Ackman’s big Herbalife reveal bombs; shares jump 25.5%
That’s all you got, Bill?
Bill Ackman’s much-hyped Herbalife bomb blew up in his face Tuesday when the hedge-fund billionaire failed to deliver the “death blow” to the company he has spent $50 million and two years trying to prove is a big pyramid scheme.
During an epic three-and-a-half hour lecture he dubbed “the most important of his career,” Ackman threw everything he had at the company he has bet $1 billion against — and came up miserably short.
He compared the protein-shake peddler to the mafia and Enron while invoking Nazis and drug dealers. At one point, the Pershing Square founder teared up when he claimed Herbalife preys on the poor.
“I’m a huge beneficiary of this country,” the billionaire said, wiping away tears as he blamed Herbalife for dashing the American dream.
That bit of theater did him no good. By the time the Q&A rolled around, Ackman was playing to a half-empty Manhattan auditorium.
He then went after what he called Herbalife’s “enablers” — everyone from the New York Times to those who are on Herbalife’s payroll, including the Boies, Schiller law firm, public relations firm Joele Frank and former Secretary of State Madeleine Albright.
Shares of the multilevel marketing company surged during his epic rant, regaining all the losses from his TV appearances the previous day touting the event — and then some.
When it was all over, Herbalife was up 25.5 percent — its highest one-day gain ever — to close at $67.77.
Reached after the presentation, Ackman told The Post he has no intention of backing down despite the market’s reaction to what he said was “one of our most important presentations ever.”
Most of his Herbalife investment — now 8 percent of his $14.7 billion hedge fund—is in over-the-counter options that don’t expire until 2015 and can be rolled over.
Ackman reiterated his commitment to take his Herbalife battle “to the end of the earth” and recommended selling the stock at the day’s high prices.
“If I were to allow short-term price movements to affect my judgment about a carefully researched investment, I would have lost a lot of money over the years,” he said.
His presentation — dense with charts and slides — was lost on an audience that had showed up expecting the big reveal.
“Hard to imagine that’s all Ackman has. He promised us the world yesterday. What’s the deal here? Is that all there is? Really?” CNBC “Mad Money” host Jim Cramer tweeted.
Using the analogy of Enron’s fake trading room, Ackman attempted to show how Herbalife’s “nutrition clubs” create the illusion of retail customers by using unpaid labor and fake university courses that force people to buy product before even becoming “members.”
The clubs, which comprise 40 to 50 percent of the company’s revenues, are “entirely fraudulent” with “fake customers,” he said.
He also tied CEO Michael Johnson to the company’s geographic expansion strategy that targets what it called, in internal documents, the “bottom of the pyramid.”
Herbalife said it may sue Ackman over the allegations.
“That’s on the table. It’s an option,” Herbalife CFO John DeSimone told Bloomberg. “I think our case gets stronger every day.”