Hedge Funds

A fluid franchise They were going. Then they were staying. Now the Sacramento Kings really might be going … unless they end up staying. The plight of a franchise seemingly on the road to nowhere gained some traction this week when hedge-fund billionaire Chris Hansen and Microsoft executive Steve Ballmer emerged as candidates to buy the Kings and move them to Seattle. Standing in their way could be Bay Area investor Mark Mastrov, the founder of the 24 Hour Fitness chain who reportedly wants the Kings to walk in place until they can get a new stadium in Sacramento.

Hedge fund Third Point took an 8.2% stake in Herbalife Ltd., becoming the latest firm to bet against hedge fund manager Bill Ackman, who has accused the direct seller of nutritional products of being a pyramid scheme. Third Point, which had about $10 billion under management and is run by financier Daniel Loeb, has purchased 8.9 million Herbalife shares, according to a filing with the Securities and Exchange Commission. Herbalife is fighting allegations made by Ackman, the founder of Pershing Square Capital Management, that it uses inflated pricing, misleading sales information and a complicated incentive structure to hide a pyramid scheme.

NEW YORK -- The investor presentation featured protein shakes and granola bars, entreaties for more hugs in the world, and accusations of lies and snobbery, all to counter a $1-billion bet that Herbalife, the Southern California company, will soon go down the tubes. Who says Wall Street is more boring these days? The presentation was the latest move in a battle between Herbalife, which sells nutrition powders, bars and vitamins through a network of individual distributors, and Bill Ackman, founder and chief of Pershing Square Capital Management.

Herbalife Chief Executive Michael Johnson was tired of a powerful hedge fund manager bad-mouthing his company. So he put on a show Thursday before hundreds of investors at the Four Seasons hotel in Manhattan, rebutting claims that the Los Angeles nutritional supplement company is a pyramid scheme. The presentation accused hedge fund giant Bill Ackman of lies and snobbery, compared Herbalife to the Girl Scouts and featured the company's president entreating that "the world needs more hugs.

Another hedge fund manager is joining Bill Ackman in the ranks of Herbalife haters. Whitney Tilson, who helps run three hedge funds and two mutual funds through T2 Partners, said in a mass email Wednesday that he's short “a tiny smidge” of Herbalife and other so-called multilevel marketers who sell products through individual distributors. Herbalife, the Los Angeles provider of health supplements, has seen its stock tumble 40% in four trading days after Ackman last week accused the company of operating as a pyramid scheme.

With investors punishing his company's stock for a third consecutive day, the top executive of Herbalife Ltd. sought to reassure shareholders Friday that his company is not a pyramid scheme. Working from the firm's tony headquarters in downtown Los Angeles, Herbalife chief Michael Johnson telephoned institutional investors, including fund managers at Fidelity, disputing highly publicized criticism from prominent New York hedge fund manager Bill Ackman. Johnson also assembled a team of about a dozen top company officials to prepare a point-by-point defense against Ackman's assertions that Herbalife is a "sophisticated pyramid scheme" whose independent sales associates make more money recruiting new distributors than actually selling products.

Herbalife Ltd. is girding for a fight against a Wall Street money man who's betting $1 billion that the company is nothing more than what he called a "pyramid scheme. " The Los Angeles maker of nutritional products rushed to defend itself Thursday against a hedge fund manager's accusation. Hedge fund titan Bill Ackman accused Herbalife of paying its sales staff far more money to recruit new distributors than to actually sell its products. That results in the roughly 2.6 million distributors at the bottom of the sales pyramid making little or no income, while a handful at the top hauls in millions, he said.

Even the most inattentive 401(k) owner surely understands today that the markets can bite you where it hurts, that promises of long-term investment gains can evaporate in the blink of a short-term crash and that the less understandable an investment scheme is, the more dangerous it is. Why, then, is California Public Utilities Commissioner Timothy A. Simon pressing so hard to subject billions of dollars of public trust fund money earmarked for...

Federal regulators accused a Santa Monica hedge fund manager of defrauding investors by saddling them with losing securities trades while claiming winners for himself. The Securities and Exchange Commission alleged that Peter J. Eichler Jr., chief executive of Aletheia Research and Management Inc., made about $2 million by allocating a disproportionately large share of money-making trades to his personal brokerage accounts. He steered another $2 million in improper profits to favored employees and clients, the SEC alleged.

NEW YORK -- The hedge fund SAC Capital Advisors told investors it has received a notice of potential action by the U.S. Securities and Exchange Commission, according to a source familiar with the matter. Looming civil action by the regulator would take direct aim at the $14-billion hedge fund after federal prosecutors accused one of its former portfolio managers -- Mathew Martoma, who worked at an SAC unit called CR Intrinsic Investors -- of taking part in history's most lucrative insider-trading scheme.