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Icahn Cuts Herbalife Investment By More Than Half – Investopedia

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Veteran activist investor Carl Icahn has sold more than half his stake in Herbalife Nutrition more than seven years after first investing in the dietary supplements developer. 

Herbalife announced on Jan. 3 that it will repurchase approximately $600 million of its stock from Icahn at a purchase price of $48.05 a share. Following the transaction, Icahn’s 16% stake in the company will decrease to a 6% holding worth nearly $400 million.

Icahn first invested in Herbalife between Dec. 2012 and Feb. 2013, purchasing nearly 13% of the company’s stock at a purchase price of between $6.93 and $39.96. Since then, the investor has made over $1 billion in his investment.

Since Icahn’s holdings will go below a level stipulated in an agreement he has with Herbalife, Icahn’s five director appointees will resign from the company’s board, Herbalife said. Icahn’s board representatives include former deputies Jonathan Christodoro and Nicholas Graziano, and longtime general counsel Jesse Lynn.

Herbalife said it will pay for the stock repurchase with cash on hand and its existing credit facility. The deal is part of the company’s $1.5 billion share buyback program announced in 2018.

“Our decision to repurchase these shares is a testament to the strength of our business and our long-term growth prospects,” Herbalife Chairman and CEO John Agwunobi said in a statement. “I am grateful to Carl for his friendship, advice and support and deeply appreciate his unwavering faith in our company, our products and our distributors. He was certainly there when we needed him.”

An unwavering commitment

Icahn’s investment in Herbalife came as fellow activist investor Bill Ackman of Pershing Square Capital Management launched a short campaign against the nutrition company, calling its multi-level marketing business model a pyramid scheme. Nonetheless, Icahn defended the company, even as it faced challenges from regulators.  

Ackman eventually ended his five-year bet against the stock, losing $1 billion in the process. 

Herbalife’s share price gained nearly 97% over the past five years, though it was relatively flat in 2020. The company in November reported better-than-expected third-quarter earnings and said it expects fourth-quarter sales to rise by 10% to 20% year-over-year. 

Icahn agreed to sell his shares to the company because he sees no need for additional activism at Herbalife.

“When I began purchasing the shares, I believed it was undervalued for extraneous reasons that I thought made little sense. At the time, I believed the company was in need of an activist and that certainly turned out to be correct,” Icahn said. “Yet, the time for activism has passed as the company has grown… That being said… I look forward to remaining a shareholder of the company.”

In addition to Icahn, top shareholders of Herbalife include Capital Research Global Investors, Renaissance Technologies, and HBL Swiss Services. 

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Tesla shares soar more than 14% as Trump win is seen boosting Elon Musk’s electric vehicle company

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NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.

Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.

“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”

Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.

Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.

Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.

Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.

In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.

The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.

And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.

Tesla began selling the software, which is called “Full Self-Driving,” nine years ago. But there are doubts about its reliability.

The stock is now showing a 16.1% gain for the year after rising the past two days.

The Canadian Press. All rights reserved.

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S&P/TSX composite up more than 100 points, U.S. stock markets mixed

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TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.

The S&P/TSX composite index was up 103.40 points at 24,542.48.

In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.

The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.

The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.

The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.

This report by The Canadian Press was first published Oct. 16, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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S&P/TSX up more than 200 points, U.S. markets also higher

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TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.

The S&P/TSX composite index was up 205.86 points at 24,508.12.

In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.

The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.

The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.

The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.

This report by The Canadian Press was first published Oct. 11, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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