Wednesday, July 23, 2014
So, you short a company's stock and set out to destroy it. You give public presentations explaining why the company is fraudulent. If people believe you and sell the stock, you will win big. If they don't, you will lose billions. That's the position that Bill Ackman, a hedge fund manager is in in his quest to destroy nutritional supplement company, Herbalife. Yesterday, after his detailed presentation on the company, its stock rose rather than fell. The feeling was that he didn't produce a smoking gun that proves the company is a culprit rather than besieged. There is something about Ackman's anti-PR that makes one want to see him fail. On the other hand, if Herbalife is shady, he will have done a public service. Time and stock trading will tell soon enough whether his shorting the stock was a good or bad idea. And the government has yet to weigh in based on its investigation into the company. Should the FTC sue the company, Ackman will be a winner. If it decides against penalties, Ackman will have to start over to rebuild his fortune.