Herbalife Stock's Volatile on Buybacks and New Ackman Claims

Once again, Herbalife's(HLF) stock is bouncing around at the mercy of competing winds.

In yet another sign that Herbalife’s fate is only somewhat controlled by its management team, the nutritional supplement maker’s stock went on wild ride Monday. Herbalife opened up more than 4%, but then quickly gave back those gains. By mid afternoon, the stock dipped more than 1% before ultimately closing up more than 7%.

That rollercoaster ride came as investors weighed the company’s announcement that it would buy back $1.5 billion in stock, more than double its previous $653 million authorization, against news from outsiders who have been pushing and pulling on Herbalife’s stock price.

The first bit came from Herbalife bull William Stiritz, the CEO of Post Holdings(POST).

The market has viewed Post as a potential buyer of Herbalife, after Post’s CEO William Stiritz personally purchased a 6.7% stake in Herbalife. Last week one of Wall Street’s most bullish analysts on Herbalife joined Post Holdings as an adviser, raising even more questions about whether the cereal company might bid for Herbalife.

Yet Monday morning, Post announced a deal to buy Nestlé’s PowerBar sports nutrition unit. The price tag wasn’t disclosed, but there’s a concern that gobbling up this company could leave Post Holdings with less bandwidth to finance a bid for Herbalife, which has roughly five times the market cap of Post Holdings.

Should Post choose to bid, there could be a host of corporate governance questions for Mr. Stiritz to answer, i.e. whether he can or should personally profit from a buyout financed by the publicly-traded company he runs. But that’s a question for another day.

Later on Monday Herbalife’s loudest detractor Pershing Square’s Bill Ackman came out swinging yet again. He has been relatively quiet on the company of late. Yet his hedge fund Pershing Square released what they called an in-depth study on “deceptive practices and recruitment systems” of one of Herbalife’s top sellers in Canada.

Mr. Ackman promised that Pershing Square will continue to release details of deceptive practices executed by other top Herbalife sellers, including at least one member of the company’s board of directors.

While Mr. Ackman has been promising bombshells that could take down Herbalife for more than a year, these revelations and the fear of more to come only pushed the stock down a bit. Herbalife’s shares have more than doubled from the fall after Mr. Ackman first predicted that the company’s stock would fall to zero and publicly acknowledged a billion dollar bet against Herbalife’s stock.