Herbalife Plunges 10.3% on Unconfirmed Rumors of Icahn Liquidation
Herbalife was cruising towards a moderately red day today when selling suddenly picked up into the close. Shares of the company, which had closed on Friday at $44.83, traded as low as $38.63 before closing the day at $40.21.
The reason for the sell-off? Nobody knows for sure, though a Tweet by Douglas Kass of Seabreeze Partners helped to stoke some rumors:
"Herbalife down by 13% on unconfirmed rumors that Icahn is liquidating his position."
Kass later Tweeted that he thought the rumors of Icahn liquidating his stake were probably false due to the fact that Icahn has seats on their board and that the window for insiders to sell shares ahead of the company's quarterly report is now closed.
Carl Icahn, who posts infrequently on Twitter (@Carl_C_Icahn), has said nothing about a possible liquidation of his stake.
Charles Gasparino of Fox Business sought to clear the rumors up a few hours ago:
"well that's that @Carl_C_Icahn has not sold $hlf stake nor has he sold a share no option position either --sources close to the matter"
Given the highly public and personal nature of Icahn's stake in Herbalife (he has battled with Bill Ackman, who has a substantial short position in the company, in a very public fashion), I have a hard time thinking that he would be liquidating at a time when the company is well off of its 52 week high. It's human nature to get more attached to a position when you publicly voice your support and I have a hard time believing that Icahn would walk away at this point.
So, there you go - apparently Icahn is NOT selling his substantial stake in Herbalife, which begs the question - what did happen with Herbalife today? After all, shares of the company are only up marginally in afterhours trading despite the fact that the rumors of Icahn liquidating his stake in the company have seemingly been refuted.
It will be interesting to see what tomorrow brings for shares of Herbalife..
Note: Carl Icahn had a 17,000,000 share stake in Herbalife as of June 30th, 2014.
Filed under: General Market News