4 ms·

Herbalife was too rich for the FTC to find it an illegal financial scheme, subsequently and simultaneously Bill Ackman got squeezed pretty hard on that and seve

Herbalife was too rich for the FTC to find it an illegal financial scheme, subsequently and simultaneously Bill Ackman got squeezed pretty hard on that and several of his other bets. He still has a group of followers because he's rich and has a nice pedigree, but he has fallen from glory pretty hard and his calls don't matter anymore. One of the best short sells these days is to short everything in his portfolio when you think he is about to get a margin call. Because that will force him to liquidate several large positions in different stocks.

lstyls 9y ago
Honest question: how the heck do you time a margin call for a whale like that apart from knowing someone on the inside?
- ringaroundthetx 9y ago
  The fund's holdings are known, and the fund manager's dispositions are easily inferred by how much they talk about something. ie. How married they are to a position. So for example, when Valeant Pharmaceauticals was tanking from its highs of $220, all the way to $16, after Bill Ackman defended it, doubled down, joined the board, and bought calls, and then admitted to not having more funds available. You just short other things in his portfolio, or at least short them on the expectation that other people are going to short. Its fun. I do "proxy trades" a lot, where I trade a temporarily correlated asset, while the market focuses on a different asset.
  - lawrenceyan 9y ago
    How was Ackman able to get away with having lost so much money on Valeant?
    - ringaroundthetx 9y ago
      "get away"? His fund didn't go insolvent, many investors did redeem their stake in his funds when their lockup periods were up, and he has enough interest and clout to continue? I'm not sure what you are asking. Its worded like you thought there would be police or broken kneecaps involved
      - lawrenceyan 9y ago
        "Get away" more in the sense as to why people still continue to invest their capital into his fund after such a massive failure on Ackman's part.

lstyls 9y ago

Honest question: how the heck do you time a margin call for a whale like that apart from knowing someone on the inside?

ringaroundthetx 9y ago
The fund's holdings are known, and the fund manager's dispositions are easily inferred by how much they talk about something. ie. How married they are to a position. So for example, when Valeant Pharmaceauticals was tanking from its highs of $220, all the way to $16, after Bill Ackman defended it, doubled down, joined the board, and bought calls, and then admitted to not having more funds available. You just short other things in his portfolio, or at least short them on the expectation that other people are going to short. Its fun. I do "proxy trades" a lot, where I trade a temporarily correlated asset, while the market focuses on a different asset.
- lawrenceyan 9y ago
  How was Ackman able to get away with having lost so much money on Valeant?
  - ringaroundthetx 9y ago
    "get away"? His fund didn't go insolvent, many investors did redeem their stake in his funds when their lockup periods were up, and he has enough interest and clout to continue? I'm not sure what you are asking. Its worded like you thought there would be police or broken kneecaps involved
    - lawrenceyan 9y ago
      "Get away" more in the sense as to why people still continue to invest their capital into his fund after such a massive failure on Ackman's part.