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Bill Ackman: Herbalife salesman suicide a bad omen

August 21, 2013|By Andrew Tangel
  • Bill Ackman has bet big against Herbalife.
Bill Ackman has bet big against Herbalife. (Scott Eells / Bloomberg )

NEW YORK -- The Herbalife saga is getting more bizarre.

Activist investor Bill Ackman is pointing to a top Herbalife distributor's suicide as an omen for the Los Angeles company's fortunes.

The nutritional products maker, however, said Ackman is merely trying to exploit a family tragedy out of desperation. 

In a letter to his investors Tuesday, the New York hedge fund manager noted that a Colorado distributor took his own life recently. The letter also cited other departures of distributors from the nutritional products company amid rule changes for how they operate.

Ackman, who has wagered $1 billion against the company in an increasingly bitter Wall Street battle, speculated the distributor's suicide may have jolted Herbalife's shares.

"The stock declined 4.1% on the news potentially because of the impact on other distributors' confidence from his death and what it may suggest about top distributor business prospects going forward," Ackman wrote.

Ackman went on to note another significant death in Herbalife's history.

"In 2000, Herbalife nearly collapsed when the company's founder Mark Hughes died from an overdose of anti-depressants and alcohol," Ackman wrote. "The company was then sold to private equity, and new management was installed to save the business."

In a statement, Herbalife criticized Ackman's latest assault.

“For the past eight months, Mr. Ackman has executed an unfounded and relentless public attack on Herbalife’s business model, blasting our company to any media outlet or hedge fund audience willing to listen, even trying to exploit a very private family matter," the statement said. "He has also hired well-connected Washington lobbyists and PR firms to try to make a case that the facts clearly do not support. His campaign is increasingly taking on an air of desperation.”

Ackman's letter was earlier reported by Business Insider, and a spokeswoman for Ackman verified a copy of the document posted online.

Why the distributor took his own life has not been reported. The 58-year-old man was found dead inside his truck in Steamboat Springs, Colo., on Aug. 11, the victim of a suspected self-inflicted gunshot wound, according to Steamboat Today, a local daily newspaper. He is survived by his wife and three children, the paper reported.

Herbalife has been at the center of an unusually public fight between powerful Wall Street money managers since late last year.

In December, Ackman announced his $1 billion short position, or bet against, Herbalife, claiming the company was a pyramid scheme.

Carl Icahn, the billionaire activist investor and Ackman foe, announced his support for Herbalife and took a long position, or bet the company's shares would rise. Icahn and Ackman later sparred verbally on live television, in a rare fued that captivated the typically decorous world of Wall Street.

Recently, investing tycoon George Soros, known for his support of liberal causes, took a major stake in Herbalife.   

Herbalife shares fell in early trading as major U.S. stock indexes slumped. The company's shares lost 36 cents, or 0.56%, to $64.36.

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