Activist investor, Carl Icahn has purchased an additional 2.3 million shares of Herbalife Ltd. (HLF - Free Report) after market close on Aug 26, raising his stake in the company to as much as 35%, contradicting what billionaire Bill Ackman reported to media sources. Shares of the supplements and weight-loss products company slumped 2.31% on Friday.
The share price declined after hedge fund manager Bill Ackman reportedly stated to CNBC earlier in the day that Icahn considered selling his stake in Herbalife worth approximately $1 billion to a consortium that included Ackman.
According to sources, earlier in August, Ackman stated that Icahn was interested in selling off his stake and was therefore looking for buyers, in anticipation of good returns. Icahn said in a statement on Friday that he never directly put in a sell order.
In fact, he hit back harder at Ackman by buying more stake in the firm, thus signaling his loyalty toward the company.
Icahn and Ackman have been battling over Herbalife for years. Icahn's position in Herbalife is worth more than a billion dollars, shares which he started accumulating in late 2012. Ackman, on the other hand, took a short position in the company in late 2012. He claimed that the company is running a pyramid scheme, which involves making money by way of recruiting more salespeople rather than selling products. Such models are illegal because they eventually collapse once there are no more people to recruit.
Herbalife, on its part, has been denying the charges from the very beginning. The company clarified that it operates like a multi-level marketing company, similar to Nu Skin Enterprises Inc. (NUS - Free Report) , USANA Health Sciences Inc. (USNA - Free Report) and Avon Products Inc. .
However, Ackman's back-to-back allegations prompted a civil investigative demand in 2014 by the U.S. Federal Trade Commission (“FTC”) related to the company’s marketing practices. Nevertheless, in mid-July, Herbalife reached a settlement with the FTC, and agreed to pay $200 million as penalty charges. The FTC had charged that Herbalife's earnings potential claims were deceptive and its compensation structure hinged on recruiting other product distributors instead of selling capability.
Nevertheless, Herbalife has remained upbeat about its prospects. The company reported better-than-expected second-quarter 2016 results on the back of higher sales, improving volume trends. Management also raised its view for full-year 2016.
Herbalife currently carries a Zacks Rank #2 (Buy).
(We are reissuing this article to correct a mistake. The original article, issued on August 29, 2016, should no longer be relied upon.)
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Activist investor, Carl Icahn has purchased an additional 2.3 million shares of Herbalife Ltd. (HLF - Free Report) after market close on Aug 26, raising his stake in the company to as much as 35%, contradicting what billionaire Bill Ackman reported to media sources. Shares of the supplements and weight-loss products company slumped 2.31% on Friday.
The share price declined after hedge fund manager Bill Ackman reportedly stated to CNBC earlier in the day that Icahn considered selling his stake in Herbalife worth approximately $1 billion to a consortium that included Ackman.
According to sources, earlier in August, Ackman stated that Icahn was interested in selling off his stake and was therefore looking for buyers, in anticipation of good returns. Icahn said in a statement on Friday that he never directly put in a sell order.
In fact, he hit back harder at Ackman by buying more stake in the firm, thus signaling his loyalty toward the company.
Icahn and Ackman have been battling over Herbalife for years. Icahn's position in Herbalife is worth more than a billion dollars, shares which he started accumulating in late 2012. Ackman, on the other hand, took a short position in the company in late 2012. He claimed that the company is running a pyramid scheme, which involves making money by way of recruiting more salespeople rather than selling products. Such models are illegal because they eventually collapse once there are no more people to recruit.
Herbalife, on its part, has been denying the charges from the very beginning. The company clarified that it operates like a multi-level marketing company, similar to Nu Skin Enterprises Inc. (NUS - Free Report) , USANA Health Sciences Inc. (USNA - Free Report) and Avon Products Inc. .
However, Ackman's back-to-back allegations prompted a civil investigative demand in 2014 by the U.S. Federal Trade Commission (“FTC”) related to the company’s marketing practices. Nevertheless, in mid-July, Herbalife reached a settlement with the FTC, and agreed to pay $200 million as penalty charges. The FTC had charged that Herbalife's earnings potential claims were deceptive and its compensation structure hinged on recruiting other product distributors instead of selling capability.
Nevertheless, Herbalife has remained upbeat about its prospects. The company reported better-than-expected second-quarter 2016 results on the back of higher sales, improving volume trends. Management also raised its view for full-year 2016.
Herbalife currently carries a Zacks Rank #2 (Buy).
(We are reissuing this article to correct a mistake. The original article, issued on August 29, 2016, should no longer be relied upon.)
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Get the latest research report on HLF - FREE
Get the latest research report on NUS - FREE
Get the latest research report on USNA - FREE