According to Bloomberg News' Duane Stanford, the activist investor first looked into shorting Herbalife 18 months ago after receiving a phone call from former Bloomberg News reporter turned researcher, Christine Richard.
Ackman began researching Herbalife after a call from Christine Richard, a former Bloomberg News reporter who by then was working for Indago Group, a New York-based boutique investigative research firm. Richard had just published “Confidence Game,” a book detailing how Ackman, warning of an impending bond-insurance market collapse in the runup to the recent recession, had shorted credit insurer MBIA Inc.
Richard declined to comment for the Bloomberg story.
During a three-hour long presentation at a Sohn Conference event, Ackman said the multi-level marketing company that sells weight loss and nutritional supplements is a pyramid scheme.
Pershing Square has been shorting Herbalife for about eight months. The hedge fund is shorting more than 20 million shares and has a price target of zero.
Since December 18, the trading session before Ackman confirmed his short position, shares of Herbalife are off 12%. At one point there were down more than 38%.
Ackman has not covered any of his short, according to Bloomberg.
That said, these things can take time. His MBIA short took six years to play out.
SEE ALSO: We Have Never Seen Anything Like Bill Ackman's Dizzying Takedown Of Herbalife >