Who is Bill Ackman and why he fights with Herbalife?
Bill Ackman of Pershing Square is hedge fund manager. He is shorting $1 billion worth of Herbalife stocks since 20 Dec 2012. He claims that Herbalife operates as a pyramid shcheme (that targets poorer people) and wants FTC to shut it down.
Why Herbalife problems are good for Ackman?
He shorted Herbalife stock, which means that when the price of stock goes down, he profits. When the price of Herbalife stocks will reach $0, he will earn $1 billlion.
It is worth mentioning that Ackman’s rival, investor Carl Icahn, bought 16.8% of Herbalife’s shares and hopes the price will go up.
Now understand this:
Every time Ackman accuses Herbalife of being pyramid scheme, he does it to gain money.
Which does not mean that Herbalife is NOT a pyramid scheme. It just menas that Ackman’s motives are clear to be seen. Current Herbalife FBI problems probably make Ackman very happy too 🙂