Herbalife jumps on latest purchase

The battle over nutrition and weight-management company Herbalife reached a new level Wednesday on news that another hedge fund has taken a large position in the equity. Herbalife shares closed 7.54 percent higher at $41.24 following news that hedge fund Third Point, led by Daniel Loeb, purchased 8.9 million shares, for an 8.24 percent stake. In what the financial media have called a battle between hedge fund titans, Loeb\'s bet on the company came weeks after William Ackman\'s Pershing Square Capital Management launched a spectacular campaign betting against Herbalife, alleging that the company has engaged in a pyramid scheme. Herbalife lost 30 percent of its market value in three sessions in December after Ackman very publicly shorted the company. Herbalife sells its diet and nutrition products through a network of distributors in 80 countries. But Ackman argues that Herbalife makes money not by selling its products, but by recruiting new distributors -- and that some 1.9 million Herbalife salespeople have actually lost $3.8 billion since Herbalife\'s founding in 1980. The aim of Loeb\'s investment in the company is not clear, nor how it might relate to Ackman\'s interest. Loeb has previously used equity stakes in companies to pressure management. Herbalife has categorically denied Ackman\'s allegations, and plans to refute the charges formally Thursday in a presentation to analysts and investors. But meanwhile, the US Securities and Exchange Commission has opened an investigation into Herbalife, the Wall Street Journal reported, citing a source close to the matter. The SEC declined to comment on the question.