The Tell: All the times Ackman’s $1 billion bet against Herbalife should have been unwound


An epic five-year crusade against nutritional-supplement company Herbalife Ltd. has ended, with one of Wall Street’s more prominent hedge-fund luminaries finally coming to grips with another brutal investing defeat.

Bill Ackman’s Pershing Square Capital exited its Herbalife HLF, +6.30%  short bet that the company’s shares would eventually tumble to zero. Instead, Herbalife’s stock rallied by more than 100% during one of the most widely publicized, wrongway short bets in business.

Perhaps adding insult to injury, Herbalife, which Ackman accused of running a pyramid scheme back in December 2012, saw its shares reach an all-time high around $96, up 6.3%, on Wednesday. Over the past 12 months, Herbalife’s stock has soared by more than 63%, advancing 11% in February, and 36% so far in 2018.

That stock rally on Wednesday came even as the Dow Jones Industrial Average DJIA, -1.50% and the S&P 500 SPX, -1.11%  finished their worst monthly declines in about two years, down about 4% for both benchmarks in February. For the year, the Dow and S&P 500 are both up at least 1.3%.

CNBC’s Scott Wapner was the first to report Ackman’s Herbalife unwind, which comes about a year after the hedge-fund maestro announced that his fund was dumping an ill-fated investment in Valeant Pharmaceuticals International Inc. VRX, -11.41% , at an estimated loss of $3 billion to $4 billion.

“The performance and resiliency of our company is rooted in our purpose to make the world healthier and happier,” Herbalife CEO Rich Goudis said in a statement to The Wall Street Journal. “For those who aren’t familiar with us, or may misunderstand us, don’t be afraid to get to know us.”

For Ackman, there may have been many points at which he could have cut his losses, which are estimated to be in the hundreds of millions of dollars, but he vowed to take his crusade “to the end of the Earth.”