At the age of 79, Post Holdings Inc. (NYSE:POST)‘s CEO and former Ralcorp Holding Inc. (NYSE:RAH) Chairman, William Stiritz, has unveiled the ownership of over 5 million Herbalife Ltd. (NYSE:HLF) shares in a filing with the Securities and Exchange Commission last Tuesday. This investment decision was a personal one, as made public by a Post Holdings Inc. (NYSE:POST) representative, and has thus made Stiritz the largest individual shareholder of Herbalife stock.
Herbalife Ltd. (NYSE:HLF) is a global nutrition company that sells a wide variety of products that range from fitness supplements to weight loss shakes and personal care products. The company operates through a global network of independent distributors and sellers. This feature has recently put it in the eye of a storm of accusations made by Pershing Square Capital Management’s Bill Ackman. The famed investor stated that the company runs on a pyramid scheme: a fraudulent investment plan destined to collapse.
The firm refuted these accusations and assured that Ackman’s allegations were designed to manipulate its stock price. These charges, which–of course–Ackman denied, have not yet been enough to stop this short thesis.
Despite these efforts to discredit Herbalife Ltd. (NYSE:HLF), the company has managed to shield its stock from Ackman’s attacks and accusations in part thanks to the support it has received from its three billionaire hedge fund managers, Dan Loeb and Carl Icahn (and later George Soros).
Icahn has taken a 16.5% stake in Herbalife and has gained a good return on his investment. Shares have been fueled by the growing penetration of Herbalife’s products among U.S. consumers, who have turned towards healthier and more nutritious options in the ever-worsening obesity crisis. On a year-to-date basis, Herbalife’s stock has climbed over 60%.
After Stiritz’s disclosure in the Herbalife Ltd. (NYSE:HLF) fold, this situation may be unlikely to change. On the same day his position was made public, Post Holdings Inc. (NYSE:POST) acquired Premier Nutrition Corporation, a firm dedicated to the marketing and distribution of “premium diet shakes,” for $180 million. In addition to this move, Stiritz is said to be a shrewd financier who compares capital allocation to poker, according to Thorndike. He has made himself known in the finance world for being one of the first ones to use debt and share repurchase tactics before they became widely popular.
Interestingly, there is speculation that Herbalife Ltd. (NYSE:HLF) might encourage capital restructuring through a share repurchase program in the near future. For this reason, the nutrition company might just have a win ahead, and Pershing Square’s bearish bet could remain underwater for the foreseeable future.
Disclosure: Pamela Gaviño has no position in any stocks mentioned