Tuesday, August 16, 2016

Fidelity selling Herbalife stock is a good sign

In a recent SEC filing Fidelity Investments, the second largest investor in Herbalife, said it had cut its stake in the firm to 7.4 million shares, a 14 percent reduction from the 8.6 million shares it reported owning at the end of June.

“The fact that Fidelity is selling is a good sign. There is no longer a bull case to be made for this stock” said Bill Ackman, who has a $1 billion bet that Herbalife’s stock would collapse. 

Monday, August 1, 2016

Herbalife considering stock buybacks to target shorts

Herbalife is scheduled to release its financial results for the second quarter of fiscal year 2016 after market closes on Wednesday, April 3. 

The global nutrition company considers pursuing stock Buybacks to pressure Bill Ackman, who has put a Short rating on the stock since 2012. In accordance with its decision to buy back its stock, the company is said to have signed an agreement with Bank of America and Merrill Lynch to buy back its common shares worth $266 million. Buyback is one of the many strategies that the company has considered to oppose short seller Bill Ackman. Other important options under the company’s umbrella include capital structuring and cash management.

This is not the first time that the company is opting for the Buyback option, as the last time it used this option was in fiscal year 2014. From FY07 to FY14, the company has approximately used $3.7 billion in repurchasing its stock. However, the last time it took this approach, it stopped paying dividends and instead sold convertible bonds to finance its efforts.