Will Icahn Beef Up on Herbalife?
Herbalife (NYSE:HLF), the nutrient- and healthcare-supply company that has become the centerpiece of a dramatic showdown between celebrity hedge-fund managers, announced on Thursday that it will be increasing the size of its board of directions by two, to a total of 11 members. What’s more, activist investor Carl Icahn, who currently owns about 13.6 percent of the company’s common stock, gets to designate who fills those two spots.
Icahn, known for his sometimes-hostile participation in corporate turnarounds, has come out swinging in defense of Herbalife over the past few months. It’s unclear whether his involvement in the company is based off of sound fundamental analysis or a personal grudge against William Ackman, the yin to Icahn’s yang. That is, sophisticated markets support both long and short investors, and Ackman is short.
Ackman, who manages $11 billion at Pershing Square, disclosed a $1 billion short position in Herbalife in December. He accused the company of being a pyramid scheme, catalyzing a sharp decline in the stock’s value and inviting the attention of regulatory officials. What is perhaps the most controversial part of the whole ordeal is that Ackman not only took such a massive short position, but effectively tried to convince other investors he was right. This is what has Icahn all worked up…