Friday, February 07, 2014

Herbalife- an epic battle

There is an epic battle being waged in Wall Street between those who have shorted Herbalife and those who are longed on that stock. In one corner, we have Bill Ackman of Pershing Square Capital Management LP, who claims that Herbalife Ltd. is operating an illegal pyramid scheme and his firm has a large short position on Herbalife stock. 

In the other corner, you have the well-known Carl Icahn & Dan Loeb of Third Point Capital who take the opposite position. Todate, Bill Ackman's firm is carrying paper loss of USD500 million as the share price of Herbalife rallied. However, the tide may be turning in Bill Ackman's favor. In January, Herbalife dropped back sharply from USD80 to USD60. Despite a sharp rebound over the past few days, the stock is still trading below its uptrend line. 

Chart: HLF's weekly chart as at Feb 6, 2014 (Source: Stockcharts)

In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Herbalife ('HLF').


OS said...

Alex ,can u comment on perstima ? How is the technical and fundamental ..Thanks a lot

Alex Lu said...

Hi OS,

Perstim (at RM4.14) has just surpassed its RM4.00 resistance. Its next resistance is at RM4.20. After RM4.20, there is a long to go before the next resistance at RM4.70.

Perstim's last 4 quarters' EPS is 43.3 sen. Its trailing PE is at 9.6x. It is fairly valued.

Based on improving financial performance, fair valuation & mildly positive technical outlook, Perstim could be a good stock for medium-term investment.