Activist investor Ackman remains convinced Herbalife will fail

By Tommy Wilkes

OXFORD, England Oct 29 (Reuters) - Billionaire investor William Ackman is still convinced that U.S. nutrition company Herbalife (NYSE: HLF - news) will fail as he sits on hundreds of millions in unrealized losses, nearly one year after predicting the company's stock price would go to zero.

Speaking some 3,000 miles from his home base in New York, Ackman offered a retrospective on his investing career but took pains to address the one bet that is looming large over his $11 billion portfolio - his short position on Herbalife.

Despite the stock price up 106 percent this year and Herbalife's earnings strong, Ackman still stuck by his thesis that the company is an illegal pyramid scheme that is certain to fail.

"This business will be shut down," the Pershing Square Capital Management founder told an audience at the Said Business School in the English university city of Oxford, without giving any precise details on how or when.

Herbalife has repeatedly denied Ackman's claims.

With his bet against Herbalife, Ackman has stirred strong emotions among the well-heeled investors of the U.S. hedge fund industry: fellow activist investor Carl Icahn, who said he finds Ackman too arrogant for his tastes, bought 16 percent of Herbalife stock, and so far his gamble is the one paying off.

However, speaking on Tuesday, Ackman was keen to stress that he had learned from past investment mistakes, including the losses crystallised less than two months ago when he pulled the plug on another failing investment, in JC Penney (NYSE: JCP - news) .

"When you do an extreme makeover it requires perfect board alignment and backing of the CEO," he said, referring to boardroom divisions at the retailer, which lost a big chunk of its customers as it shifted to a new sales strategy that Ackman had backed. "The vision was right; the execution wasn't."

Still, this month has been a strong one for Ackman's hedge fund, people familiar with his portfolio said, noting Pershing Square is up in the high single digits.

A big winner for Ackman has been Canadian Pacific Railway , whose share price has rallied this year after Ackman won a proxy fight and installed a new CEO last year.

Ackman, who is worth $1.2 billion according to Forbes, has racked up an impressive track record and his main fund has averaged more than 20 percent per annum in gains since launching in 2004.