Per­sh­ing caps Her­bal­ife short

Irish Independent - Business Week - - BUSINESSWEEK -

AC­TIVIST in­vestor William Ack­man, who placed a $1bn (€860m) bet in 2012 that Her­bal­ife Ltd’s stock price would col­lapse to zero, said on Wed­nes­day his firm has capped losses by clos­ing out its short po­si­tion in the nu­tri­tion and sup­ple­ments com­pany.

Her­bal­ife has been buy­ing back shares and its stock price has soared some 50pc this year, pil­ing pres­sure on Ack­man’s $10bn hedge fund as pa­per losses mounted and the cost to bor­row the shares rose. Ack­man did not dis­close how much his firm, Per­sh­ing Square Cap­i­tal Man­age­ment, had lost by buy­ing shares to cover its short po­si­tion.

“We cov­ered the shorts and re­placed them with out­right put po­si­tions,” Ack­man told Reuters, adding that po­ten­tial losses on Her­bal­ife will now be capped at 3pc of the firm’s cap­i­tal. “We can still lose money but the loss is capped.”

Short po­si­tions, in which bor­rowed shares are sold to be re­placed later at a lower price, mean heavy losses if the stock’s price rises.

Put op­tions give the holder the op­tion to sell a stock at a set price. (Reuters)

William Ack­man did not dis­close how much his firm lost

Newspapers in English

Newspapers from Ireland

© PressReader. All rights reserved.