Herbalife Ltd. (NYSE:HLF) shares are losing momentum, after hitting strong resistance near the $80 a share mark. The stock has since pulled lower, threatening to erase a good amount of gains accrued this month. The selloff could be interpreted as a profit-taking play given the strong performance the stock has had this year.
Institutional Holding
The global nutrition company is up by more than 40% for the year as it continues to trade in an uptrend. Renewed investor interest in the stock follows the announcement of a 600 million stock repurchase program, which represents 7.2% of the company’s total shares. Shares of the company have also skyrocketed on news the company is opening new nutrition clubs as it continues to strengthen its customer base.
Institutional investors ramping up positions in the company has also had a positive impact on the stock’s sentiments on Wall Street. Regulatory filling indicates that HBL Swiss Financing owns 4.57 million shares in Herbalife representing 5.25% stake.
Billionaire activist investor Carl Icahn is the largest investor in the company with a holding of 22.8 million shares valued at $1.78 billion. Hedge fund, Capital Research Global Investors comes second with a holding of 11.41 million shares worth $813.78 million. FMR LLC is the third largest investor in Herbalife with a holding of 8.03 million shares worth $572.49 million.
Ackman $1 Billion Bet
Bill Ackman is already feeling the effects of Herbalife’s solid performance for the year. The billionaire investor losses in the stock continue to pile, after entering a $1 billion short position in the company. Ackman has always insisted that the nutrition company operates a pyramid scheme and is destined to go to zero.
The claims have so far failed to hold water seen by the stocks stellar performance in the market. Revenue growth over the past three years has all but vindicated the company after coming under scrutiny from the Federal Trade Commission. Gross margins increasing for three consecutive years all but continues to strengthen investor confidence in the company’s long-term prospects.
