- REUTERS/Mike Cassese
Bill Ackman probably did not have a happy end to his work week.
Two of his biggest trades – Herbalife and Valeant Pharmaceuticals – headed in the opposite directions of his positions on Friday.
Herbalife, a long-time Ackman short, ended the day up exactly 9% at $63.57 a share while Valeant was down 13.4% at $29.86 a share.
Shares of Herbalife soared to their highest level in a year after the company hinted at a possible resolution to its case with the Federal Trade Commission.
Herbalife CEO Michael Johnson said that the investigation by the FTC was close to ending and estimated possible financial hits to the company.
“We have updated our disclosures to report that while there are a number of open issues, those discussions have progressed to an advanced stage, and the range of outcomes now include litigation or settlement,” Johnson said in the company’s quarterly earnings call.
“We also announced that if a settlement is reached with the FTC, it would likely include injunctive and other relates – as well as a monetary payment with our best estimate of that payment being $200 million,” he continued.
The nutritional-supplement company has been under investigation for some time now after concerns were raised that it was operating a pyramid scheme. The company’s best-known detractor is hedge fund billionaire Ackman, whose Pershing Square fund has a short position on Herbalife.
Despite taking it on the chin for months now, Ackman has recently deepened his commitment to the troubled pharmaceutical business with a seat on the board of directors.
For his trouble, Ackman has had to endure a grilling from the US Senate, a stock price collapse of 88%, and barbs from Warren Buffett and Charlie Munger.
Shares again tumbled after the company announced that it would form a committee to evaluate how the firm determines drug prices. One of the problems over the past year has been Valeant’s practice of purchasing a drug and raising the price.
And so Ackman got punished on both of his most well-known trades on Friday. Here’s a chart that is sure to make the hedge funder cringe:
- Google Finance/Business Insider