One Billion Dollars Short, Bill Ackman, and the Siege Of Herbalife (2015)

John Oliver discussing Herbalife https://www.youtube.com/watch?v=s6MwGeOm8iI

Bill Ackmann on Herbalife https://www.youtube.com/watch?v=bQc6L4ieMwo

Almost 60% of their distributors were latinos (http://articles.latimes.com/2013/feb/15/business/la-fi-herba...). The lengthy presentation countering Pershing Square's accusations which contained this fact (http://files.shareholder.com/downloads/ABEA-48ZAJ9/229776353...). There are countless stories of how these people were exploited in the name of gains.

They are expanding rapidly in international markets. In India, Herbalife has over 40 distribution centers now and over 0.5 million distributors ! They even got a famous sports personalities to advertise for them (http://www.herbalproductkart.com/herbalife-brand-ambassdors).

To do my bit in preventing people from falling for such scams, I asked my friends and mother to share it on their whatsapp groups so that people don't fall prey to such pyramid schemes.

Hard to beat the hedge fund compensation model of fee on the way up, fee on the way down.

Agnostic to his Herbalife bet, Ackman "has widely underperformed the S&P 500 since its EOY 2012 inception: 7.1% since inception net of fees vs. 84% for the S&P 500. Their original flagship fund's (2004 inception) track record is outstanding with returns of ~20% per annum."

So his first fund killed it, he made a name for himself, raised a ton of money, and has literally cost his investors 75% of their returns to date in the market.

He's personally worth $1,400,000,000 now as a result.

Every fund pitch everywhere comes with the disclaimer "Past performance is not an indicator of future success" because of funds like Ackman's.

Ackman bet big on Valeant and rode all the way from more than $200/share down to $10/share, losing more than $4B in the process.

It just depends on how you do it. Just because you have more money than the liquidity of the market doesn't mean your buy and sells are market manipulation.

I have bought things on the open market 100% above the prior market price, when I wanted them. Moving the asset's price 100% and sure enough many out of the loop people started FOMOing and buying more. Its the same principle for bearish positions too.

In the securities market you can talk about your bullish or bearish rationale, and avoid sanctioning from regulators or private persons by disclosing your position. Ackman doubled down on that logic and did it very publicly. Although this is more a problem for bearish positions, the statements can't be lies or "intentionally misleading".

In the past there were many naked shorts, where fake shares were sold into the public market causing impossible selling pressure. That is illegal now, for the most part, and as long as you aren't doing that it helps make sure you aren't manipulating the market, by the legal standard.

Again, just because you can have an outsize affect on the price of the market and the mere presence of creating an advantageous circumstance, doesn't make it market manipulation or securities fraud.

Herbalife was too rich for the FTC to find it an illegal financial scheme, subsequently and simultaneously Bill Ackman got squeezed pretty hard on that and several of his other bets.

He still has a group of followers because he's rich and has a nice pedigree, but he has fallen from glory pretty hard and his calls don't matter anymore.

One of the best short sells these days is to short everything in his portfolio when you think he is about to get a margin call. Because that will force him to liquidate several large positions in different stocks.