Ackman finally exits HLF!!

[beefcaketrade]

Just listened to the Ackman Icahn audio on youtube. Two thoughts:

1. They weren't really arguing about Herbalife at all. Icahn didn't even say/admit he was long Herbalife, even when the CNBC guy pressed him. They were arguing about completely unrelated stuff, about setting a lawsuit, whether Icahn told Ackman he wanted to be friends, etc.

2. Icahn sure seemed to come across as a big jerk. He seems to have some reverence around here, but he DID seem like a bully and a guy who wouldn't hesitate to stab you in the back and lie you your face and everyone elses.

I'm too lazy to dig through the 13D filings, but if I recall correctly from a few years ago, what's funny was Icahn added a lot of HLF via synthetic longs after the CNBC feud with Ackman on air. And yeah the initial call wasn't about HLF per se. It's more the two billionnaires didn't like each other much, so one took the other side of the other.

I remember at the time, everyone on the street was on Ackman's side. Even the CNBC personalities were pretty biased in their reporting too.

I think what people fail to realize was that just because you have a general distaste for the business, it doesn't make it illegal. The legality aspect is very technical in nature, and the fact the FTC did not ultimately close down HLF, FTC being the ultimate decision maker as to whether something is an illegal pyramid, indicates that it was ok afterall. People mix their emotions too much. Maybe they don't like HLF products. Maybe they don't like multi level marketing in general. Maybe they don't like the whole vibe of HLF where the products involve the happenings of the poor and thus think the business overall sucks. Whatever the reason may be for their bias, but that doesn't make the business itself illegal.

Also, this is the first 'regulator action' short I've seen. The entire short thesis seems to hinge on regulators stepping in to shut it down. Which is a huge bet. Not only are you betting on market forces, you're also betting on government enforcement action. Those odds seem pretty steep. History has now shown that both the market and enforcement action moved against the favor of shorts.

That being said though, as HLF approaches $100, I think it is a short on a valuation basis. I don't think it deserves the multiple it has. This is not worth $8B market cap IMHO. Shares IMHO are worth $70 in current market conditions. Worth shorting? Well, as long as the risk is capped I guess. Put spreads or something.

 

[beefcaketrade]

2. Icahn sure seemed to come across as a big jerk. He seems to have some reverence around here, but he DID seem like a bully and a guy who wouldn't hesitate to stab you in the back and lie you your face and everyone elses.

Disagreed here. He didn't come off as a jerk to me. More like a tough guy and a fighter like he's been throughout his career.

Icahn is just a self made guy who doesn't like being sidelined by anyone. I thought the coverage and Scott's attitude during the interview was a bit biased too.

Icahn is a heavy hitter in the investing world. If there was a list of people you never want to bet against, they will include names like Buffet and Icahn. Icahn had a less public profile prior to the HLF/Ackman feud, followed by making a Twitter account and becoming public with political views as of recently. But back in the old days, they had a term for Icahn's effect on stocks, the so called "Icahn Lift". When Icahn steps into a stock, it goes up.

 

[beefcaketrade]

I think Ackman shorted HLF for the wrong reason in the first place. A beginners mistake. He should have known better. It was in the nature of a raid. Others realized he had goofed, recognized the depth of Ackman's pockets, and jumped in for quick Profits. Soros bought!

You sound smarter than Ackman to me. I always thought brains improved one's looks, so you're probably better looking too. UTX is looking best when Republicans are camping out in the White House, but it looks like they might be getting ready to fold their tent.

In a strong bull market we see continuous higher highs of course, so buying near the high is not unusual behavior for those expecting the Bull to continue. We have to remind ourselves that the number one reason a stock continues to climb in a Bull market is that it has already gone up. Others see this and don't want to be left out. For the trader, more so than the investor, it is a matter of not getting caught without a chair. It comes down to recognizing when the music is about to end, and that's not easy. I like your reasoning nevertheless, but remain vigilant and be prepared to wait. Patience is a virtue hard to come by.

Yeah. A lot of people piled on. I think Loeb was long at one point as well. Heck, I threw a few cents in there myself.

A regulatory short requires too much action on the part of a third party, in this case the government bureaucracy to act in the way you want. In the end it never happened. FTC never closed HLF down, so it wasn't going to zero.

