Wasn't there a rumor Icahn was shopping for buyers, but the leak by the brokers caused him to double down instead to spite the leakers? I was a HLF bull before. But with Ack completely out, what is the upside? A 'nutritional company' with 8B valuation at ATHs? What's the upside to HLF now that Ack is closed out of the position? Right, they have the buybacks for the financial engineering. Perfect time to sell to them for the buybacks IMHO if I was Icahn. His mission is done. He set in place the people to change the way the company operates into something that is kosher with regulators. Plus he won the epic battle post-CNBC feud with him profiting and Ack losing. The entire mission is complete. Plus a handsome profit at this level. Still, stock can probably go to $100. Regarding Ackman, him being much smarter than I, I just don't understand why he enters into UTX at near ATHs when market had such a historic bull run. This reminds me of entering VRX at ~$200 also at the highs. If he was such an activist, shouldn't he go for the beaten down dogs and try to turn it around? General Electric for example? He'd have much more respect from me by going into a GE and fixing it than into UTX. I guess GE has a few big names like Peltz already, so don't want to step over each other to activist this thing up, but personally I think it makes a whole lot more sense, long term, to go into a GE than UTX. Can UTX see a double from here? Who knows. But the odds GE doubles from here over a long term run, seems more plausible and that is in spite of a future market correction.
So Ackman does not only invest in company but also gets his hands on management and board, in order to influence decisions to make company change or adopt course of action in business. That is acting like a private equity firm and that's why his fund does not have more than 10 positions at a time. Although this is smart in a sense that when Ackman is ready to unload, he can do so gradually over a few days or week or so, unlike private equity exits where deal takes several months to complete and that's after a buyer is found, sometimes after a long search.
He does take passive stakes in companies and lets it ride. Just recently it was announced his Nike stake is a passive stake. I think VRX was originally a passive stake. He's not gaining a sizable controlling stake in UTX. His AUM is under $9B according to a Jan report. UTX is a $100B+ market cap company. GE also, is a $100B+ market cap company. He's not getting a controlling stake in either company. But an investment is an investment right? Buy low sell high, not buy high sell low like VRX, JCP, or the reverse order for HLF etc. Private equity is a different animal to a hedge fund who trades stocks in the secondary market, even as an activist investor it is very different to PE.
They are gonna do a 2:1 stock split, change the name, $450M to $650M share buyback, and refinance 1B in convertible notes.
So with all that financial engineering and marketing stuff, what is fair value for this company? The underlying is still this 'nutritional company' at now 8B valuation who's products I've never personally seen anywhere or tried. In fact, I've seen GNC products on shelves and not HLF products, and GNC is 300M market cap. I guess HLF has more global presence and surprisingly they did beat estimates recently. HLF at $50 was an interesting buy. HLF at $90+ has even me a little bearish, but of course ya can't bet against Uncle Carl. I think fair value is something closer to $70 a share TBH.
I think Ackman shorted HLF for the wrong reason in the first place. A beginners mistake. He should have known better. It was in the nature of a raid. Others realized he had goofed, recognized the depth of Ackman's pockets, and jumped in for quick Profits. Soros bought! You sound smarter than Ackman to me. I always thought brains improved one's looks, so you're probably better looking too. UTX is looking best when Republicans are camping out in the White House, but it looks like they might be getting ready to fold their tent. In a strong bull market we see continuous higher highs of course, so buying near the high is not unusual behavior for those expecting the Bull to continue. We have to remind ourselves that the number one reason a stock continues to climb in a Bull market is that it has already gone up. Others see this and don't want to be left out. For the trader, more so than the investor, it is a matter of not getting caught without a chair. It comes down to recognizing when the music is about to end, and that's not easy. I like your reasoning nevertheless, but remain vigilant and be prepared to wait. Patience is a virtue hard to come by.
The company is morally bankrupt and should be shut down. However, he wasn't fighting some scumbag CEO - he was fighting an FTC that has allowed this company to exist for 30 years (not to mention Amway - the politically connected equivalent).