Breaking News from CNBC's Kate Kelly: Pershing Square's Ackman Short Herbalife
WHEN: TODAY, WEDNESDAY, DECEMBER 19TH
WHERE: CNBC'S "STREET SIGNS"
Following is the unofficial transcript of breaking news from CNBC's Kate Kelly. All references must be sourced to CNBC.
KATE KELLY: I'VE JUST LEARNED THAT PERSHING SQUARE HEDGE FUND MANAGER BILL ACKMAN HAS A MAJOR NEW SHORT POSITION ON THAT'S HERBALIFE. ACKMAN HAS SPENT THE PAST YEAR DOING FUNDAMENTAL RESEARCH ON HERBALIFE, WHICH SELLS WEIGHT LOSS AND NUTRITIONAL PRODUCTS THROUGH A NETWORK OF INDEPENDENT DISTRIBUTORS, AND HE CONSIDERS IT TO BE A PYRAMID SCHEME I AM TOLD. HE HAS BEEN SHORT HERBALIFE FOR ABOUT SEVEN OR EIGHT MONTHS AND WILL UNVEIL MORE DETAILS ON WHY AT THE SOHN CONFERENCE FOUNDATION INVESTMENT GATHERING TOMORROW MORNING. ACKMAN CONSIDERS HERBALIFE TO BE ONE OF THE SINGLE BEST INVESTMENT SHORT THESES HE'S EVER SEEN FROM WHAT WE'RE HEARING. AS FOR HERBALIFE, THESE ACCUSATIONS ARE NOT NEW. ON JULY 31, COMPANY CEO MICHAEL JOHNSON CAME ON OUR AIR AND ADDRESSED SOME OF THESE CONCERNS DIRECTLY. ASKED BY HERB GREENBERG WHY THE COUNTRY OF BELGIUM AND OTHERS HAVE DESCRIBED HERBALIFE'S BUSINESS AS A PYRAMID SCHEME, HE SAID THIS:
MICHAEL JOHNSON (SOT): WE THINK THEY MISUNDERSTOOD OUR PLAN THEY SAID THAT WE WERE RECRUITING AND PAYING FOR RECRUITING. WE DON'T DO THAT AND THAT'S WHAT A TYPICAL SCHEME IS THAT YOU'VE BEEN ADDRESSING AND OTHERS HAVE HAD CONCERNS WITH SO WE DON'T HAVE THAT ISSUE.
KATE KELLY: SHORTLY THEREAFTER, WHEN HERB ASKED WHY THERE WAS AN FAQ ON THE HERBALIFE WEB SITE AS TO WHETHER IT WAS A PYRAMID SCHEME, HE SAID THIS:
MICHAEL JOHNSON (SOT): I'D SAY OVER 32 YEARS THERE HAVE BEEN SOME QUESTIONS AND THERE'S BEEN SOME THOUGHTS ABOUT DIRECT SELLING THAT SOMETIMES THERE IS THIS CONCEPT THAT PEOPLE AREN'T MOVING THE PRODUCT AND THAT THERE ISN'T CONSUMERS. THAT MAY BE BUT THAT'S NOT WITH US.
KATE KELLY: NO DOUBT JOHNSON WILL BE ON THE DEFENSIVE AGAIN TOMORROW, AS ACKMAN GIVES MORE DETAILS ON HIS SHORT. WE CALLED THE COMPANY FOR COMMENT THEY ESSENTIALLY REFERRED US BACK TO THE COMMENTS THAT THEIR CEO HAD MADE ON JULY 31ST THAT WE JUST BROUGHT YOU. I SHOULD ALSO ADD THAT THE TRADING IN HERBALIFE HAS BEEN HALTED WE UNDERSTAND MANDY DUE TO CIRCUIT BREAKERS THAT JUST KICKED IN.
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