Bill Ackman's Pershing Square Releases 40 Pages of Questions Aimed at Herbalife

As promised, Bill Ackman's Pershing Square released a 40 page document on Thursday laying out dozens of questions aimed at Herbalife's HLF management. Readers can view the questions here. Some of the questions are particularly technical in nature and relate to old legal battles the company has fought. For example, Pershing Square notes, “According to a white paper paid for by Herbalife and written by Professor Anne T. Coughlan, a non-lawyer, marketing professor: ‘an illegal pyramid scheme awards payments to participants for mere recruiting.' (Anne T. Coughlan, FAQs on MLM Companies, July 2012, at 3.)” And then asks, “Can you point to any case law that defines the phrase ‘mere recruiting'?” Others are more general, for example, Pershing asks “How much did Herbalife pay FedEx and UPS in the United States each year over the last five years?” Shares of Herbalife traded near $36.60 in afternoon trading on Thursday, up over two percent on the session. The stock has been -- to put it lightly -- volatile over the last few months. Bill Ackman's Pershing Square is currently short roughly 20 million shares of the multi-level marketer; Ackman insists that shares of the company will soon be worthless. After Ackman made his short thesis public for the first time in December, shares fell all the way to the mid $20 range. But then, a number of other hedge fund managers decided to get into the trade -- from the other side. Bob Chapman began the wave with an investor letter laying out why he had “made Herbalife 35%” of his fund. That was followed up later by an SEC filing showing that Dan Loeb's Third Point had purchased 8.2% of the company. In a letter to investors, Loeb dismissed Ackman's case against Herbalife as absurd. On Thursday, in an appearance on Bloomberg TV, David Einhorn said that he was no longer involved in Herbalife either from the long or short side. Einhorn had previously been short Herbalife, but had covered his position. “The range of outcomes is too wide,” he said. Einhorn explained that it wasn't clear what would happen to Herbalife, and so he was content putting his capital to work elsewhere. The battle over Herbalife doesn't look to be going away anytime soon. At this point, investors might look for the company to respond to some of Ackman's questions -- or dismiss them entirely.