Ackman Blasts Herbalife as a ‘Pyramid Scheme’

Hedge fund manager makes weight loss firm his end-of-year short

   

Ackman Blasts Herbalife as a ‘Pyramid Scheme’

bill ackman Ackman Blasts Herbalife as a Pyramid SchemeStar hedge fund manager Bill Ackman is betting against weight-loss firm Herbalife (NYSE:HLF).

Ackman explained his reasoning at a conference Thursday, Reuters reports. In his presentation, titled “How to Be a Millionaire,” Ackman called Herbalife a “pyramid scheme” that has grown rapidly without any substance to justify the growth. He also mentioned that the firm had raised the price of its products and questioned the truth in its sales reports.

Ackman’s fund, Pershing Square Capital, has been taking short positions against the firm for a number of months. Shares of Herbalife dropped 12% in Wednesday’s trading after Ackman answered questions about Pershing’s short position in HLF. The stock was down another 10% in trading Thursday.

Herbalife CEO Michael Johnson shot back at Ackman on Wednesday. Johnson said that Ackman’s accusation of his firm being a pyramid scheme was “bogus” and accused Ackman of attacking Herbalife to benefit Pershing Square’s business model.

Rumors continue to circulate that other fund managers are shorting Herbalife stock.

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Article printed from InvestorPlace Media, http://investorplace.com/2012/12/ackman-blasts-herbalife-as-a-pyramid-scheme/.

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