Herbalife Ltd. (HLF) Isn’t the Only Stock with a Bill Ackman-Whitney Tilson Connection

Citigroup Inc. (NYSE:C) had Ackman dumping all of his shares last quarter, but Tilson upped his stake in the bank by over 500%. Citi’s revenues are expected to be up 8% in 2013, after two straight years of decline. Recent 3Q results were strong with loan growth of 11% year over year, which is faster than many U.S. peers. Net charge-offs were also down 12% year over year  during 3Q, but the stock still trades at only 0.6x book value. Ken Griffin – founder of Citadel Investment Group – also upped his stake in Citi last quarter by 200% (check out Ken Griffin’s new picks).

The two fund managers’ most recent market-moving news has been short positions in Herbalife Ltd. (NYSE:HLF). Ackman has laid out his allegations in a detailed presentation  – 350 pages – one that Tilson calls “the most remarkable piece of investment analysis I have ever seen.” Herbalife has planned an analyst and investor meeting on January 10th to rebut Ackman’s accusations that the company is a pyramid scheme.

Worth noting is that Herbalife has managed to beat EPS expectations in each of the last four quarters and the stock trades on the cheap side at only 9x earnings, compared to 11x for Nu Skin, which has also come under pressure lately. We would remain cautious in the interim and wait to see the company’s rebuttal on January 10th, possibly expecting an announcement of share repurchases assuming the company feels strongly enough that its stock has been unfairly driven down. Billionaire investor and founder of SAC Capital – Steven Cohen – dumped his entire Herbalife stake last quarter (check out Steven Cohen’s top picks).

To recap: it appears that both Ackman and Tilson are still bullish on Howard Hughes, and both are bearish on Alexander. They are also both heavily bearish on Herbalife, but their opinions differ when it comes to J.C. Penney and Citi. Ackman still loves J.C. Penney, while Tilson dumped all of his shares last quarter. Tilson, meanwhile, still holds Citi, but Ackman fell out of love last quarter.

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