Herbalife is digging in for a long, tough fight with hedge fund Pershing Square. The health products company said it will hold an analyst and investor meeting in New York on January 10, when senior management plans to serve up a “comprehensive response” to investor questions about its business model. It also said it has retained Moelis & Co. as its strategic advisor. The stock is down more than 61 percent from its all-time high of $72.32 hit in mid-April and down about 25 percent since Pershing Square’s Bill Ackman called the company a Ponzi Scheme in late December. Keep in mind that until recently, Herbalife had a number of fans on Wall Street. For example, as recently as October 24, Barclays analyst Brian Wang had an Overweight rating and an $89 price target on the stock, reassuring clients: “We believe the company is taking the appropriate steps to regain investors' confidence, including increasing the transparency of its business model, changing or eliminating policies that could be perceived negatively, and buying back stock…We expect the stock to recover meaningfully over time.”
Raj Rajaratnam, already serving 11 years in prison -- the longest ever -- for insider trading, has agreed to pay nearly $1.45 million to the Securities and Exchange Commission to settle civil charges. The sum includes $1.29 million, which includes gains and losses avoided as a result of some of his trading activities, and $147,738 in prejudgment interest. The settlement stems from trades made on tips from Rajat Gupta.
Stephen Mandel’s Lone Pine Capital has lifted his stake in Trip Advisor to 5 percent. The Tiger Cub now holds more than 6.5 million shares of the online travel site, up about 14 percent from his stake at the end of the third quarter. Trip Advisor is one among a handful of stocks widely held by the Tiger Cubs.
Activist hedge fund Starboard Value LP is apparently raising cash. It recently reduced its stake in MIPS Technologies to 2.66 million shares, or 4.9 percent of the total outstanding, putting its total holding just under the threshold requiring it to file a 13D. As recently as November 9, Starboard owned 4.46 million shares, or 8.83 percent of the company. Earlier this month, Starboard also cut its stake in marketing company Viad by 430,000 shares, to 4.2 percent of the total outstanding, and trimmed its stake in Progress Software to 7.4 percent from 8.7 percent. Also in December, it raised its stake in Regis Corp. to 6.9 percent and lifted its position in Tessera Technologies to 6 percent from 5.7 percent.
Ken Griffin’s Citadel Advisors reported it owns more than five million shares of video game maker Take-Two Interactive Software, or 6.06 percent of the total outstanding. The regulatory filing indicated it is a passive investment.
Citi research has downgraded shares of hedge fund favorite Apple to Neutral from Buy, asserting its previous Buy rating was trading oriented based on its expectation for a rally fueled by strong iPhone5 sales. “However, near-term supply chain order cuts, while inconclusive in nature, bring into question the strength of iPhone5 and refocus investors onto risks in the Apple story,” it told clients in a recent note.
Brevan Howard’s BH Macro fund was up 3.30 percent through December 21.
Good news for Porsche in its battle with an army of hedge funds. A New York State court finally dismissed a four year-old lawsuit brought by 26 hedge funds against the European car maker. The investors accused the car maker of engineering a short squeeze on the stock of Volkswagen in October 2008 when it bought most of Volkswagen's shares as part of a plan to buy the company. The ruling by New York State Appeals court essentially said the lawsuit does not belong in this court. Meanwhile, in late December a court in Stuttgart, Germany, where Porsche is based, brought charges of market manipulation against former Porsche Chief Executive Wendelin Wiedeking and former Chief Financial Officer Holger Haerter in connection with the purchase of Volkswagen’s stocks.