The Morning Brief: Herbalife Gets Squeezed?

Deutsche Bank Monday raised its rating on travel website, a favorite among hedge funds, to Buy from Hold and lifted its price target to $900 from $715, calling it “the clear global secular winner” among online travel agencies. Deutsche Bank also cited the company’s industry-high growth rates and margins, among other factors. The stock’s fifth largest holder is Stephen Mandel Jr.'s Lone Pine Capital, with 1.77 million shares at the end of the first quarter. Blue Ridge Capital owned 447,000 shares, while D.E. Shaw owned 425,000 shares after picking up 176,000 shares in the most recent three-month period. The stock closed Monday up more than 3.5 percent, to $842.45.

Looks like the shorts threw in the towel on Herbalife Monday. Its shares surged 10.73 percent to close at $49.21, on 76 percent higher volume than the most recent three-month average. The stock has now doubled from its low shortly after Pershing Square’s William Ackman publicly made his case for shorting the nutrition supplements company. However, there is no apparent news out there to explain its activity on Monday. Some Wall Streeters think the stock is a victim of a short squeeze. “It’s a discrediting of the short thesis on multilevel marketers,” Tim Ramey, an analyst with D.A. Davidson & Co. told Bloomberg. “It looks like a lot of short-covering, especially the copycats who got short and don’t have any idea why they are short.”

Stifel Nicolaus raised its price target on Boeing to $115 from $100. It cited the resumption of the aircraft manufacturer’s 787 airliner deliveries and production work on its 787-9 aircraft, improved margins from management productivity efforts and better-than-expected performance from the defense business. The company has become a growing favorite among high-profile hedge funds. We pointed out last week that O. Andrea Halvorsen’s Viking Global Investors took an initial $1.2 billion stake in Boeing, making the airplane maker his second largest position and only one of two individual wagers of more than $1 billion. Two others took smaller initial stakes. Jana Partners bought 1.55 million shares, while Renaissance Technologies bought 1.1 million shares. The stock closed at $98.72, down slightly.

Speaking of Viking, the hedge fund firm disclosed on Monday that it took a 5.1 percent passive stake in Intuitive Surgical, known for the da Vinci Surgical System.

Omega Advisors’ Leon Cooperman disclosed that he owns 5.1 percent of PennyMac Financial Services, a specialty financial services company. In a 13D filing, Cooperman said the stake was taken “for investment purposes,” but he added that he reserves the right “to cause the sale or other disposition” of the shares. In addition, hedge fund Bridger Management on Monday said it owns 5.2 percent of the stock, but the firm made the filing in a 13G, meaning it is a passive investment.


Hedge fund Taconic Capital Advisors reported that it owns 6.39 percent of WPX Energy, a natural gas and oil company. Although it filed the investment in a 13D, which suggests it could be an activist position, the hedge fund stated in the filing that it currently does not have any plans or proposals that could lead to a transaction. Of course it leaves open the possibility for this situation to change.

Paul Tudor Jones’ Tudor Investment Corp. has hired Lorenzo Giorgianni, the deputy head of the International Monetary Fund’s policy department. He will serve as chief economist for emerging markets when he joins the Greenwich, Connecticut hedge fund firm in October. At the IMF, Giorgianni is responsible for developing policies and overseeing their implementation in what are called programme countries, including Greece, Portugal, Ireland and Jamaica.