Seeking Alpha

Herbalife presents yet another version of its side of the Pershing Square story

  • Herbalife (HLF -1.2%) publishes an updated refutation of Pershing Square's statements questioning its business model and the satisfaction of its many distributors.
  • The company has created a website, iamherbalife.com, where Herbalife customers and distributors share their positive experiences.
  • The last statement in the main body of the press release concisely sums up its opinion of the affair: "Ultimately, Pershing Square's campaign is based on propaganda, and we look forward to demonstrating that its assumptions will crumble under serious and independent scrutiny."
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Comments (46)
  • Quoth the Raven
    , contributor
    Comments (2125) | Send Message
     
    This press release, aside from not making any factual sense with regards to their business model, shows they have real nerves about the webcast coming up on 7/22 by Ackman.
    17 Jul 2014, 02:15 PM Reply Like
  • SwalePie
    , contributor
    Comments (58) | Send Message
     
    Please explain without bias what caused you to type 'not making any factual sense with regards to their business model'?.
    17 Jul 2014, 02:53 PM Reply Like
  • Akmanscam
    , contributor
    Comments (2113) | Send Message
     
    He doesn't know. Give him a few weeks to think of something
    17 Jul 2014, 04:39 PM Reply Like
  • jbrown010949
    , contributor
    Comments (5) | Send Message
     
    Ackman is the one that seems nerves, he's the one down half billion dollars shorting HLF. He seem to say anything to drive this stock down.
    17 Jul 2014, 11:20 PM Reply Like
  • Jeffjacobjames
    , contributor
    Comments (764) | Send Message
     
    Ackman has nothing! If he had anything worthwhile, why wait two years to release it?? Remember how lame and ineffective the ABC 20/20 expose turned out? Ack is shooting blanks here... again.
    17 Jul 2014, 02:21 PM Reply Like
  • Akmanscam
    , contributor
    Comments (2113) | Send Message
     
    Exactly Jeff. This will be an even bigger bomb that the Robin Hood conference and the so called "Documentary" back in May. Ackman is ready to cover.
    17 Jul 2014, 04:40 PM Reply Like
  • ninjahatori
    , contributor
    Comments (581) | Send Message
     
    Ackman is ready to cover ---Ackmanscam

     

    Yeah , No wonder he's falling ALL OVER Icahn and giving him Bear Hugs.

     

    He Knows he has to Cover , so He is Trying to Settle the 'Prestige' Issue now itself
    18 Jul 2014, 10:16 AM Reply Like
  • Akmanscam
    , contributor
    Comments (2113) | Send Message
     
    Ackman is ready to cover ---Ackmanscam

     

    Yeah , No wonder he's falling ALL OVER Icahn and giving him Bear Hugs.

     

    He Knows he has to Cover , so He is Trying to Settle the 'Prestige' Issue now itself

     

    **********

     

    Ackman is a modern day Judas with his phony hugs and smiles. Didn't Judas hug and kiss Jesus before betraying him?? And Ackman wants to show Icahn how to exit HLF profitably and want to help him? No he wants Icahn out to cause the stock to fall both from Icahn's taking his shares out and the sentiment it would create but hold the show, does anyone really think that Icahn is this stupid? HE may be old, but I doubt if he is stupid and let's not forget Icahn's opening statement in the "Battle of the Billionaires" in January, 2013:

     

    "ACKMAN IS A LIAR!"

     

    How true!
    19 Jul 2014, 02:30 PM Reply Like
  • Judicious
    , contributor
    Comments (256) | Send Message
     
    Any predictions on where she share price will land at end of day Tuesday? I'm thinking 52 range
    17 Jul 2014, 02:25 PM Reply Like
  • Akmanscam
    , contributor
    Comments (2113) | Send Message
     
    More like $72.
    17 Jul 2014, 04:40 PM Reply Like
  • tineke
    , contributor
    Comments (28) | Send Message
     
    Way to go HLF ! In the middle of this long ongoing battle, my husband and I will keep drinking our daily yummy healthy F1 shake. Just bought a new lot from a distributor, as faithful cusers. 12 years now (since the May 2002).
    We have our own reasons why we don't like the company to shut down : never again do we want to go back to having an unhealthy sandwich with jam, peanut butter, Nutella ... on it :)
    17 Jul 2014, 02:30 PM Reply Like
  • spunboy
    , contributor
    Comments (161) | Send Message
     
    Wow. 12 years of soy intake.

