Bill Ackman Ends Fight with Herbalife, Buys Shares of United Technologies

William Ackman the billionaire activist investor wagered $1 billion six years ago that the stock price of Herbalife would plunge to zero after he publicly called the nutrition company nothing more than a fraud in a presentation for three hours in front of analysts, investors and members of the media.

On Wednesday, little fanfare was seen when the manager of hedge funds let it slip to a reporter from a cable news channel that his company, Pershing Square Capital Management was not betting against Herbalife any longer.

Now, Ackman has started to build a stake in the maker of aircraft parts United Technologies Corp., whose shares moved up over 3.4%.

Instead of falling, Herbalife stock increased since the activist investor started shorting it. The total loss for Pershing Square was not known. On Wednesday, the stock was up to $95.88 per share, compared to approximately $45 during 2012 when Ackman started his battle with the company.

Pershing Square did not disclose when it started to buy stock in United Technologies.

For years Ackman has claimed that Herbalife was operating a pyramid scheme that was illegal where distributors of diet shakes and other Herbalife products earned money through bringing in recruits into the group rather that selling.

In 2017, Ackman converted his short position at Herbalife into a bet against it through the use of put options. This helped limit possible losses for the hedge fund, though even that was closed as well. He said that he would not speak publicly about it any longer.

Ackman has now turned another page on a bitter battle that put him up against rival Carl Icahn, who became the biggest shareholder of Herbalife soon after Ackman had gone public with his short position.

The bet hurt the long-term performance of Pershing Square and made Ackman into a social activist stepping up to crusade against Herbalife that he said was hurting many minorities with promises that were false of financial success through selling their product.

The United States Federal Trade Commission looked into the matter, and reached a settlement with the company. It involved a penalty of $200 million and requirements the company reform certain business practices.

Investors in the $9 billion fund of Ackman’s quietly applauded his decision to put Herbalife behind him, saying it was part of their manager’s strategy of rebuilding a performance record following losses for three years.


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