Bets on Herbalife Ltd. (HLF) and Argentina Pay Off Big for Special Situations-Focused Fund

Then there is Irsa Inversiones y Rprsntcins SA (ADR) (NYSE:IRS), in which Serengeti Asset Management held 1.10 million shares worth $26.96 million heading into the second quarter; the fund unloaded 87,000 shares during the first three months of the year. IRSA Inversiones y Representaciones SA is another Argentina-headquartered holding company that invests in a variety of businesses around the world. Among its holdings is Israeli telecom Cellcom, some real estate projects in Las Vegas, and Clal Insurance, which provides insurance and pensions in Israel. Irsa Inversiones y Rprsntcins SA (ADR) (NYSE:IRS)’s stock is 37% in the green year-to-date and has gained over 70% over the last year. During the second-half of 2016, Irsa Inversiones y Rprsntcins SA (ADR) (NYSE:IRS)’s revenue increased by more than tenfold to 36.83 billion Argentine peso ($2.30 billion) from 2.16 billion Argentine peso ($134.23 million) recorded a year earlier. In addition, the company turned to a profit of 3.57 Argentine peso ($0.22) per diluted share from a loss of 0.84 ($0.05). Another investor bullish on Irsa Inversiones y Rprsntcins SA (ADR) (NYSE:IRS) is billionaire Paul Singer’s Elliott Management, which held 520,986 shares at the end of March.

Last but not least, we would like to point out Serengeti’s stake in Herbalife Ltd. (NYSE:HLF), the largest weight loss company in terms of revenue. During the first-quarter, Serengeti added 100,000 shares to its stake in the company, disclosing a holding of 300,000 shares worth $17.44 million. Serengeti also owns some of Herbalife’s debt worth $23 million. Despite the company’s recent issues with the Federal Trade Commission and Ackman’s campaign to convince other investors that Herbalife Ltd. (NYSE:HLF) is a pyramid scheme and its stock is worthless, the shares have been doing pretty well, having gained 49% year-to-date. Serengeti added the company to its equity portfolio during the first-quarter of 2015 and the stock has rallied by 66.34% since then. The company’s latest financial report was pretty good, with both revenue and EPS beating expectations, though Ackman, who has a big short bet against the company, has recently said that Herbalife Ltd. (NYSE:HLF)’s fundamentals are worse than the company makes them look. On the other hand, Ackman’s “rival” in the whole Herbalife Ltd. (NYSE:HLF) story, Carl Icahn is pretty confident in the company, as his fund, Icahn Capital, held 22.87 million Herbalife shares at the end of the first-quarter.

Disclosure: None