You aren't going to break Bill Ackman. Today I see Valeant (VRX) being crushed, and I heard people saying that Ackman is either trying to sell or should sell. I see Herbalife (HLF) rallying and I hear Ackman is covering or others are squeezing him.
The fact is that while I do not like Valeant at all, I don't think it is a sitting duck. It does have some proprietary drugs. It does have huge sales, monster earnings and very big operating cash flow. These continue no matter how many different governmental entities look at the company.
Again, I am not saying to buy it; I am saying that at these prices, even Valeant, unless it is going to be prosecuted for something, represents value and I can see real, actual money managers buying the shares.
As far as Herbalife? Until the company sues Ackman and has an ironclad case against the hedge fund manager, the idea that this stock is going to run up is highly unlikely. It just reported a good quarter, but nothing that would make anyone say, "Ah ha, what a bargain!" It is still a company that counts its points as more important than its earnings. It, too, though, has good cash flow.
So the idea of Herbalife spiking up and gaffing Ackman seems fanciful. Of course, all bets would be off if Herbalife were to get a bid. I just have no idea who would bid for a supplements business that is sold directly.
Consequently, it will be hard to squeeze the stock too high given this earnings profile.
My take? It's about the hedge fund and his clients. Ackman has many a loving customer. I bet he can handle any redemptions.
So if you want to own Valeant, own it because of its earnings. Same with Herbalife. Don't own or sell because of Ackman. It isn't his firm that is on trial, and I don't think it's worth speculating on what happens if his firm was "really in trouble."
Buy stuff you like, short stuff you don't and forget Ackman. He should not be a part of the equation.