| BEVERLY HILLS
BEVERLY HILLS May 3 After years of discord with
a prominent hedge-fund manager, a federal investigation and bad
publicity, Herbalife Ltd Chief Executive Michael Johnson
is taking a victory lap.
At the Milken Institute Global Conference this week, Johnson
touted the wares of his nutritional supplement maker, offering
free shakes and protein bars to billionaires, and painted
Herbalife not as a company that narrowly avoided being
classified a pyramid scheme, but as part of the solution to an
"Our company has been under scrutiny but we are a nutrition
company," Johnson said on a panel called "Leading a Healthy
"We are in a real mess because people don't take care of
themselves," he added. "Our company helps with that. That's my
The conference, which Herbalife co-sponsored this year,
gathers influential people from around the world to discuss
solutions for problems with technology, health, education,
finance and public policy, among other things.
Johnson's stance on stage and around the event was markedly
different than the defensive one he had to maintain for much of
the past five years.
In December 2012, hedge-fund manager William Ackman unveiled
a $1 billion bet against Herbalife in a withering, hours-long
presentation. He painted the company as a crooked enterprise
that preys on low-income and minority communities, pretending
salespeople can get rich by selling Herbalife, but really
bleeding most of them dry financially.
Ackman has accused the company of being an illegal pyramid
scheme numerous times, and even starred in a recent documentary
about Herbalife called "Betting on Zero" to explain his
position. But as it stands, he is losing out.
The U.S. Federal Trade Commission probed the matter, and
eventually reached a settlement with Herbalife. It involved
financial penalties and requirements that the company reform
some of its business practices, but fell short of supporting
Meanwhile, Ackman's Wall Street rival, hedge-fund manager
Carl Icahn, has profited handsomely by taking the other side of
the bet. He began buying Herbalife shares in 2013 while
extolling the company and challenging Ackman in television
interviews. He has since become Herbalife's top shareholder.
The high-profile battle sent the company's stock price on a
wild ride. It hit a low of $24.24 after Ackman's 2012
presentation, but soared with Icahn's support and after the FTC
settlement was announced. It closed at $62.46 on Wednesday.
The Herbalife bet was a big loss for Ackman's hedge-fund
firm, Pershing Square Capital Management.
The stock would have to fall into the low $30-range to
become profitable for Pershing, which suffered double-digit
losses in 2015 and 2016 partly due to the position. Herbalife
cost Ackman more in the first quarter of this year, though his
main fund swung to gains last month and is now up 1.9 percent
For Johnson, the outcome has been nothing short of a
personal victory, and his demeanor at the event showed it. He
plans to retire in less than a month, having built a small
fortune at the helm of Herbalife for more than a decade.
"There was all this news agitated by a short seller," he
said on the panel. "Fake news."
By day at the event, Johnson spoke of Herbalife in
altruistic terms, saying its nutrition clubs are a place where
people can not only buy its nutritious shakes and treats, but
find camaraderie with others. At night, he mingled with
jetsetters at the exclusive Peninsula Beverly Hills hotel.
Outside of the pavilion where Johnson was speaking, guests
were treated to free Herbalife shakes and protein bars. There
were some murmurs from some at the venue about Herbalife issuing
a voluntary recall for the peanut butter version of the snacks
on Tuesday, due to trace amounts of undeclared fish allergen.
One conference attendee sipping a banana-flavored shake
joked about its less-than-appetizing appearance: "Yeah, I know
I'm taking risks here. But I'm into high risk."
Although the conference featured some of the most powerful
global hedge fund managers, Ackman was noticeably absent.
Pershing Square launched an investment fund on the London Stock
Exchange this week, so he was in London.
(Reporting by Svea Herbst-Bayliss in Beverly Hills, Calif.;
Additional reporting by Lawrence Delevingne; Editing by Lauren
Tara LaCapra, Bernard Orr)