Bill Ackman Was Just Warming Up in Exposing $HLF, “Wants the World to Understand the Facts About this Company”

“Bill Ackman’s quest to expose Herbalife Ltd. (HLF) started with a tip from a friend. The call came from a reporter turned stock researcher, who had penned a book about the hedge fund manager’s last big short and was now telling him that Herbalife smelled like a pyramid scheme.

The discussion 18 months ago grew into a research project that pulled in much of Ackman’s team, two law firms and forensic accountants. On Dec. 20, Ackman, 46, went public with a three- hour presentation, accusing Herbalife of using inflated pricing, misleading sales information and a complicated incentive structure to hide a pyramid scheme.

The shares plunged 32 percent in the next three days. Amid heated denials from the company, which is preparing to lay out its case at an investor conference in New York on Jan. 10, the shares had by Jan. 4 rebounded 42 percent from their post-Ackman closing low of $26.06. Ackman, an activist investor who has lobbied for shakeups at companies from Target Corp. (TGT) to Canadian Pacific Railway Ltd. (CP), is just getting started with Herbalife.

“We’re prepared to spend whatever it costs and do whatever is required to make sure that the world understands the facts about this company,” he said in a telephone interview. “We can’t imagine how the SEC or the Federal Trade Commission or any other relevant regulator will ignore what we have said.” Ackman said he would make all his information available to U.S. regulators.”

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