Reading List: Herbalife Shorts
Finance is rarely entertaining. But when it is, it’s a doozy. Last year the activist hedge fund titan Bill Ackerman bet that Herbalife — a company with 33 years of history and $3.5 billion in annual revenue — was a souped-up pyramid scheme. Eventually Ackerman bought over 20 million shares of Herbalife short, a tremendous financial bet.
Which is where the fun starts. For as Herbalife’s shares fell in response to Ackerman’s attack, other hedge fund managers — including Dan Loeb, a former friend with a newly formed interest in Ackerman’s downfall — saw a buying opportunity. And ended up going long.
Hedge fund managers are not known for their small egos, and the Herbalife saga pitted two of the industry’s best-known icons in a struggle that began based on different views of a company, but coalesced into personal battle of will. So what better source than Vanity Fair to cover the squabble in all it’s intricate detail. This is a long but riveting story of wealth, pride and ponzi — a guilty pleasure for the quant nerd perhaps, but a fully entertaining read.