     

    http://bit.ly/1pfP5No
    "New studies suggest that eating large amounts of soy’s estrogen-mimicking compounds might reduce fertility in women, trigger early puberty and disrupt development of fetuses and children"

     

    17 Jul 2014, 05:17 PM Reply Like
  • Jeffjacobjames
    , contributor
    Comments (764) | Send Message
     
    spunboy,

     

    "New studies suggest" that the shorts no longer claim HLF is a pyramid scheme so they've moved on to other BS like nutrition clubs are blah blah blah or Icahn is selling or China will shut them down or _____________. Time for the "spun" to stop and deal with real facts! You know, things you can actually prove
    17 Jul 2014, 08:03 PM Reply Like
  • spunboy
    , contributor
    Comments (161) | Send Message
     
    No, I still very much believe that HLF is a pyramid scheme but not in the post you are referring to. Just pointing out one study that questions the primary ingredient in F1, soy.
    18 Jul 2014, 12:43 PM Reply Like
  • Akmanscam
    , contributor
    Comments (2113) | Send Message
     
    No, I still very much believe that HLF is a pyramid scheme but not in the post you are referring to. Just pointing out one study that questions the primary ingredient in F1, soy.

     

    ***********

     

    That is your opinion and you may be one of the only people who still feels this way. Herbalife is NOT a pyramid and many studies show soy is very good for you. For me, my cholesterol and blood pressure dropped since using F1 and no that is NOT medical claim, it is merely stating facts as shown to me by my doctor at my last physical. Not saying that F1 will cause a drop in cholesterol and blood pressure, only saying it did for me.

     

    Studies have shown that soy slashes cholesterol levels. And this is soy in general, not Herbalife claiming this.

     

    Bye!
    19 Jul 2014, 02:33 PM Reply Like
  • SwalePie
    , contributor
    Comments (58) | Send Message
     
    I'm assuming I'm not the only one who thought the Herbalife statement was well written and straightforward?
    17 Jul 2014, 02:51 PM Reply Like
  • User 6461431
    , contributor
    Comments (836) | Send Message
     
    Absolutely...a preemptive strike to remind any news media wanting to pick up Ackman's press release that Ackman has a few (OK 1 Billion) reasons to be biased.
    17 Jul 2014, 03:07 PM Reply Like
  • King Rat
    , contributor
    Comments (879) | Send Message
     
    Empirical evidence is nice when the sample selection is:
    1) completely random
    2) sizable enough
    3) freedom from external bias

     

    Anybody want to wager how many of those 3 points Herbalife adheres to?

     

    I have no objection to the quality of Herbalife products. The taste and nutrition are fine. My objection is to the price and delivery method. My neighbor was harassed at the gym by an Herbalife salesman for using whey she had purchased at Costco because (insert Herbalife sales pitch). She got a free Herbalife sample and inquired at the price. It was "whey" higher than Costco's price. When she declined to purchase Herbalife, the salesman began ranting FUD about Costco selling poison and repeating many times that only Herbalife being pure protein.

     

    Costco (Cytosport) Protein price: ($55/6lb) $9.17/lb, 2.7¢/g
    Herbalife protein price: ($30/0.8lb) $37.79/lb, 10¢/g

     

    When your product costs nearly 4x the competition, the only way you can stay in business is through FUD, lies, and harassing sales pitches. Again, I have no problem with Herbalife products. It is the deceitful method in which Herbalife attempts to sell its decent yet overpriced products that I object to.
    If somebody supplements 50g/protein/day as part of their exercise plan,

     

    Costco would be $492.75/year.
    Herbalife would be $1825/year.

     

    Never mind that Costco is more expensive than some other places. If you don't mind spending an extra $1333/year, fine, buy Herbalife. Yet I am sure that to the vast majority of Herbalife customers, not the cherry-picked elite, $1333 is a lot of money. It certainly is to me.
    17 Jul 2014, 03:01 PM Reply Like
  • ProTruth
    , contributor
    Comments (368) | Send Message
     
    Good example.

     

    Aggressive proselytizing that their product is the Only True Product on the Face of the Earth, combined with $$ at stake (as in they want your $$) is a big red flag.

     

    Re: the press release....There is no need to tie healthy living, socially supported weight loss/fitness efforts, good nutrition and physical exercise to BizOp fraud. All of this good stuff is available without getting involved in MLM.

     

    No need to tie weight loss or health to protein powder, either, BTW. If (non-fake-BizOp related) protein powder works for some people, okay with me, but IMO, it's not the best way (I have a BS in Community Nutrition from UC Davis). Overconsumption of highly processed foods like protein powder can have unintended consequences in the long term (look up the story of Baby Formula--we learned a lot by studying how that experiment in infant nutrition worked out over the years...). The best way to go? Loads of exercise, fruits and veg, fish, lean meats, complex carbs, and healthy fats. Plus, there is nothing like the heavenly taste of real food, lovingly prepared. It feeds the soul, as well as the body. Throw in a smidgen of dark chocolate, the occasional glass of vino....or whatever floats your boat...and life is indeed sweet. Isn't it? :)
    17 Jul 2014, 04:25 PM Reply Like
  • Kristina Raegan
    , contributor
    Comments (512) | Send Message
     
    King Rat,

     

    You wrote:" It is the deceitful method in which Herbalife attempts to sell its decent yet overpriced products that I object to."

