Herbalife, the maker of namesake nutritional and weight-loss supplements, fell the most in more than seven months after hedge fund manager Bill Ackman said he has taken a short position on the company.
Shares declined 12 percent to $37.34 yesterday; they have lost almost half their value since peaking at $73 in late April.
Ackman, founder of New York hedge fund Pershing Square Capital Management, joins Greenlight Capital Chairman David Einhorn in raising questions about Herbalife.
Ackman, whose investment position on Herbalife was first reported by CNBC, confirmed in an e-mail that he had researched the company for a year and considers it a pyramid scheme.
He started short-selling Cayman Islands-based Herbalife seven to eight months ago and will present his thesis at the Sohn Investment Conference today in New York City.
The timing of the announcement constitutes “blatant market manipulation,” Herbalife Chief Executive Michael Johnson told CNBC, adding the conference is a day before certain Herbalife put options expire.
Johnson said that Herbalife, a company that peddles weight-management and nutritional supplements, and personal care products is a “legitimate company.” He sounded angry during the segment, calling it a “bogus accusation,” adding the affair could amount to a regulatory violation.
He also responded to Ackman’s comments in October, when the hedge fund billionaire said the country will be better off once his company goes out of business. At the time Ackman was referring to a short position that had not yet been revealed.
“The United States will be better when Bill Ackman is gone,” Johnson said yesterday.