Ackman Enlists Congress in His Crusade Against Herbalife

November 4, 2014 Debbie Jacobs In the News

Two years ago Bill Ackman announced at a Manhattan business conference that his hedge fund firm Pershing Square Capital Management took a $1 billion short position on the Los Angeles-based nutrition supplements giant Herbalife. In other words, Ackman was betting on the company’s demise.

Since then Ackman has not stopped railing about the deceitful practices of the company, calling it a pyramid scheme which targets the poor. He calls the company “the best-managed pyramid scheme in the history of the world.”

Two years on and Ackman is still tilting at windmills, and Herbalife has even had a rise in its stock price after a slick presentation of their business strategy this past July.

Has Ackman given up on his crusade? Not at all. He has just changed strategies. Instead of trying to get the public to turn against Herbalife, Ackman is aiming his sights now at Congress. With the aid of a few DC lobbying firms he is trying to enlist the support of Democrats, especially those in the Latino caucus, since a large number of Herbalife’s clientele (victims) are from the Latino community. Ackman would like to see the threat of an investigation by the Federal Trade Commission do what his appeal to the hearts and mind of the public did not: bring down the company.

Not all capitalists see this as a good thing, however.

“It’s terrifying,” said Veronique de Rugy, a senior research fellow at the free-market Mercatus Center at George Mason University in Virginia:

“This is the danger of a government that is almost limitless in its power and reach. It gives private actors the incentive to use government influence to manipulate the marketplace.”

Ackman claims he is not in this to make a profit. He has called Herbalife’s profits “blood money” and has declared that any money he makes from his short position will be donated to charity.

 

Bill Ackman, Herbalife, Mercatus Center, Pershing Square Capital Management, Veronique de Rugy,

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