Holiday Drama on Wall Street

Written by GSCR Staff   
Thursday, 20 December 2012 11:18

Today we are taking a break from our regular insight on a particular small cap stock or market analysis to bring this great story to your attention.  Think of it as a nice entertainment piece and something to follow while you finish shopping or try and leave work early.

Herbalife Ltd. (NYSE – HLF - $37.34) has been story of huge down turns after 52-week high of $73 last May to a steady decline to around the $43 range.  Yesterday, Bill Ackman, the famous non-traditional hedge fund founder of Pershing Square Capital Management, announced he was shorting the stock and it plummeted from $41.60 to $37.34 yesterday.  He called the company a “pyramid scheme.”

Herbalife’s CEO, Michael Johnson, called in to CNBC yesterday to first defend his company and then accuse Ackman of market manipulation, citing an extraordinary number of put options, or rights to sell the stock at a certain price, set to expire Friday which are now worthless unless the stock drops significantly.  Here is a link to the Johnson interview from yesterday.

http://finance.yahoo.com/video/herbalife-ceo-legitimate-company-200000462.html

Ackman is coming on CNBC today and I would not be surprised it Johnson appears as well.  This will be great drama today or even for weeks if Ackman is accused of market manipulation.

Have a great day!

Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.

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