Herbalife Ltd. (HLF), J.C. Penney Company, Inc. (JCP): Poor Ideas From a Known Investor

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On the other side of the trade, we find the legendary billionaire investor Carl Icahn and his company, Icahn Enterprises LP (NASDAQ:IEP), which is up 61% this year and pays a 5.5% cash dividend. Icahn Enterprises LP (NASDAQ:IEP)‘s company initially accumulated a 12.98% stake in Herbalife, making his investment vehicle one of the company’s main shareholders. Apparently, he hasn’t sold a single share. These two amazingly smart investors can not be right at the same time. Herbalife is either a valuable company, as Icahn seems to believe, or it is a pyramid scheme, as Ackman claims.

Foolish bottom line

Bill Ackman is a wonderful value investor, but it looks like (no-one can be sure yet) these two positions (J.C. Penney Company, Inc. (NYSE:JCP) and Herbalife) can be counted as two major mistakes. Even if I think that J.C. Penney Company, Inc. (NYSE:JCP) should be rated as a “buy,” I am not sure it is worth the $75 per share Ackman says the company should be valued at. In the case of Herbalife Ltd. (NYSE:HLF), it is tough to make a call, but at the current valuation and given the doubts that surround the business, I would most definitely stay away from it right now.

Federico Zaldua has no position in any stocks mentioned. The Motley Fool has the following options: long January 2014 $50 calls on Herbalife Ltd. (NYSE:HLF). Federico is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article Poor Ideas From a Known Investor originally appeared on Fool.com is written by Federico Zaldua.

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