What Will Herbalife’s Q4 Earnings Mean for These Investors?

Carl Icahn of Icahn Enterprises (NASDAQ:IEP) bought a 12.98 percent share in the company, which was revealed in a 13F filing made with the Securities and Exchange Commission last week, and he has stood firm as well. During an interview with CNBC, he explained that he had invested in Herbalife because he buys companies that are undervalued.

He believes Ackman has provided him a “great opportunity” by shorting Herbalife. After Icahn’s much-publicized fight with Ackman on CNBC last month, analysts have questioned whether his bullish position is a personal vendetta or a legitimate bet. However, his filing with the SEC showed that Icahn’s position is largely made up of options, indicating that he is serious in calling Ackman’s Herbalife criticisms a scheme.

But other large Herbalife shareholders have adjusted their holdings recently. Going long on Herbalife in January, Third Point’s Daniel Loeb called Ackman’s thesis “preposterous.” However, thanks to the stock’s recent rally — shares have gained 9 percent since February 1 — Loeb sold off some of his 8 percent stake in the company in the past several weeks, although it is unclear how much he has dumped.

When he purchased his stake, Loeb called Herbalife a “compelling long-term investment,” according to the New York Post, but it seems that conditions have changed since he made that assessment.  His sell-off followed  Icahn’s massive build up, which caused the stock to jump up from $30 per share to $44. At that price Loeb clearly considered the stock’s rally to be overextended in the short term…