By Jonathan Stempel and Jennifer Ablan
(Reuters) - The hedge fund firm run by activist investor William Ackman said on Friday a federal judge's recent dismissal of a shareholder lawsuit against Herbalife Ltd did not "exonerate or bless" its business practices.
Pershing Square Capital Management LP, which in December 2012 revealed a $1 billion bet against the weight loss and nutritional products company, said recent news reports it was behind the lawsuit, or had sued Herbalife itself, were false.
It also said that, despite what it called Herbalife's "misleading public suggestions," U.S. District Judge Dale Fischer in Los Angeles did not address whether Herbalife was an illegal pyramid scheme, as Ackman has contended.
Herbalife shares have risen 22.3 percent in the last three days after reports of Fischer's decision began to surface.
They closed on Friday up $4.16, or 11 percent, at $42.10, in part on market speculation that Ackman had begun to cover his short position. Ackman has said many times he expects Herbalife's share price to fall to zero.
Fischer had written that shareholders led by two pension funds did not show questions raised about Herbalife by Ackman and various federal and state investigators showed that the company fraudulently inflated its stock price.
Herbalife said on Wednesday it welcomed the dismissal, and added: "We are confident in the strong fundamentals of our business model and remain committed to helping people and communities improve their nutrition."
In its statement on Friday, Pershing Square said it believed the result of the various probes "will be that Herbalife will be shut down or will be required to modify its deceptive practices so substantially that the company will not be able to survive."
Fischer's decision is dated March 16.
Herbalife did not respond to a request for comment on Pershing Square's statement.