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Bill Ackman says he was silenced in Herbalife conference call

February 20, 2013|By Stuart Pfeifer
  • Hedge fund manager Bill Ackman has taken $1 billion short on Herbalife stock.
Hedge fund manager Bill Ackman has taken $1 billion short on Herbalife stock. (Scott Eells / Bloomberg )

One voice that was not heard during Herbalife Ltd.'s conference call with analysts Wednesday morning was hedge fund manager Bill Ackman, who has accused the company of operating a pyramid scheme and shorted $1 billion of its shares.

"We followed the instructions, pushed star 1, and were not allowed on. Why are you surprised?" Ackman said in an email to The Times.

The company said in a statement that it has no record of Ackman or anyone at his firm, Pershing Square Capital Management, attempting to ask a question.

"This was confirmed repeatedly with the conference call operator throughout the course of the call.  Not surprisingly, this is another attempt by Pershing Square to manipulate the news to support their reckless bet against Herbalife," the company said. "Pershing Square has no choice but to continue to misrepresent the facts and attempt to disrupt the marketplace."

During the analyst call, Herbalife Chief Executive Michael Johnson said the company enjoyed broad growth in 2012, with record sales of $4.1 billion. He called Ackman's attack "unprecedented, untrue and unfair."

In a regulatory filing Tuesday, Herbalife noted that it was cooperating with a Securities and Exchange Commission review of its business model. It also said it would spend between $10 million and $20 million in legal and consulting fees related to Ackman's attack.

Los Angeles-based Herbalife sells weight-loss and nutritional products through a network of millions of independent distributors in 88 countries. Ackman has challenged the model, noting that most distributors make little or no money while a few at the top get rich from commissions related to others they brought into the business.

The company denied those allegations, saying most distributors sign up in order to receive discounts on products they personally consume, not to earn a living selling the company's products.

Billionaire investor Carl Icahn disclosed last week that he's purchased about 13% of Herbalife's shares and planned to talk to the company about steps to increase its value, including possibly taking it private. Johnson said Wednesday that the company has had "short discussions" with Icahn, but did not elaborate.

Ackman said he's disappointed that Herbalife has not responded point by point to a series of questions he issued to the company.

“If Herbalife really wants investors to understand their business better and provide full transparency as Johnson said on the call, they should start by answering even one of the 284 questions we submitted publicly to them two weeks ago. To date, they have yet to respond to one of those questions.”

Herbalife shares were down $1.92, or nearly 5%, in morning trading.


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