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Herbalife (HLF) Retains Moelis & Co As Strategic Advisor; Shares Plunge

 December 24, 2012 10:35 AM
 


(By Balachander) Herbalife Ltd. (NYSE: HLF) said it has retained Moelis & Company as its strategic advisor and the nutrition company also said it now expects to exceed its quarterly guidance of $50 million of the repurchase authorization in upcoming quarters.

Shares of the company fell sharply last week after Pershing Square's Bill Ackman disclosed he is shorting the stock. The company said it has been informed that Ackman has shorted its stock for the past 7 to 9 months and that the stock dropped almost 15 percent on Wednesday following Ackman's announcement.

"There are very few companies that have ever faced anything like this. It's almost unprecedented in the history of investing," a Los Angeles Times report quoted D.A. Davidson & Co. analyst Tim Ramey as saying. "They'll have to very calmly go through and answer the charges that have been leveled at them."

[Related -Herbalife Ltd. (HLF) Q3 Earnings Preview: What To Watch?]

Last week, the hedge fund manager said Herbalife is a pyramid scheme.

"The allegation that Herbalife is a pyramid scheme is bogus," said Herbalife Chief Executive Officer Michael Johnson regarding Ackman's claims.

"Make no mistake: Today's announcement isn't about Herbalife's business model. It's about Bill Ackman's business model," Johnson said last Wednesday.

Ackman made a presentation on Herbalife on Thursday, the day before the puts expire.

[Related -How To Invest Like Bill Ackman]

"Today's presentation was a malicious attack on Herbalife's business model based largely on outdated, distorted and inaccurate information," the company responded on Thursday.

Due to trading blackout period restrictions, the company said on Monday that it has yet to utilize the $950 million remaining on its existing $1 billion share repurchase authorization.

Herbalife also said it will host an Analyst and Investor Meeting in New York at 9:00 AM EST on January 10, 2013.

For the third quarter ended Sept. 30, the company's earnings increased 9 percent to $118 million on sales growth of 14 percent to $1.0 billion. The company sees earnings per share of $4.40 to $4.55 for 2013.

The stock, which has been trading in the 52-week range of $26.03 to $73.00, retreated 4.07 percent to trade at $26.16 on Monday.

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