It has been an epic battle, over the future of Herbalife, between Carl Icahn of Icahn Enterprises, and Bill Ackman of Pershing Square. It is clear that Herbalife, and Icahn, are winning. Icahn has a very large stake in the company and has invested in the company’s success. Bill Ackman, in December 2012, took out a billion-dollar short bet that he could bankrupt the company using persuasion and the power of government to get it done.
Icahn is winning this battle because he has proven that trying to help a company succeed is a far better investment strategy than trying to use the power of government to put a company into bankruptcy for purposes of profiting from a billion dollar short bet.
Carl Icahn is a well-known investor who set up Icahn Enterprises to make investment and profit from successful and start up corporations. And he has been a successful investor. Forbes estimates that Icahn’s net worth is about $16.3 billion. Forbes also reports that Icahn has an important friend “Donald Trump in the White House” and “Icahn now has an insider’s role … advising the Trump Administration on issues involving regulatory overhaul, helping to select the heads of key regulatory agencies like the Securities & Exchange Commission and the Environmental Protection Agency.” This is a good time for Icahn.
Icahn has a 23.1% stake in in the company Herbalife. In November of last year, Icahn decided to invest $100 million in the company. There is no doubt Icahn has confidence that Herbalife is a solid investment.
Ackman is fighting a losing battle to bankrupt Herbalife solely for the benefit of his billion dollar short bet. According to Forbes, Ackman is not quite as successful as Icahn and Ackman’s net worth is $1.4 billion. Forbes describes the downfall of Ackman’s hedge fund as the collapse of Valeant Pharmaceuticals continued to take a toll on Bill Ackman’s Pershing Square hedge fund firm, which saw significant asset outflows and another down year in 2016. Ackman’s main fund, Pershing Square International, fell 10.2% in 2016, while his publicly traded Pershing Square Holdings saw NAV drop 13.5%.” Ackman is widely regarded as being on the verge of falling out of the billionaires club due to his bad bet on Valeant and the prospective hit he will take on his Herbalife short bet when he finally gives up his attempt to kill the company.
Bill Ackman’s allegations about Herbalife Nutrition’s business have been proven wrong repeatedly over the course of his almost seven year campaign to destroy the nutrition product company. Ackman’s long time allegation, that the company was artificially propped up by orders filled by distributors rather than sales of products to end users, have proven false. The company just recently reported that 90% of U.S. sales in May of 2017 were end use customers, not distributors. Herbalife had agreed to an 80% of sales to end use customers when they signed an agreement with the Federal Trade Commission (FTC) last year.
Herbalife is winning the war declared on them by Ackman, because it has proven to be a legitimate company selling products to consumers finding a need in their lives for the nutrition products offered by the company. Betting on the success of companies like Herbalife is a reason why Icahn has maintained great wealth and Ackman is in danger of slipping from billionaire status to that of multi-millionaire. Carl Icahn is on the right side of the fight over Herbalife, and he wants to make the company great again.