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Matt Stewart

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  • Bill Ackman's Folly With Herbalife: 7 Assumptions That Led Him Astray [View article]
    what data?
    Dec 10 02:25 PM | Likes Like |Link to Comment
  • Icahn Unlocked: Now What? [View article]
    revenue per distributor by segment x cashflow estimate per distributor...

    my assumptions are too generous anyway...
    Dec 10 02:10 PM | Likes Like |Link to Comment
  • Herbalife Wins Prestigious Consumer Award for its Products in Ukraine [View article]
    lol
    Dec 10 12:30 PM | Likes Like |Link to Comment
  • Herbalife Wins Prestigious Consumer Award for its Products in Ukraine [View article]
    runner-up...Borscht

    http://bit.ly/18S8UYc
    Dec 10 12:02 PM | Likes Like |Link to Comment
  • Bill Ackman's Folly With Herbalife: 7 Assumptions That Led Him Astray [View article]
    backed up by the case law which also states that just because a company can demonstrate it makes some retail sales doesn't prevent one from concluding that it is, primarily, a pyramid scheme...

    it is not enough to have some retail sales...recruiting rewards must be funded primarily from retail sales...as in first and foremost...

    HLF funds its upline commissions/overrides primarily from the purchases of plan participants who do not retail the product...

    bingo...pyramid scheme...
    Dec 10 11:54 AM | 4 Likes Like |Link to Comment
  • Bill Ackman's Folly With Herbalife: 7 Assumptions That Led Him Astray [View article]
    DD...do you really think that the verbal encouragement of the recruiter doesn't trump the paperwork?

    upline distributors mislead recruits every single day with stories of Unicorns and Lollypops...

    HLF corporate turns a blind eye...
    Dec 10 11:50 AM | 5 Likes Like |Link to Comment
  • Icahn Unlocked: Now What? [View article]
    law in Belgium is different...I read the ruling...US law is not the same...
    Dec 10 11:46 AM | Likes Like |Link to Comment
  • Icahn Unlocked: Now What? [View article]
    makes no sense...the company tells us the most loyal customers sign-up to buy product for 25% discount or more...that they love the product so much they are willing to buy an IBP...then we are told that these same loyalists typically last a year or less...

    why on earth would the most loyal customers behave this way? where ar e all of the loyal customers you describe if they aren't signed-up as members?
    Dec 10 11:44 AM | 2 Likes Like |Link to Comment
  • Bill Ackman's Folly With Herbalife: 7 Assumptions That Led Him Astray [View article]
    David,

    Your point is based on a simple fallacy. Even you are smart enough to recognize this.

    The question before the house is obvious. In the context of an MLM, do participants buy the product as an incidental action in pursuit of advancement in a pay plan that is a pyramid scheme or...

    do participants buy product to resell it to legitimate "ultimate users" who are not participants in the pay plan?

    eg. If Herbalife flattened its wholesale pricing for all participants and eliminated this sordid incentive to buy product to become a SUPERVISOR, how much over-priced shake mix would the good ship Herbalife actually sell to real obese people who couldn't care less about the ladder of success?
    Dec 10 11:24 AM | 6 Likes Like |Link to Comment
  • Bill Ackman's Folly With Herbalife: 7 Assumptions That Led Him Astray [View article]
    Kevin,

    I have watched your videos online. You seem like a nice guy and a smart guy. Obviously you are talking your book. That's fine.

    I will take issue with you on the following points:

    1) I do not think Mr. Ackman is emotional at all. I think he is an evidence based investor. I think he does mountains and mountains of fundamental research and lets the fact base lead to his conclusion not the other way around. Whether or not one disagrees with the thesis is one thing. The ad hominem portion of your argument is likely irrelevant.

    2) The common flaw in the arguments tabled by all MLM disciples is the same. Just because you MLMers say "personal consumption"/the retail question is a question of motivation doesn't make it so...

    why?

    the answer is obvious...Herbalife's marketing plan encourages inventory loading due to price discrimination...parti... buy product to advance in the scheme...

    I submit that regulators want to see a bright line between pay plans that encourage inventory loading v. purchases connected exclusively to retail sales...

    the problem Herbalife has is an obvious one:
    a) its pay plan pays on purchases and not "ultimate sales"
    b) the plan incents participants to buy status and/or a higher discount...
    c) as is the case with Omnitrition, participants get "caught-up" in the Marketing plan.

    This is the essence of a pyramid scheme.

