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Questions we should be asking about Ackman vs Herbalife

By NexChange
Hedge Funds

Herbalife has launched a second video attacking  short-selling activist investor Bill Ackman. It is the latest salvo in a war that has now rumbled on for three years.

Ackman took a massive $1 billion short position on the nutritional supplement firm in 2012 and since then he has been on a crusade to bring down the firm. His firm Pershing Square Capital even launched a website comparing its multilevel marketing (MLM) business model to a giant pyramid scheme.

The battle between Ackman and Herbalife is unprecedented in its longevity and scale. It has backfired for Ackman too. Changes brought about by Ackman's activism have ironically helped the company go from strength to strength.

It is a case that Fortune predicts will be studied for years to come, and rightly so. It raises a number of questions, not just about Herbalife, but questions like: is the $34.5 billion MLM industry really just a giant pyramind scheme as Ackman suggests? More importantly: do activist investors make for effective regulators?

It's clear Ackman is not only shaping the future of Herbalife, but will no doubt - for better or worse - shape how the businesses community will deal with activist investors for years to come.
Photo: UniversityBlogSpot
 

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