UBS Managing Director and Senior Portfolio Manager Jason Katz reflects on 2020 markets and discusses the risks for the markets in 2021.
Carl Icahn has sold more than half of his 0.54% stake in Herbalife Nutrition Ltd., HLF, relinquishing his seat on the board of the nutritional supplement company, taking a step back from a long-standing investment he made defended against an attack by rival investor William Ackman.
According to people familiar with the matter, Icahn has sold back about $ 600 million of his 16% stake in Herbalife in recent days. That leaves him with a stake of about 6%, worth $ 400 million. As his holdings will be less than the level set out in an agreement Icahn has signed with the company, he also intends to relinquish the five board seats currently held by his representatives, the people said.
The move helps to achieve a major victory for the scarce octogenarian billionaire, who is estimated to have earned more than $ 1 billion on the investment.
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Icahn has been Herbalife’s largest shareholder since 2013. He stuck to the company through challenges from Ackman and regulators and the resignation of the CEO, after being caught on a tape and encouraging a colleague to cover rules for expenses.
| Ticker | Safety | Last | Alter | Alter% |
|---|---|---|---|---|
| HLF | HERBALIFE LTD | 48.05 | +0.26 | + 0.54% |
Icahn only bought the shares in late 2012. The investment was a high challenge for Ackman, who bet against the company and publicly crucified his business model, which relies on a network of distributors and calls it a pyramid scheme. The company said it is a legitimate marketing organization on multiple levels and has fought it around every turn.
The two opposition contestants’ opposite bets led to a serious public outcry, with Ackman predicting the share would go to zero and the men would trade in a screaming match on live television. In 2018, Ackman largely lost his $ 1 billion, five-year bet.
Icahn’s deal with the company in 2013 earned him two seats and he later took in more on what is currently a 13-member board. Its representatives include former deputies Jonathan Christodoro and Nicholas Graziano and longtime chief councilor Jesse Lynn.
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Herbalife has a market capitalization of approximately $ 6.3 billion. Its shares were roughly equal in 2020, but have risen several times over the past decade. The company reported better-than-expected third-quarter revenue in November, saying sales would increase 10% to 20% year-on-year in the fourth quarter. It also nominates a new chief financial officer.
Herbalife is buying back shares and the deal with Icahn comes after the company offered to buy a large portion of its shares at the closing price of $ 48.05, people familiar with the matter said. Icahn adopted this, in part because he sees no need for additional activism at the company, they said.
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Icahn sold $ 550 million to Herbalife shares in 2018, telling The Wall Street Journal at the time: “There’s an old Icahn rule, if you earn more than $ 1.5 billion in a situation, you sell.” a little.’