    3) MLMs like Herbalife and others rely upon information asymmetry to popularize their model. If participants had perfect information, nobody would sign-up for the business opportunity at this stage of the company's life-cycle.

    why?

    low level participants can't make any money

    Nonetheless, the pay plan continues to encourage ad nauseum recruiting of new distributors. The evidence of saturation is found in three specific data points:

    a) the fact that late entering participants don't make any money and
    b) the fact that close to 90% of them quit and
    c) the fact that the actual retail price for inventory in the market is below the COGS for a junior recruit

    4) The company's new and exciting return policy does not in any way exonerate it from promoting a pay plan that intentionally oversaturates consumer markets. Investors who buy-in to the business opportunity risk time, intellectual capital, reputational risk, etc. It is not just about the money. There is an opportunity cost to anyone who pursues an MLM opportunity. The fact that one can return inventory as and when (not if and when) the business opportunity inevitably fails to yield any positive ROIC does not ameliorate nor neutralize the central element in the fraud.

    5) It is common sense that if a company does not limit the number of distributorships it grants but, rather, intentionally oversells the retail opportunity then, de facto, the last guys in have to lose...

    6) the only logical way to establish as a matter of fact that junior Members are "personal consumers" is by contract. Nuskin does this with their consumer network. Nuskin also has no pay to play incentive for junior recruits as the wholesale price is flat. This makes Herbalife's pay plan materially different and far more sinister than other MLMs.

    Ackman's thesis is simple:

    if you take away the price discirimnantion in the pay plan and the incentive to climb to SUPERVISOR and isolate authentic retail sales to "ultimate users" from those purchases that are being made so participants can advance up the marketing ladder...

    Herbalife's business is a shadow of itself...

    Ackman argues the company grows first and foremost by pedlling its business opportunity primarily and its over-priced placebo secondarily or incidentally...

    makes perfect sense to me...

    finally....if Herbalife truly held the answer to global obesity in the palm of its hand there is no way they would pay out such a huge % of revenues in the form of commissions to salespeople...

    Herbalife is in the business of recruiting, spinning a yarn about rags to riches that is a fairy tale, and taking advantage of unsophisticated people who lack the perfect information to make an informed economic decision...

    MLM apologists lack conscience...

    any pay plan that deliberately promotes ad nauseum recruiting is a confidence game...

    Herbalife has injured literally millions of people with false promises and a rigged game. This year a lone over 2 million distributors will quit. What a weak and hopeless brand.

    the sooner the SEC shuts it down the better.
    Dec 10 10:34 AM | 16 Likes Like |Link to Comment
  • Icahn Unlocked: Now What? [View article]
    I agree that Herbalife is a pyramid scheme. I think any honest investigation of the company would easily find evidence of deception and consumer harm. I think the SEC shuts it down and seizes the assets for restitution so I think it is a $0.

    In the event this does not happen I think the company hits headwinds anyway. If the balance sheet is levered further, this could be even worse for shareholders.

    Herbalife relies upon recruiting to grow. This is not an opinion but a fact. This makes the growth model problematic over time.
    Dec 10 09:47 AM | 1 Like Like |Link to Comment
  • Icahn Unlocked: Now What? [View article]
    the answer is obvious Yteeld...Mr. Ackman thinks HLF common is worth $0
    Dec 10 08:45 AM | 1 Like Like |Link to Comment
  • Icahn Unlocked: Now What? [View article]
    If Ackman were to cover his short the ironic outcome might be that the stock would trade exclusively on fundamentals and not the predicted squeeze effects of financial engineering.

    Herbalife's fundamentals don't deserve more than a 10-12 P/E in my opinion due to massive churn.
    Dec 10 08:07 AM | 2 Likes Like |Link to Comment
  • Icahn Unlocked: Now What? [View article]
    Ronald McDonald...I do not like Herbalife's lack of business ethics. The company's marketing plan is deceitful. I am not a lobbyist nor am I paid by anyone. In the case of Herbalife it is not the Apples that are necessarily rotten but rather the basket itself.

    Participants like rats in a skinners box just salivate when the bell rings by following the incentive system that it peddled to them. The fraud is therefore systemic. Like a rigged game, the result is preordained.

    Last guys in get hosed.

    My motives are to explain that thesis and make some money.
    Dec 10 08:06 AM | 6 Likes Like |Link to Comment
  • Icahn Unlocked: Now What? [View article]
    volume weighted average share price must be greater than $73...looks like that hurdle has been cleared...
    Dec 10 08:00 AM | Likes Like |Link to Comment
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