The market may be surging again, but that will hardly comfort Bill Ackman who later today is expected to report later today that his hedge fund remains roughly 20% YTD, or perhaps even worse following news from the NY Post, that his most hated stock ever, Herbalife, has reached “an agreement in principle with the Federal Trade Commission to settle a years-long probe into whether it was a pyramid scheme”, as a result of which the stock is soaring.
This follows the company’s announcement earlier this month that it was close to a settlement with the FTC.
As a reminder, the FTC’s probe into whether or not HLF is a pyramid scheme is also the basis for Ackman’s massive roughly $1 billion short in the name. If the FTC says no, then Ackman may have no choice but to cover.
This is what the Post reported:
An announcement of a deal could come as soon as Tuesday, sources said, although the agreement is not final and could still fall apart. Terms of the settlement — including what could be a sizeable financial penalty — could not be learned.
“I do not believe the FTC is requiring a substantial change in the business model,” a source close to the matter said. Herbalife has, though, agreed to pay a hefty fine, the source said.
The Los Angeles-based company has been operating under a cloud since Dec. 20, 2012, when hedge fund billionaire Bill Ackman announced a $1 billion bet that Herbalife was a fraud and that its shares would go to zero after regulators found it was a pyramid scheme.
The company has strongly denied the accusations.
The FTC subsequently opened a probe into the matter as did some state attorneys general.
The stock is already trading as if Ackman will have no choice but to cover, and was up 8% on the report (which however we would urge readers to take with 2 grains of salt, coming from a publication with a known axe to grind either for or against Bill Ackman in the past).
The post Ackman On The Edge: Herbalife Soars On FTC Settlement Report appeared first on crude-oil.top.