The Morning Brief: Herbalife Shares Sink by 6 Percent

The move was a temporary reprieve for Bill Ackman’s Pershing Square, which is short the company, although the stock is still up significantly for the year.

Shares of Herbalife plunged 6 percent on Tuesday on news that the head of its China operations resigned after 10 years on the job. Herbalife’s China business has been growing faster than the company overall, according to reports. The stock drop comes one day after the shares closed at a new all-time high. In fact, even with Tuesday’s decline, shares of the multi-level marketer of nutrition products are still up more than 10 percent this month alone and about 42 percent for the year-to-date. Of course, Bill Ackman’s Pershing Square Capital Management famously has a huge negative bet on the stock, while Carl Icahn is the largest shareholder.


Davidson-Kempner Partners disclosed it owns 1.25 million shares, or 5.39 percent, of Modern Media Acquisition Corp. a blank-check company that went public last week. It was formed to complete a merger, acquisition or some other business combination with a company, according to an announcement. Modern Media plans to seek a company valued between $500 million and $1.5 billion. Davidson Kempner has long been a fan of these types of blank-check companies. At the end of the first quarter alone it held positions in at least 16 different blank-check companies, in many cases also holding their warrants.


Tiger Global Management boosted its stake in TransDigm Group by 60 percent, to 4 million shares as of May 18. As a result, it now owns 7.7 percent of the defense contractor that makes aircraft components. We recently reported that Jason Karp’s Tourbillon Capital Partners has a significant short position in the stock.


D.E. Shaw & Co. disclosed that it owns 1.8 million shares of Ophthotech Corp., or 5 percent of the biotech company focused on diseases of the eye.