He's smarter, richer and better looking than I. But it's ok, I'll try to avoid buying UTX near ATHs after a decade long historic bull run at the maxima inflection point of the economic cycle at full employment. His UTX bet is puzzling, because in that space, GE seems better. But maybe he needed instant quarterly performance gain. It's more likely UTX with no controversy grinds higher slowly compared to GE, which is still in the dog house and can be choppy and unpredictable. But over the long term from here on out, I think GE will perform better than UTX in price appreciation though.

 

[piezoe]

Yeah. A lot of people piled on. I think Loeb was long at one point as well. Heck, I threw a few cents in there myself.

A regulatory short requires too much action on the part of a third party, in this case the government bureaucracy to act in the way you want. In the end it never happened. FTC never closed HLF down, so it wasn't going to zero.

He's smarter, richer and better looking than I. But it's ok, I'll try to avoid buying UTX near ATHs after a decade long historic bull run at the maxima inflection point of the economic cycle at full employment. His UTX bet is puzzling, because in that space, GE seems better. But maybe he needed instant quarterly performance gain. It's more likely UTX with no controversy grinds higher slowly compared to GE, which is still in the dog house and can be choppy and unpredictable. But over the long term from here on out, I think GE will perform better than UTX in price appreciation though.

I, of course, don't know if you are right, nor do you, but I like your reasoning and you're giving the matter considerable thought. I would suggest that your patience may be sorely tested. But don't do like I did and sell my AMD when I got tired of waiting. I was right, but I lost patience.

 

[beefcaketrade]

I, of course, don't know if you are right, nor do you, but I like your reasoning and you're giving the matter considerable thought. I would suggest that your patience may be sorely tested. But don't do like I did and sell my AMD when I got tired of waiting. I was right, but I lost patience.

When did you enter and exit AMD? I bought and sold AMD at $4 a few years ago. Never touched it again after. Can't believe it went to $15 lol.

 

[piezoe]

When did you enter and exit AMD? I bought and sold AMD at $4 a few years ago. Never touched it again after. Can't believe it went to $15 lol.

It was about a year after they bought the graphics card maker. I thought that was a good move. They were so saddled with debt I started thinking they'll never be able to dig out. I knew that somehow they'd keep getting orders because OEMs don't want to be put in the position of having Intel as a sole source. Also knew their servers were good and there was nothing wrong with their CPUs . When you're a manufacturer, even though you may favor one supplier over another, you always try to hand a few orders to your suppliers competitors just to keep them around. You don't want to be faced with a sole source supplier. So I figured AMD would always be around, but then I kept looking at that debt and a stock price that just stayed stuck between high threes and 5 and I just got tired of waiting and got out. Then a year later bang, and I could have tripled my money had I just been a little more patient. I consider myself far more patient than average, and everything that got me into AMD in the first place proved to be true in the end, but I kept looking at that debt and wondering and worrying about it, thinking someone my come in and buy AMD, but with that debt, what's it worth? And I really had no way to evaluate the intellectual assets. So it was that debt that finally caused me to dump it.

 

[vanzandt]

Bill Ackman’s Pershing Square Faces Wave of Investor Redemptions
Future of activist investor’s firm may not include a private hedge fund after losing bets on Valeant and Herbalife

April 5, 2018 5:30 a.m. ET


William Ackman, the famed shareholder activist, is losing investors at a rapid pace and facing a future that would no longer include managing a private hedge fund.

After three years of subpar performance, most investors in his Pershing Square Capital Management LP have asked for their money back, with about two-thirds of the cash that could be withdrawn at the end of the year being pulled, according to people familiar with the matter. Longtime backer Blackstone Group LP has been taking cash out, and JPMorgan Chase & Co.’s asset-management group told clients it could no longer recommend the fund, the people said.

While a sharp reversal in performance could stem the tide, the fund declined again in the first quarter, trimming its total assets 12% to $8.2 billion. It isn’t clear what redemptions are this year.

Mr. Ackman is paring staff, stepping back personally from investor relations and isn’t seeking to replace departing money. That sets the stage for a future in which the firm will largely consist of a publicly traded entity, Pershing Square Holdings Ltd. PSH 1.64% , which currently has about $3.9 billion in assets.

https://www.wsj.com/articles/pershing-square-faces-wave-of-investor-redemptions-1522920601

 

[dealmaker]

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