Editor’s note: This article was first published in July 2013; George Soros’s stake, the 10% share rise, Bill Ackman’s losses of more than $350 million and the all-time high were current market news then. Herbalife later reached a settlement with the FTC in 2016, and Ackman closed his short in 2018.
We are witnessing a genuine clash of the titans over Herbalife. Yesterday the shares fell sharply after the publication of a five-page report by Bill Ackman himself, in which he hinted that Herbalife’s good results might be manipulated or embellished. But today the stock is up 10% after it emerged that billionaire George Soros has taken a significant stake in Herbalife (NYSE: HLF).
If Carl Icahn buys Herbalife shares, it can only be to screw up the position of Bill Ackman, who is already losing more than $350 million on his short. But if Mr George Soros buys shares, things change and we are talking about a very different story, because Soros doesn’t buy in order to lose money, much less to get dragged into a battle between other investors’ funds.
One thing is clear: Soros hasn’t invested out of hatred for Bill Ackman, nor because he has switched to herbal supplements. Even clearer is that, after the announcement of his purchase of the company’s shares, Soros has already made money on today’s spectacular rise.
Remember that if Herbalife manages to break above $72.32 (its all-time high), the stock would considerably increase its chances of entering what is known as a free rise, with nothing in the way to stop its price.
Welcome to the exciting world of the stock market, where you can watch just three people move a stock’s price to unimaginable levels. And in this case the outcome will be worth watching, because we are talking about three investment giants whose track records have not featured many mistakes.
See also: James Montier’s 7 immutable principles of investing
Featured image: Harald Dettenborn, CC BY 3.0, via Wikimedia Commons.
