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Herbalife Increases Carl Icahn's Ownership Limit

As part of Herbalife's announcement regarding its settlement with the FTC, it said its board had allowed Carl Icahn ( Trades , Portfolio ) to own 34.99% of the company, an increase from his previous 25% limit. In response, Icahn made the following statement: I have always believed in Herbalife ( HLF )AAAs strong fundamentals and am pleased the Board has decided to increase my ownership limit from 25% to 34.99% of the CompanyAAAs outstanding shares. A significant part of my investment success is directly tied to our in-depth investment research and understanding of often complex and unique issues facing companies. One can be sure that this was the case with Herbalife where we spent considerable time and resources studying the false pyramid scheme accusations made against the Company. Unlike many of those that AAAshortedAAA Herbalife, we did not rely on one or two research papers prepared by non-experts. As a result of our research, over three years ago we concluded that Herbalife was not a pyramid scheme. The FTC settlement announced today, coming after a two-year investigation also concluded that Herbalife is not a pyramid scheme AAA a conclusion that obviously vindicates our research and conviction. While Bill Ackman (Trades, Portfolio) and I are on friendly terms, we have agreed to disagree (vehemently) on this subject. Simply stated the shorts have been completely wrong on Herbalife. Now that the Company has reached a settlement with the FTC, it is time to consider a range of strategic opportunities, including potential roll-ups involving competitors, as well as other strategic transactions.I have the greatest confidence in HerbalifeAAAs CEO, Michael Johnson, and the entire management team, who have skillfully led the Company through adversity, including holding firm against a high-profile PR campaign against the Company by Bill Ackman (Trades, Portfolio) where it was alleged more than once that the Company would be shut down. Obviously, we are still here. I genuinely commend managementAAAs steadfastness in the face of short sellers desperate to rally a bear raid based on false accusations. The short-sellers should also note that since joining the Board three years ago, we have paid attention to their accusations and while the vast majority have been baseless, a handful of their points were valid and the Company has made appropriate changes. Interestingly, ending and modifying certain practices has not hurt earnings one iota.Herbalife produces some of the finest nutrition products in the world and its direct sales model gives people an opportunity, either full- or part-time, to start their own business. Without the Herbalife sales opportunity many of these people would be unemployed or otherwise have a difficult time finding work. In my teens I spent several summers working as a Fuller Brush man going door to door often working 12 hours per day. I ended up earning more during the summer than my father. Many of my friends who also started with me but were not willing to work as hard failed as salesmen. But no one would believe their failure made Fuller Brush a AAAbadAAA company. Fuller Brush, much like Herbalife, provided manyAbout GuruFocus: GuruFocus.com tracks the stocks picks and portfolio holdings of the world's best investors. This value investing site offers stock screeners and valuation tools. And publishes daily articles tracking the latest moves of the world's best investors. GuruFocus also provides promising stock ideas in 3 monthly newsletters sent to Premium Members .

This article first appeared on GuruFocus .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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