This Saturday, I point you to a colorful long read: Sheelah Kolhatkar’s deep dive into William Ackman’s short bet against Herbalife.  Unabashedly sympathetic to Ackman, the article describes how Herbalife was brought to his attention (there are analyst firms that just identify shorting opportunities?  Who knew?  Please don’t answer that everybody knew; that would be embarrassing) and ultimately ended up as something of a crusade to expose what Ackman believes is a pyramid scheme. (And the FTC believes is a scheme that is awfully like a pyramid scheme but without actually using those words.)  According to Kolhatkar, Ackman and his people want to make money, sure, but they also want to expose a fraud that – like Trump’s universities (a comparison Kolhatkar explicitly makes) – robs desperate people of their savings.  

The article describes the titanic battle between Herbalife and Ackman (Herbalife’s CEO is described as having an “air of PTSD”), including how Ackman even tried to enlist Latino civil rights groups to advocate on his behalf.  It’s reminiscent of that time the NAACP involved itself in the epic battle over debit card swipe fees.

Ackman has held on to this bet for a while, combatting other investors and Herbalife’s own extensive public relations campaign.  In a few months, however, the settlement that Herbalife reached with the FTC will take effect, and Herbalife will be forced to ensure that most of its sales are made to actual retail customers, and not distributors hoping to resell the product.  One question mark raised by the piece is whether the settlement will finally allow Ackman’s bet to pay off, or whether Herbalife will manage to survive, perhaps by focusing its operations in other countries, where the settlement doesn’t apply.