic alternatives" with management, a chilling proposition for Ackman since a going private transaction would essentially force Ackman to buy back his position. During their debate, Icahn warned Ackman this was a possibility. Ackman responded to Icahn by saying, smugly, that he was free to tender shares in the company. Based on today's filings, Icahn might be crazy - or angry - or brilliant enough to do just that.
Shares of Herbalife moved higher by over 20 percent following the announcement. The huge move is a testament to investor's faith in Icahn and his ability to organize individual investors into a powerful force for activism. If anyone can spearhead the mother of all short squeezes, it is Icahn.
In Ackman's defense, the fact that Icahn appears to have made an "emotional" decision may prove helpful, but aside from this argument it is clear the hedge fund manager is in a dire position, and it may get worse before it gets better. Sorry Ackman.
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