Start the conversation
Bill Ackman's battle with Herbalife Ltd. (NYSE: HLF) has doomed the nutritional supplement maker's stock to bouts of wild volatility. In just the last month HLF stock has dropped 11.2%, surged ahead 25.5%, fell another 26.8%, and finally advanced another 5%.
Ackman triggered a buying spree last month when he claimed that he was going to deliver a "deathblow" to the company with a presentation on HLF's predatory business model.
While merely uttering "deathblow" plunged the stock into an 11.2% tailspin, the actual presentation on July 22 was underwhelming. The longs seemed to take the advantage back from the shorts as the stock soared 25.5% on the day.
After Ackman's July presentation, where he pledged to all but blow the lid off HLF's alleged pyramid scheme and predatory marketing practices, the company stock soared and was trading at $67.77 on the day.
Click to Enlarge
But that quick gain, fueled by traders who scoffed at Ackman's renewed offensive against HLF, was erased entirely - and then some - on July 28 when the diet shake vendor's stock dropped as much as 28.8% to intra-day lows of $48.26.
This big loss came when HLF released its second-quarter earnings, revealing that the company fell short of analyst expectations for the first time since 2008.
Since then, HLF has traded back over $52, providing further evidence that this spat between activist investors going long and short sellers following Ackman's lead has had unpredictable consequences on the company's stock.
The most recent jab in this showdown was thrown by Capital Research and Management Co., an institutional investor that loaded up on more than 9 million shares of the diet shake vendor to take a 10.1% stake in the company on July 31. News of this large-scale share purchase at the beginning of the week helped push HLF stock above $50 after it breached a low last week post-earnings.
Here Are 10 “One-Click” Ways to Earn 10% or Better on Your Money Every Quarter
Appreciation is great, but it’s possible to get even more out of the shares you own. A lot more: you can easily beat inflation and collect regular income to spare. There are no complicated trades to put on, no high-level options clearances necessary. In fact, you can do this with a couple of mouse clicks – passive income redefined. Click here for the report…