Ackman cheers as Fidelity funds unload more Herbalife shares

Fri Aug 12, 2016 4:01pm EDT
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By Svea Herbst-Bayliss and Tim McLaughlin

BOSTON (Reuters) - One of Herbalife Ltd's largest investors sold more of the company's stock, just weeks after the U.S. government told the protein shake maker to reorganize its business, according to a filing with the U.S. Securities and Exchange Commission.

In an SEC filing on Wednesday, Fidelity Investments, the second largest investor in Herbalife (HLF.N: Quote), said it had cut its stake in the firm to 7.4 million shares, a 14 percent reduction from the 8.6 million shares it reported owning at the end of June.

"The fact that Fidelity is selling is a good sign," said Bill Ackman, the billionaire hedge fund manager who bet $1 billion that Herbalife's stock would collapse.

Fidelity declined to comment.

The mutual fund's portfolio managers, including Steve Wymer of Fidelity Growth Company Fund, have been cooling on Herbalife in recent months. Boston-based Fidelity funds cut their stake in Herbalife by 26 percent in the second quarter, disclosures show.

Sales after the Federal Trade Commission fined Herbalife $200 million on July 15 could suggest sentiment may be souring more quickly on the $6 billion market cap nutrition and weight loss company.

The FTC ordered Herbalife to hire a monitor to track product sales and said the company had been deceiving hundreds of thousands of hopeful people.

Ackman, who has lobbied the government to shut Herbalife down, has called the company a pyramid scheme.   Continued...

A Herbalife product is seen at a clinic in the Mission District in San Francisco, California April 29, 2013.   REUTERS/Robert Galbraith