Do the Shorts Have the Upper Hand in Herbalife?

Do the Shorts Have the Upper Hand in Herbalife?

Herbalife continues to be a battleground between investors and short-sellers, made more prominent by big-name hedge-fund managers Carl Icahn and Bill Ackman taking aggressive positions on opposing sides of the stock. Icahn was the front-runner initially, with shares of the stock gaining 145% in 2013, but Ackman may now be gaining traction after repeated calls for investigation into the company's sales practices, to uncover whether it is more of a pyramid scheme than a legitimate business.

And apparently, the Federal Trade Commission was listening. Shares of the company plunged 15% on the news that it will be investigated by the FTC, though shares have now rebounded to a loss of only around 6%. The company itself says that it welcomes the investigation and is confident that it is in compliance.

In this video, Motley Fool health-care analyst David Williamson looks at the ongoing drama in the battle over Herbalife, and tells investors why this is a fight he's staying out of.

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David Williamson has no position in any stocks mentioned. The Motley Fool has options on Herbalife. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Originally published