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Bill Ackman Compares Herbalife to Bernie Madoff, Stock Takes Hit

BILL ACKMAN screen shot

Activist investor Bill Ackman renewed his attack on Herbalife during a CNBC interview Wednesday, likening the nutrition and weight management company to convicted fraudster Bernie Madoff.

“Herbalife, we’re doing God’s work, ” he added.

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“When you shine sunlight on Madoff it makes it difficult for Madoff to find victims. The same thing is happening at Herbalife, ” the founder of the $18 billion Pershing Square Capital Management hedge fund said on “Squawk Box” as the show debuted in its new home in New York City.

Ackman first shorted Herbalife on May 1, 2012. When he went public with his position in December 2012, the hedge fund manager called the company a “pyramid scheme” and said his position was worth $1 billion. The company has strongly denied Ackman’s charges ever since, CNBC said.

Giving an indication on where his Herbalife trade stands now, Ackman said: “We will make more than we would have made had it just straight gone to zero initially. We did increase the position earlier this [past] year.”

Herbalife stock has tanked more than 20 percent in the past five trading sessions—almost 8 percent of that decline on Tuesday alone. That’s on top of a 50 percent loss for all of 2014, the report said.

The stock has been moving lower recently, Ackman said, because the company is going to miss earnings and will have to redo its guidance. He said there’s a massive seller in the market and that can be seen by looking at short-term option trading, according to CNBC.

Ackman also claimed: “You have a flight of top [Herbalife] distributors, senior employees from around the world, contacting us, contacting the government, sharing information.”

The company did not respond to a CNBC request for comment.

Shares of Herbalife fell sharply by 8.45% to $27.85 in early market trading on Tuesday, after Ackman said during the CNBC interview that the company will “massively” miss earnings and will have to reissue its guidance, TheStreet said.

Ackman added that there is a large seller of the stock currently in the market that can be seen by looking at short-term option trading, the report said.

Herbalife stock has fallen more than 20% in the past five trading sessions, with 8% of the decline from yesterday. For the full year 2014, the stock suffered a 50% loss, according to TheStreet.

Cayman Islands-based Herbalife is a global nutrition company that sells weight management, healthy meals and snacks, sports and fitness, energy and targeted nutritional products as well as personal care products, the report said.



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