Hedge Funds Square Off in Epic Battle; Herbalife (HLF) Fate Hangs in Balance

January 9, 2013 10:48 AM EST
With friends like Dan Loeb, who needs enemies? That is probably what hedge fund manager Bill Ackman is thinking this morning after so-called pal Dan Loeb disclosed an 8.2 percent stake in Herbalife (NYSE: HLF), a company Ackman called a ponzi scheme. In December Ackman revealed a massive short position on the stock.

Loeb's stake in Herbalife comes a day before a major presentation by Herbalife management. The presentation comes in response to a scathing, 3-hour attack by Ackman on December 20th. Among other issues, Ackman's campaign against the multi-level marketing company thrashed it for duping employees and investors into believing the company has a real business model. Ackman values the stock at zero and said he will give his profits to charity.

So far Loeb hasn't issued a statement on Herbalife, but his massive stake speaks volumes about his views on both the stock and on William Ackman.

In other recent news, hedge fund manager Robert Chapman called Ackman's bet against Herbalife ill-timed, since for now regulators are unlikely to take action against HLF, even if it is, as Ackman claims, a ponzi scheme.

Hedge fund David Einhorn is rumored to be on Ackman's side, although he has not revealed a short position in the stock.

As one hedge fund trader put it: the Herbalife situation is "hedge fund porn."

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