The nutrition and weight loss company said that
auditor PricewaterhouseCoopers had completed a review of its
financial statements for 2010, 2011, 2012 and 2013 and that it
made no significant changes.
Herbalife shares surged 9.4 percent to end regular trading at
$74.83, up 127 percent year to date. The stock had been trading
about 3 percent higher prior to a trading halt pending
announcement of the audit results.
That is bad news for Ackman's $12 billion hedge fund, Pershing
Square Capital Management, which has lost a substantial sum by
betting that Herbalife's stock price would fall. Ackman told
Bloomberg TV on November 22 that his fund had lost between $400
million and $500 million on Herbalife, the last time he
discussed the losses publicly.
Nearly a year ago Ackman surprised Wall Street with his very
public claim that Herbalife is a pyramid scheme and would
eventually be shut down by regulators.
Herbalife has denied Ackman's allegations and so far no
regulator has officially made any statements about Herbalife's
Undeterred by mounting losses, Ackman last month said that he
would pursue his bet "to the end of the earth."
A spokeswoman for the hedge fund said, "It is not the role of
Herbalife's auditor to determine if the company is a pyramid
scheme." That depends, she said, on whether distributors earn
more from recruiting new distributors than from retail sales to
consumers who are not distributors.
"The few Herbalife distributors that make money earn the vast
majority of their profits from recruiting. Herbalife is a
pyramid scheme that will be shut down by regulators," she added.
Ackman's campaign against Herbalife has prompted other high
profile investors, including Carl Icahn and Soros Fund
Management, to take the opposite side of the trade. On Monday,
Icahn told CNBC that he was happy about the completed re-audit
and that he thinks the company is undervalued.
Herbalife had to hire PWC as an auditor after a conflict of
interest forced KPMG off the account.
(Reporting by Angela Moon and Svea
Herbst-Bayliss; editing by Richard Valdmanis and Steve Orlofsky)
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