But the Humbleness Part I Had to Learn

It all started with my blogpost on December 19th in which I posited that Shane Dinneen wasn't active at Pershing Square any longer. After posting, I received an email from Pershing's new PR rep over at Rubenstein requesting that I immediately call her to discuss the matter. Before we spoke I received another email saying that there were serious "factual errors" and she again requested I call her immediately. After I shot her a quick email to say I'd be happy to call, she asked that I take down the post about Bill Ackman and Shane Dinneen.

I tried calling her a couple times but got her voice mail so before we spoke, I sent an email that outlined 14 basic beliefs I have formed over the passing months with respect to Herbalife and Pershing Square. I wanted to provide her an opportunity to ruminate on those points so that we'd have a fruitful discussion. I welcomed a direct response from Pershing and offered to include that response on the blog. We finally spoke that evening.

In our discussion it became very clear to me from the outset that the only factual error she wanted to discuss was my use of the word "fired". At the beginning of the conversation she stated that although she appreciated the 14 points I'd sent she would only be commenting on my recent blogpost. She was crystal clear with respect to the fact that Shane Dinneen was not "fired". I made it very clear to her that I was of the belief that Shane was still actively on payroll and thus technically still an employee of Pershing, but that he was not actively involved in managing the firm's Herbalife position. When directly asked, she neither confirmed nor denied if Shane had been and would continue to be on an extended hiatus and continued to focus on my use of the word fired. We went around like that for a few minutes, with neither one of us really making any headway. She continued to reiterate that I couldn't say that Shane had been "fired" and I continued to reiterate that Pershing was hiding behind semantics and that Shane had not been active at the firm, nor contributing to the Herbalife position for some time. At her request, I agreed to modify the post to be clear that Shane was not "fired" and in turn I requested that Pershing respond to the beliefs I'd outlined. I also offered to post their response directly to my blog. She said that she'd get a response together from Pershing and we ended our conversation.

The next morning I still had not heard from her, so I shot over a quick email to check whether she thought Pershing would be sending their response to me soon so I could be sure modify my blog. The response I received was as follows:

"You have harmed the reputation of Pershing Square Capital Management and defamed one of its employees. Pershing Square will not make a statement to anyone who won't identify themselves and/or is not part of a legitimate news outlet.
We demand that you remove the language in your blogpost suggesting that Shane Dinneen was fired or that he is not part of the Herbalife team at Pershing Square Capital Management. Your statements are 100% wrong and indeed libelous. If you are interested in the truth then you will modify your post to reflect the facts."

I have to admit that I was a little disappointed with that response. I was left with the impression that Pershing would have some sort of substantive response and those measly five sentences just didn't cut it. So I sent another email on December 20th (below) to which Pershing has still not responded. I then waited over the weekend and on Monday sent another quick email simply asking if they would respond further. Granted, Ackman did send a special six page letter to investors on December 23rd, but I have yet to receive a response to either of those two emails. 

"Thank you for your email. I am a little confused though. You are saying that Pershing will not make a statement to anyone who won't identify themselves, but you are simultaneously making a statement to that same unidentified individual (me).
If Pershing prefers to go on the record with an identified journalist that is part of a legitimate news outlet I am happy to put you in direct contact with them. Say the word and they'll dial your phone immediately.
I am in fact very interested in the truth, which is precisely why I am asking that Pershing provide a response (beyond the response you've already provided, yet unwilling to provide to an unidentified individual). I provided you with a 14 point outline of my beliefs (Shane's lack of involvement with Pershing's Herbalife position is one of them). I specifically noted to you that I believe that Mr. Dinneen is still on payroll and an employee of Pershing Square, but that he has been on a continued hiatus and not active in Pershing's Herbalife position.  It is very simple: has Shane been on a hiatus and not actively involved in the Herbalife position? If not, will his hiatus continue?
Again, I submit to you my beliefs below and ask that Pershing respond to them. As I told you last night, I will include your response on my blog as well as modify the previous post. You are stating that I am wrong, but simultaneously unwilling to provide me any reason to believe that I am wrong other than to respond by saying that I am wrong and that you won't respond.
I promise that the second you give me a statement that says Shane is still employed at Pershing Square and that he has not been on hiatus I will put it up IMMEDIATELY. I'll even send it to every legitimate journalist I can. If he has not been on hiatus, I will GLADLY modify the post, to state this. Its pretty simple. Tell me he has not been on hiatus and I will immediately correct the post.
And again, if you are unwilling to respond directly to me, simply because I am unidentified, I am very happy to place you in direct contact with journalists that you can provide those statements to.

