Herbalife Ltd. (HLF) Brushes Off Another Ackman Threat

Herbalife Ltd. (HLF) stock isn't feeling any effects from Bill Ackman's latest warning

by Alex Eppstein

Published on May 2, 2016 at 3:17 PM

While activist investor Bill Ackman goes to bat for one company, he's doing his darndest to put a dent in supplements marketer Herbalife Ltd. (NYSE:HLF). Specifically, Ackman urged HLF employees to leave their jobs because "this is not going to be a good thing on your resume," and warned the business "has deteriorated dramatically." At the moment, though, the stock is once again shrugging off the doomsday predictions, up 1.2% at $58.67 -- much to the chagrin of bearish options traders.

In fact, rarely have options traders bought to open puts over calls at a faster pace than they have in the past two weeks. Specifically, across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), HLF has amassed a 10-day put/call volume ratio of 5.57 -- just 1 percentage point from a 12-month high.

This skepticism is reflected among short sellers -- not the least of whom is Ackman. Nearly 37% of HLF's float is sold short, and at the stock's average daily trading levels, it would take 18.6 sessions to cover.

From a technical perspective, Herbalife Ltd. (NYSE:HLF) has spent the past couple of months trading sideways between $57 and $63. Of course, since briefly testing $42 in mid-February, the shares have advanced an impressive 39%. What's more, the stock's 50-day moving average has moved into the $57-$63 zone, and could offer a potential layer of support going forward.

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