Herbalife’s stock took a dive on Tuesday for the second consecutive day, indicating more bad news for the embattled Los Angeles nutritional supplement company and more good news for hedge fund manager Bill Ackman.
Tuesday’s 8 percent drop came after CNBC reported that Paul Sohn, the chief architect of Soros Fund Management’s bullish bet on Herbalife, had quietly departed from the firm last year. That added on to a 12 percent tumble for Herbalife stock on Monday.
Sohn is rumored to be the man who got Soros into its position on Herbalife in the first place. He told fund managers at an idea dinner that “George Soros broke the Bank of England” and that “George Soros can break the back of Ackman,” the New York Post reported in 2013.
Bill Ackman and his Pershing Square Capital Management have wounded Herbalife with a nearly two-year short-selling assault, claiming the company’s business model is an illegal pyramid scheme.
Herbalife has repeatedly denied that claim, but the U.S. Federal Trade Commission is investigating the company’s practices and the company recently paid $15 million to settle a class action lawsuit filed by a former distributor who echoed Ackman’s accusations.
This settlement and other factors weighed heavily on the company’s bottom line. In November, the company posted lackluster earnings for the quarter ended Sept. 30, missing analysts’ estimates.
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