Reuters / Shannon Stapleton Bill Ackman would be right to be worried about his Herbalife short following the company's decision to do a Dutch auction.
Herbalife has a plan that could "squeeze" hedge fund billionaire Bill Ackman.
First and foremost, the company's surging stock - up 11% over two days after a report that it held talks to go private - has cost the Ackman-led Pershing Square Capital Management roughly $115 million on a mark-to-market basis, according to data compiled by the financial-analytics provider S3 Partners.
And Ackman could be in for more pain because of Herbalife's decision to execute a so-called modified Dutch auction, through which the company plans to buy back $600 million in shares at $60 to $68 a pop. The buyback of 8.8 million to 10 million shares could "actually squeeze Ackman out of some of his shorts," S3 says.
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