     

    This is really the crux of the matter that needs to be addressed soon and finally - the inherent deception of MLM.

     

    The courts address it in this manner:

     

    "First, fraudulent past conduct gives rise to an inference of a reasonable expectation of continued violations....we believe that the drawing of such an inference was particularly appropriate here where appellants did not attempt to cease or undo the effects of their unlawful activity until the institution of an investigation." SEC v. Manor Nursing Centers, Inc 458 F.2d 1082, 1100 (2d Cir.1972).

     

    This just confirms what most people already know intuitively: a long and storied history of being found guilty of lying and employing various deceptive techniques in making sales is not likely to result in a change of heart.

     

    Better just to consider everything coming from MLM to be a lie and never go near it. It's 'profiling' for sure, but MLM isn't human either.
    17 Jul 2014, 06:04 PM Reply Like
  • sacathanas
    , contributor
    Comments (1744) | Send Message
     
    Ok, so how many times has HLF been found to have engaged in unlawful activity? Zero. That ends that.
    17 Jul 2014, 06:07 PM Reply Like
  • Curious2
    , contributor
    Comments (1679) | Send Message
     
    HLF ended their tool scams only last year (lead generation) and last month (remainder of tool scams), which came ONLY after Ackman and the regulators started investigating, respectively. That ends HLF.
    17 Jul 2014, 09:18 PM Reply Like
  • Kristina Raegan
    , contributor
    Comments (512) | Send Message
     
    sacathanas,

     

    You wrote: "Ok, so how many times has HLF been found to have engaged in unlawful activity? Zero. That ends that."

     

    People are entitled to their naive liberal ideas concerning profiling, and I am entitled to avoid doing business with people who promote MLM, based on the sordid history of it all.

     

    Also, I was talking about the 'inherent deception in MLM' and you respond as if I specifically mentioned Herbalife...that's very interesting in and of itself.
    17 Jul 2014, 10:56 PM Reply Like
  • sacathanas
    , contributor
    Comments (1744) | Send Message
     
    News flash, Kristina. This page is about HLF. Now, if you were talking about MLMs in general, why did you cite a nursing home case that had nothing to do with MLMs? That's called irrelevant. And, even though irrelevant, I demonstrated that HLF passes the legal standard your were trying to extend to MLMs. That's a three-bagger.
    18 Jul 2014, 08:02 AM Reply Like
  • Akmanscam
    , contributor
    Comments (2113) | Send Message
     
    News flash, Kristina. This page is about HLF. Now, if you were talking about MLMs in general, why did you cite a nursing home case that had nothing to do with MLMs? That's called irrelevant. And, even though irrelevant, I demonstrated that HLF passes the legal standard your were trying to extend to MLMs. That's a three-bagger.

     

    **********

     

    It's called diversion.
    19 Jul 2014, 02:34 PM Reply Like
  • mhnash
    , contributor
    Comments (29) | Send Message
     
    I think a point many people miss is that it is highly unlikely that HLF will be declared illegal, thus throwing thousands on the job market, not to mention all the other MLMs who would then be on the chopping block. You really think the government wants thousands more looking for work right now...and for what? to increase Ackman's bottom line? Please. Herbalife has a slew of high priced lawyers making sure they are within the law. Herbalife follows the law. What I am hearing is that some people on this thread don't approve of the law re MLMs. Too bad for that. The big players are complying whether or not Ackman thinks it's a good thing or not.

     

    Also, the above poster wants to see Herbalife closed down because the prices are higher than Costco? Costco's prices are usually lower than other prices. Duh. You can always say no thanks to a product, no matter what the salesman says to you. It's called a free market. What a ridiculous argument.
    17 Jul 2014, 05:14 PM Reply Like
  • Curious2
    , contributor
    Comments (1679) | Send Message
     
    Yes, let a few thousand employees keep their jobs, so that millions of others can be ripped off. Great analysis....NOT!
    17 Jul 2014, 05:49 PM Reply Like
  • ProTruth
    , contributor
    Comments (368) | Send Message
     
    The number of people employed directly by HLF is relatively small. I would say in the long run, it is better for them not to be working for a crooked company. Life is funny. There will probably be a big silver lining there on that side of it.

