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The Morning Brief: Herbalife Falls Again as Icahn Jousts with Ackman
Shares of Herbalife fell about 4 percent to $60.79 and are now trading slightly above the price Carl Icahn paid on Friday after the stock sold off. The octogenarian investor is engaged in a high-profile mano-a-mano battle with Pershing Square Capital Management’s William Ackman, who is heavily short the multilevel marketer of nutrition and health-related products. Meanwhile, Icahn on Tuesday said in an interview with CNBC.com that he does not believe he is backed into a corner with Herbalife stock. “If anyone should feel boxed in, it’s Ackman,” Icahn said. “Ackman is an astute student of the market, as I am, and I think he would probably agree that there is very rarely, if ever, a company with the short interest, as it was just announced, of 27.2 million shares of the 92 million shares outstanding. Of the 92 million, there are 20 percent to 25 percent that are closely held. The only time you see the ratio very close to that is in companies that are on the verge of bankruptcy. Obviously, Herbalife is not anywhere near that position, and is in fact growing dramatically in countries such as China.”
New York-based Tiger Seed Hound Partners more than tripled its stake in Media General to 6.9 million shares, or 5.34 percent company. Media General is also the ninth-largest position of New York activist Sandell Asset Management.
This is what you call bottom-fishing. The Kentucky Retirement Systems has boosted its stake in one of its biggest losing hedge funds. The $14.9 billion fund, which previously had a $455 million investment in Prisma Capital Partners’ Daniel Boone Fund as of June 30, lifted this bet to more than $700 million, or 5 percent of total assets, according to Kentucky.com. Daniel Boone is down 8 percent this year, partly responsible for the pension fund’s overall 0.5 percent loss. The fund is up just 1 percent over the past three years. “Well, obviously, everyone would like to make more and particularly not lose,” says William Cook, who was appointed to the KRS board of trustees in June, according to the report. “But that doesn’t necessarily mean it’s a bad investment, and it certainly doesn’t mean that, looking forward, it’s a bad investment. You know, if you look at the oil industry for the last three or five years, it’s not been a pleasant place to invest. But going forward, there may be a lot of opportunity.” Cook spent 11 years at Prisma as a director and senior portfolio manager until he retired in March 2015. Cook promised to abstain from any decisions regarding Prisma, according to the report.
Shares of Daniel Och’s Och-Ziff Capital Management fell 1.5 percent to close at just $3.84 per share. The publicly-traded hedge fund firm last week trimmed some of its fees and recently raised its reserve to settle U.S. bribery charges.