Dan Loeb, who trumpeted his investment Herbalife in early January – saying the shares had plenty of upside – has trimmed his stake in recent weeks, according to a recent report.
Loeb’s sell-off came at about the same time that activist investor Carl Icahn was building up his position in the Los Angeles-based distributor of weight loss and nutritional products.
The two heavy-hitters have lined up against fellow activist Bill Ackman, who has branded Herbalife a pyramid scheme and taken a $1 billion short position in the company’s shares.
Loeb’s partial sell-off, which has been rumored for weeks, was reported Saturday by CNBC.com, which cited a source.
Third Point, the hedge fund run by Loeb, declined to comment yesterday.
Loeb began selling some of his stake weeks ago, sources tell The Post, and has traded in and out of the position.
The sell-off by Loeb continued on Friday, the day after Icahn revealed that he had taken a 13 percent stake in the company, CNBC reported.
Investor Robert Chapman, a close ally of Loeb’s in the Herbalife battle, said Friday he had sold or hedged his entire position.
After trading as high as $49 a share Friday on news of the Icahn investment, Herbalife shares closed at $38.74, up 1.2 percent.
Loeb’s Third Point announced an 8.2 percent stake in Herbalife on Jan. 9. In a widely-publicized letter to investors, he disagreed with Ackman that it was a pyramid scheme, calling his fellow hedgie’s views “preposterous.”
The company has also disputed Ackman’s claims.
Loeb, in the letter, estimated that the stock could go to $68 per share and said the company was a “compelling long-term investment” for his firm. He added that “shares could even trade above our current price target” because of the short interest and a company presentation on Jan. 10.
Following the initial news of Loeb’s stake, Herbalife shares began rising, closing at a peak of $44 on Jan. 22. Loeb paid an estimated $30 per share to build his position.
Because Loeb considered the stock’s rally to be overextended in the short term, the hedgie felt Herbalife was a “different proposition” once it was trading in the mid to high 40s — indicating that he was hedging or selling some of his shares in the run-up, according to a source.
The same dynamic led him to sell Herbalife on Friday, the source said.