My Beliefs:

1. I believe Pershing amassed a short position in Herbalife of around 24.5M shares (at an average cost of ~$46/share)
2. I believe that Pershing partially covered that position in September by buying back 9.8M shares and converting that to 13.5M shares worth of OTC Jan 2015 puts (purchased at the equivalent of $10/contract)
3. I believe that Pershing conducted this partial covering exercise under the false flag on the factsaboutherbalife.com website that explicitly stated day after day that Pershing's short position did not contain any options at all.
4. I believe that Pershing Square is in possession of an authenticated translation of the Test-Aankoop appeal decision and that Pershing Square is willfully and purposefully excluding this information from their factsaboutherbalife.com website.
5. I believe that Pershing has coordinated their anti-herbalife efforts  with politicians at both the local and national levels. (one example in particular is Pershing hosting a letter from NYS Senator Espaillat approximately 20 minutes after it was created)
6. I believe that Pershing Square was in receipt of Representative Sanchez's letter to the FTC on June 5th, (and no later than June 6th) before the FTC was in receipt of it.
7. I believe that Bill Ackman himself was informing his fellow dinner attendees on June 6th about Rep. Sanchez's letter to the FTC, again before the FTC had this letter.
8. I believe that as a result of Pershing's Herbalife short and provided that the firm has not continued to restructure the positions that the firm has lost approximately $838M (realized and marked, as of today's close)
9. I believe that my above estimate aside that Pershing Square is currently unwinding their Herbalife short, or at least further restructuring by buying back the shares they have on loan.
10. I believe that Pershing Square may be purchasing more OTC Herbalife puts.
11. I believe that both Shane Dinneen and Mariusz Adamski (the two lead internal analysts on Pershing's Herbalife short position) are both no longer with the firm.
12. I believe that Pershing can legally claim that Dinneen in particular is still employed by Pershing and that he is still on payroll, but that in fact Mr. Dinneen is on and has been on a hiatus and is no longer contributing to the active management of Pershing's Herbalife short position.
13. I believe that Pershing square attempted to slow the PwC audit process by sending a multitude of letters to PwC in addition to the 52 page letter that was publicly disclosed
14. I believe that Pershing square has made claims that Herbalife's accounting practices are questionable while simultaneously ignoring the same accounting treatments in companies that Pershing is holding long.

Again, that pretty much sums up the core of my beliefs about Pershing and its Herbalife short position. As stated, I look forward to your response and will happily include it on my blog."

After waiting for more than ten days, without any response, I'm left scratching my head as to why in particular Pershing and Ackman were SO sensitive about this particular post. By no means do I believe that Ackman's special December 23rd letter is a direct response to me, but the pattern within the response remains par for the course. I noticed in that letter that Ackman specifically said 

"When combined with the false rumor that Pershing Square has quietly capitulated on its position, these developments have caused the stock to rally to new all-time highs."  

He noticeably uses the word capitulate. He could have further restructured the position and put Dinneen on hiatus without "capitulating". He says nowhere within his letter that Shane and Mariusz are still active at Pershing, or that he hasn't further covered/restructured the position. He really is a strange bird sometimes. In October he noted that his restructuring dropped a hefty thwack on Herbalife longs by making the squeeze mechanics less attractive, but now he's saying that the belief he was quitting the Herbalife short was a reason the stock rallied. Not sure which one he really believes, but I doubt he'll shoot me an email to explain.

I am surprised (not really) at their level of sensitivity with respect to semantics. I also take issue with Rubenstein's assertion that I have somehow harmed the reputation of Pershing Square; one only needs to read all of Ackman's letters, and watch all of his interviews regarding Herbalife to realize that Ackman has done far more than I ever could to harm the reputation of Pershing. It is also difficult for me to reconcile how Ackman and Pershing could contact little old me, the unidentified illegitimate blogger, and then conveniently refuse to respond to that same unidentified illegitimate blogger when I'm asking for a meaningful response. After ALL of the open accusations and questions for Herbalife Ackman has issued it seems like it would be a pretty straightforward process for Ackman to rip my fourteen point outline a new asshole, provided of course that those points are without merit.  Why not fire off a (gasp) single page letter that simply states why my fourteen points are wrong? It would also be easy enough to speak directly to a legitimate reporter at a legitimate news organization to address the points I raised to Pershing, but I suppose that would be too reasonable. If any of you legitimate reporters happens to hear back from Pershing, I'd love to hear from you. Perhaps it would be easier for everyone if Ackman would take his own advice and host a Richard Kinder-esque conference call to answer everyone's questions about Pershing's Herbalife short. I'm sure Michael Johnson would be happy to call in. I'd much rather be stuck on conference call than to still be stuck on the steep incline of Ackman's learning curve.

And to close out 2013 I'll leave you with a Henry Miller quote that I think speaks to the very heart of analysis, judgment and living a responsible, fulfilling life in general:

“No man is great enough or wise enough for any of us to surrender our destiny to. The only way in which anyone can lead us is to restore to us the belief in our own guidance.”

May 2014 be a fruitful year for you all in which you are led by the belief in your own guidance.

Happy hunting and thanks for reading.

-TS