Following Herbalife Ltd.'s
Following a $200 million settlement with the FTC earlier
It’s always good news for a stock when a large fund manager is bullish, but Icahn’s most recent purchase may have much more bullish long-term implications.
There is no way Icahn was pleased with the disappointing quarter from Herbalife or the departure of its CEO. The stock fell 10 percent following the report. Yet Icahn’s purchase this week has locked him into the stock for at least another 90 days and puts him along for the ride through what could potentially be another disappointing quarter in Q4.
Herbalife isn't the same company it was when Icahn first bought in. In addition to the FTC settlement, Herbalife’s share price, EPS and revenue have been trending downward since early 2014.
Historically, Icahn is not one to go down with a
If Icahn is buying more Herbalife now, investors can read between the lines and reasonably conclude that he may have plans to take the company private, or even combine it with a national nutrition retailer, in the near future. Icahn has at least 90 days to decide what, if any, major move he will make.
Herbalife investors certainly aren’t pleased with the numbers the company delivered in Q3, but Icahn’s latest purchase may be the best news they could have gotten.
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