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Investing George Soros' In Herbalife

The Soros investment means that in continuing his massive bet against Herbalife’s stock, Ackman’s Pershing Square hedge fund is on the opposite side of arguably the two greatest traders in the history of Wall Street. The other legend Ackman is up against in his Herbalife trade is the only guy on Wall Street who is richer than Soros. Carl Icahn, whose net worth is $20 billion, invented the investment strategy that Ackman now practices, now known as activist investing. Icahn owns 16.5% of Herbalife and has two representatives on the company’s board. According to CNBC, Soros’ position in Herbalife is large enough to be one of his top three positions. Soros is involved in the managing of his money but the chief investment officer at Soros Fund Management is Scott Bessent, who handles the day-to-day operations. The forces of Ackman claim that the man responsible for Soros’ Herbalife investment is Paul Sohn. Nevertheless, Ackman is shorting 20 million shares of Herbalife, a $1 billion bet, because he thinks the company is a pyramid scheme that will collapse once people realize the fraud and regulators shut it down. The optics of the Soros investment in Herbalife get even worse for Ackman because his short investment thesis includes a strong moral component. Ackman has said he has a “moral obligation” to fight Herbalife, claiming the company takes advantage of low-income people and minority groups, and will give his personal profits from the short trade to charity. Ackman’s lawyers have reportedly asked the Securities & Exchange Commission to investigate how Soros’ position in Herbalife was leaked to CNBC’s Scott Wapner, the star reporter who orchestrated Ackman’s televised verbal brawl with nemesis Carl Icahn in January by getting Icahn to make a surprise call during Ackman’s interview with Wapner. Ackman’s surrogates are suggesting that the leaking of Soros’ position potentially constituted improper market manipulation designed to create a short squeeze. Herbalife’s stock is now up by 100% in 2013 and continued to rise in Thursday morning trading. That means that the Pershing Square hedge fund’s Herbalife position has suffered estimated paper losses of some $650 million in 2013, given that Ackman has said he shorted 20 million shares and told CNBC on Wednesday that he has not covered a share.

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