Herbalife Ltd. (NYSE:HLF) shares continue to trade higher following the announcement of a $600 million share repurchase program. The company also announced a tender offer and cancellation of shares, a move that will increase billionaire investor, Carl Icahn's percentage ownership in the nutritional supplement provider.
Herbalife has offered to buy $600 million worth of its stock at a price of between $60 and $68. The company has already acquired 6.7 million shares in that range.
Institutional Holding
A company typically buys its shares to reduce the number of outstanding shares, if it feels they are undervalued. Fewer shares in open market most of the time makes the remaining become more valuable.
Regulatory filing indicates that Mr. Icahn upped his stake in Herbalife to 22.87 million shares from 1.63 million shares as of the end of the second quarter. The activist investor currently owns 26.22% of the company’s total common shares. Fillings also indicate that Mr. Icahn turned down an opportunity to tender some of his shares as part of a tender offering proposed by Herbalife.
The second largest investor in Herbalife is Capital Research Global Investors with a stake of 11.41 million shares, valued at $813.78 million. FMR LLC wraps up the top three largest investors in the company with 8.03 million shares worth $572.49 million.
Ackman $1 Billion Short
Herbalife is a battleground stock, after hedge fund manager Bill Ackman entered into a high profile $1 billion short position, over claims the company was operating as a pyramid scheme. A probe by the Federal Trade Commission over the company’s operations ended with the company being fined $200 million without being accused of operating as a pyramid scheme.
The stock initially dropped to lows of $27.60 a share in 2015. Since then, it has rebounded more than doubling in value as Ackman’s bet hangs in the balance. The stock is already up by more than 50% for the year.
Improving sentiments on Herbalife is a big blow for Ackman who insists the stock will drop to Zero. Ackman claims and short position have also taken a hit on reports that the company could become a private company as part of an acquisition push.
Related Stories
