The FTC is unlikely to act on the allegations made by Ackman, which only reinforces the confidence of those betting against Ackman’s short position. Robert Chapman, of Chapman Capital, is one fund manager who has gained notoriety for being on the opposite side of Ackman. The short interest ratio for HLF was nearly 27% according to Nasdaq, which released this number on December 14th, prior to the Ackman’s presentation. If the ratio is even higher than that now then it would be even more unlikely for the shares to fall. HLF also has an attractive dividend, which is around 3.1%. The dividend payout should keep investors interested in buying the stock. Daniel Loeb, of Third Point LLC, recently took an 8.2% stake in HLF, that’s roughly 8.9 million HLF shares. Third Point is the most recent firm to bet against Ackman’s claims. Tim Ramey, an analyst from D.A. Davidson and Co., stated that Loebs investment “sounds incredibly wise to us.” Ramey went on to state, “The Ackman case doesn’t have any merit. It attempts to prove the company’s a pyramid scheme when the prima facie evidence is that it’s not.” The bets against Ackman have been stacking up and are providing support for HLF shares. Shares of HLF are more likely to hit $55 a share rather than falling to $25. Today, January 10th, is HLF’s analyst day. The meeting should provide investors with a better understanding of what exactly is going on inside the company. The company is likely to spend a majority of the meeting defending itself against Ackman’s allegations.
Author: Tyler Sciortino
Contact for questions or inquiries at tsciortino312@aol.com