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Bill Ackman Surrenders in His Five-Year War Against Herbalife (2018)

www.wsj.com Bill Ackman Surrenders in His Five-Year War Against Herbalife

The activist investor is ending his crusade against Herbalife Ltd., in what amounts to a bruising defeat in one of Wall Street’s longest-running, most expensive and nastiest fights.

I came across the article "Bill Ackman Surrenders in His Five-Year War Against Herbalife" in the Wall Street Journal. The hedge fund Pershing Square Capital Management led by Bill Ackman short sold the multi-level marketing and dietary supplement corporation Herbalife.

Bill Ackman argued that Herbalife was a pyramid scheme, and its stock price would go to zero. Activist investor Carl Icahn of Icahn Enterprises invested in Herbalife –– becoming its biggest shareholder. Short seller versus activist investor. A live television shouting match between Ackman and Icahn.

Compare to the GameStop short squeeze. GameStop CEO Ryan Cohen has even been connected with Carl Icahn ("Ryan Cohen and Carl Icahn Meetup Energizes GameStop Bulls Amid Yet Another Bear Market Rally").

Netflix produced a full-length documentary against Herbalife. And GameStop inspired multiple films –– notably including Dumb Money (for the bulls) and and This Is Financial Advice (for the bears).

The FBI and federal prosecutors investigated Ackman for market manipulation ("Prosecutors Interview People Tied to Ackman in Probe of Potential Herbalife Manipulation"). And the SEC similarly investigated Ryan Cohen ("Ryan Cohen Said To Be Under SEC Scanner Over His 'Sketchy' Bed Bath & Beyond Trades").

After five years, Ackman apparently exited his position –– losing hundreds of millions of dollars. Supposedly, GameStop short sellers also closed their positions ("Melvin Capital, hedge fund targeted by Reddit board, closes out of GameStop short position").

The book When the Wolves Bite: Two Billionaires, One Company, and an Epic Wall Street Battle by Scott Wapner describes the Herbalife story. The Antisocial Network: The GameStop Short Squeeze and the Ragtag Group of Amateur Traders That Brought Wall Street to Its Knees by Ben Mezrich describes the GameStop story.

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8 comments

  • great post OP. I was recently just thinking about the Icahn vs Ackman saga. https://www.youtube.com/watch?v=6LRW1PVM3jk

    This is a pretty worthwhile story because it demonstrates the reality that big multi-billion dollar financial fights happen.

    Competing interests have competing narratives. I was actually planning on putting a post together about this using the Icahn vs Ackman fight as an example.

    Situations like this happen. Sometimes, not always, they are a zero-sum game: one person's win is another person's defeat.

    GME investors find themselves in a similar but different situation. GME investors are undoubtedly engaged in a conflict of competing interests.

    Some financial incumbents have an interest in GameStop's demise, and GME investors have an interest in GameStop's success. GME opponents succeed when the company fails (not going to happen), and investors capitulate. Investors need to lose everything for the opponents to win their position. And, conversely, opponents of GME investors could lose everything at GME's success. So, it is a zero-sum game. It is a high stakes game when one or more involved parties face existential elimination.

    Of course, our opponents want to gaslight us into believing that we have no opponents, there is no substantial short interest on GME, naked short selling doesn't exist, that we are all deluded idiots rooting for a dying brick and mortar retailer that is destined to fail.

    Literally the very first words of This is Financial Advice, the creator of that video mockingly states: "Like, the thing is, people don’t appreciate that this is, like, we’re in a war"

    The mockery is supposed to imply that anyone that actually believes that there exists a financial conflict over GME is necessarily deluded. There is no GME war. Nothing to see here. Just a bunch of delusional misinformed idiots.

    There is no war, says the propagandist who then spends the next several hours engaging in that very information war by spreading lies and attacking specifically one faction while not fairly addressing any of the points that that faction would make. Almost like that video is biased. Almost like that video was made and the message told just happens to be to the benefit of some incumbents that are engaged in a financial war over GME, to spread the message that anyone that opposes their interest in GameStop's demise by investing in GME is necessarily a deluded cultist.

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  • 3/5's of the way there :) I can dig it haha

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  • Never fucking leaving

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