Herbalife common has been under pressure lately. Shares have fallen from $72 to $62 per share over the past month or so. This price action occurred notwithstanding the fact that the company has been aggressively repurchasing shares in the Open Market.
Recall, Herbalife refinanced its term loan earlier this year and took on more debt. Evidently, the 6% pre-tax carry on that debt juxtaposed with the slow pace of repurchase activity seems to make this particular carry trade a loser.
Enter Mr. Icahn yet again. For those with short memories, it wasn't all that long ago that Mr. Icahn engineered an expensive convertible debt issuance in order to fund an aggressive buy-in of just over $1 billion of HLF common. So far, that carry trade seems to be underwater on a mark to market basis. You can read about that issuance here.
