By Svea Herbst-Bayliss and Jennifer Ablan
BOSTON/NEW YORK (Reuters) - In the battle of investors who've made opposite bets on the shares of Herbalife (HLF), 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.
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.