In the battle of investors who've made opposite bets on the shares of Herbalife , both sides - including firms led by billionaires Bill Ackman and George Soros - have consulted a New Jersey college professor and studied his research.
For decades, William Keep, dean of the School of Business at the College of New Jersey, has pursued a relatively obscure marketing specialty known as multilevel marketing businesses, or MLMs. But as a new go-to adviser for some of Wall Street's biggest players, Keep has been suddenly thrust into the spotlight.
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In December, Ackman placed a $1 billion short bet against Herbalife, citing the professor's research. Since then, Soros bought a large block of the company's shares around the time his firm was seeking out Keep's research and personal insights.
Through it all, Keep insists he has remained neutral to the investment implications of his studies.
"As my agenda has to do with MLMs and pyramid schemes, this sideshow is a distraction," he said of the attention he's received from investors and the media.
Multilevel marketers pay their sales force not only for the products they sell but also for recruiting other sales people. A pyramid scheme occurs where a company's sales team earns more for finding new distributors than they get for selling the product.
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Ackman cited a paper co-authored by Keep in his December presentation when he lambasted Herbalife's business model. Months later, Ackman called Keep and spoke to him on the phone, though it is not clear what the two discussed.
Herbalife has repeatedly rejected Ackman's characterization of the company as a pyramid scheme that will eventually go bust.
Keep told Reuters in an interview that he has not voiced an opinion one way or another on whether Herbalife is a pyramid scheme. He makes clear to investors he isn't giving them investment advice.
Keep said that in his discussions with investments managers he never gets an indication of how they will react to his research.
"Once I leave the room, they could say, 'this is silly'. I don't know what kind of investment decisions they will make."
But investors still seek him out. Keep has been invited as a guest speaker at several hedge fund events and even visited the offices of Soros' family office.
During the summer, Keep met with some of Soros's investment staff, including portfolio manager Paul Sohn, to give them a tutorial on his research. Keep said Soros's investment team wanted to know how he thinks the epic battle over Herbalife will play out.
Keep declined to tell Reuters what he specifically told the Soros team, but said they had one burning question: Are regulators going to take action against Herbalife - something Ackman has been counting on in betting the company's shares will crash.
He also declined to handicap the outcome of any potential regulatory investigation, saying only that it would take a long time and cost a lot of money.
Keep visited Soros in June and again in July. Regulatory filings show Soros Fund Management purchased 5 million shares of Herbalife in the second quarter, becoming the latest high-profile investor to line up against Ackman and his Pershing Square Capital Management fund.
Another manager investing for Soros, East Side Capital, had a long position on Herbalife long before Ackman made his December presentation and still ranks as Herbalife's seventh-largest investor.
Besides meeting with the Soros team, Keep said he also spoke at a luncheon sponsored by research firm DeMatteo Monness for its hedge fund clients and at an event sponsored by research firm Hedgeye in recent months.
Keep has often been called as an expert witness when the government, including the Federal Trade Commission, has investigated pyramid schemes. And because of his specialist knowledge, Keep has frequently been featured in the media. Even as he was preparing for a new school semester, he said, he has been swamped by calls from reporters.
For months, the battle of the future of Herbalife has fascinated Wall Street, given the number of high-profile investors lining up to bet against Ackman.
Ackman's most notable and outspoken critic has been Carl Icahn, Herbalife's biggest shareholder, who got into the stock shortly after Ackman unveiled his big short positions.
So far, Ackman and his $11 billion Pershing Square have been losers in this contest of Wall Street billionaires, with Herbalife shares rising 83 percent this year. Pershing Square has incurred at least $300 million in paper losses on its investment.