Herbalife, the controversial supplement company, has decided the best defense is a strong offense.
Herbalife is approaching investors in Bill Ackman’s Pershing Square hedge fund, suggesting they pull their money from the $12 billion firm, according to a Bloomberg report.
The company plans to point out to some of the biggest investors in the fund that Ackman has lost as much as $500 million and is risky and irresponsible, said the people, asking not to be named because the campaign is private.
Moelis & Co., an investment bank working for Herbalife, arranged a meeting with Cliffwater, which advises clients on hedge-fund investments, and Herbalife executives, according to two people with knowledge of the meeting told Bloomberg.
Moelis also reached out to New Jersey’s $76.7 billion pension fund, which has $207 million invested with Ackman, said sources. Executives of the New Jersey fund haven’t met with the Herbalife camp yet.
“Herbalife and Ackman have been fighting in one theater, and now the warfare has moved into an additional theater,” John Coffee, professor of securities law at Columbia University in New York told Bloomberg. “All’s fair in love and activism,” he said, adding that the tactic of putting pressure on activist investors through their clients is a new one.
Herbalife hit an all-time last week at $77.39. The stock is up nearly $40 this year or 121 percent.