Bill Ackman just enriched a man he loathes with his failed Herbalife “death blow”

July 23, 2014
July 23, 2014

Billionaire hedge fund manager Bill Ackman laid out a lengthy presentation yesterday arguing that Herbalife is an illegal pyramid scheme. Ackman, who has pursued a 2-year-long campaign against the nutritional drinks maker, accused the company’s leadership, including CEO Michael Johnson, of perpetrating a massive criminal fraud that deliberately targets minorities and the underprivileged, comparing their misdeeds to those of Enron, the mafia, and the Nazis.

Ackman choked up while recounting how much he and his family have benefitted from the American dream that he says Herbalife has subverted, making it clear that his $1 billion bet against Herbalife shares has become a personal crusade.

“Michael Johnson is a predator,” Ackman said. “This is a criminal enterprise. I hope you’re listening, Michael. It’s time to shut this company down.”

But investors were not impressed with Ackman’s promised “death blow” against Herbalife. By the end of the day, the company’s share price was actually up by 25%, substantially increasing Johnson’s net worth in the process.

According to data from FactSet, Johnson owns 4,226,896 fully diluted shares. That means that over the course of Ackman’s big day, the value of Johnson’s shares increased by more than $58 million. And that doesn’t even take into account the increase in the value of Johnson’s options, which entitle him to buy an additional 3,135,615 shares, the vast majority of which have vested.

Ackman said during his presentation that he has spent $50 million of his own money attacking Herbalife. But in the course of a single day, he ended up enriching his enemy by even more.

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