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Herbalife is famously fraught with conflict which is as much about personalities as it is about money. Hedge fund manager Bill Ackman is like a Captain Ahab to the Great White Whale that is Herbalife, but every time he throws a harpoon, the stock seems to rise higher. When asked in the spring about Ackman’s short position on the stock, which has declined double-digits, he remained resolute in staying bearish, and has repeatedly called for investigations into Herbalife, which he believes is a criminal pyramid scheme rather than an ordinary multi-level marketing business.
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Activist investor Carl Icahn is on the opposite side of the aisle from Ackman when it comes to Herbalife, and he boasted that every time Ackman says something against the stock, it seems to rise a few points. CNBC’s Jim Cramer admitted on his Mad Money program that he too is getting weary of this battle, and implied that Ackman wants to destroy an entire company, which for better or for worse, provides employment opportunities to people, to benefit his shareholders. Cramer said he is looking forward to the time when Herbalife will “stop being a plaything and go back to being a stock.”
Bill Ackman was at it again recently when he claimed that he had information that would deal a “death blow” to Herbalife. However, the company is buying back shares, and management doesn’t seem to be shaking in its shoes. On the day Ackman threatened this invisible “death blow, ” the stock had its largest single-session gain in its history.
Herbalife will announce its earnings on Monday, and no one is expecting any mortal wounds from Ackman to mar the report. If Herbalife beats the consensus estimates of $1.55 a share, it will have produced its 22nd consecutive earnings beat.