     

    The numbers of people deceived and harmed by Herbalife is enormous. It's not okay to make money by blatant deceit and manipulative harmful psychological tactics. It hurts the social fabric. It says to the public that bad behavior is okay. The tactics they use, for example telling recruits not to listen to people on the outside, can have quite devastating effects on families and relationships. There is an enormous amount of harm beyond the financial.
    17 Jul 2014, 07:47 PM Reply Like
  • Kristina Raegan
    , contributor
    Comments (512) | Send Message
     
    ProTruth wrote: "It's not okay to make money by blatant deceit and manipulative harmful psychological tactics. It hurts the social fabric. "

     

    No, it's not okay, and all of it needs to be made very clearly illegal very soon.

     

    It's shocking just how little many involved with MLM understand about empathy and reasons for action that have nothing at all to do with money.

     

    It's as if every move must involve profit.
    17 Jul 2014, 11:03 PM Reply Like
  • Akmanscam
    , contributor
    Comments (2113) | Send Message
     
    Yes, let a few thousand employees keep their jobs, so that millions of others can be ripped off. Great analysis....NOT!

     

    ***********

     

    No let over 7,400 employees keep their jobs doing what they love working for a company that is making a profound difference in peoples lives. On the other hand, I wouldn't be concerned about P.S. getting shut down and those people losing their jobs. I don't see them as providing any useful service at all.
    19 Jul 2014, 02:36 PM Reply Like
  • tineke
    , contributor
    Comments (28) | Send Message
     
    What determines if a product is overpriced ? VALUE !!!
    And value can be indicated by intrinsic value, or what one is willing to pay.
    I'm driving a Mini. Fun car by the way. A Bentley is car too.
    Lets compare both by just the price : My Mini has cost me 25.000 euro. I believe a Bentley can cost around 200.000 Euro.
    That means I can buy 8 Minis for 1 Bentley. Suppose I'd pay the price of a Bentley for my Mini. Big scam (as pricing of HLF products is referred to). But to expect buying a Bentley for the price of a Mini is more than foolish. Yet they are both cars. Does this mean Bentley attempts to sell overpriced ? Ofcourse not. And yet there are people wanting to pay + 200.000 euros for just a car.
    Why ? They don't just want a vehicle that drives them from A to B. They are willing to pay top dollar cause they want top range ! Obviously this is an extreme example. But yet we can do this with any type of product, eg a washing machine, even chocolote : Godiva versus a supermarket's home brand. Yes and even with 'whey'.
    Each eatable product on the planet has ingredients. They can be of poor, moderate, high quality or outstanding quality ! As quality goes up so does the price. Simple as that.
    Herbalife -having a scientific board behind all the products- guarantees outstanding quality for the 1st to the last ingredient in each of its products.
    If we compare production cost of anything we buy to the retail price the profit is very often +1000 %. Every stage in between takes a cut. In MLM it is no different : but the profit goes directly to the distributors, the people who promoted and eventually sold it. 72% to be exact goes back to the distributors. By the way, even if the products where to cost even double as they do now, it is still the customer who decides he wants to pay the price. And there are millions who want the 'overpriced' shakes and tablets ! Think nobody knows they sell whey or protein powder in fitness centers etc ? Yet, despite of the 'high' price millions choose Herbalife ! And the customer is always right ! As I've said more than once on this forum : I have been using the F1 shake and tablets for 12 years now. I'm in great shape. No day goes by without them. Take Herbalife with me on holiday, to the hospital ...And I don't put a price on feeling great ! My feeling of wellbeing is of great VALUE to me
    17 Jul 2014, 05:32 PM Reply Like
  • NeitherSide
    , contributor
    Comments (3) | Send Message
     
    A simple solution to end all arguments would be to clearly segragate and quantify retail sales in terms of those purchases that are not directly nor indirectly tied to any downline, distributors, or memberships. This should be easily doable by looking at all sales made at full price. Once this number is identified, then it would be easier to determine which side of the argument is valid.

     

    A 3rd party is not needed for that information. One has to track inventory some kind of way (at cost, discounted, etc.).
    17 Jul 2014, 05:46 PM Reply Like
  • sacathanas
    , contributor
    Comments (1744) | Send Message
     
    Why would that be relevant? Who said "retail sales" at "full price" is a relevant measure? Certainly not the Ninth Circuit last month in BurnLounge. The only thing that matters is that commissions are paid on sales to ultimate users. Why is it so hard for people to read this, understand it, and accept it? It's the law. Period.
    17 Jul 2014, 05:52 PM Reply Like
  • Kristina Raegan
    , contributor
    Comments (512) | Send Message
     
    The Ninth Circuit reviewed the final decision of the District Court, which used this definition (#19) in its Amended Final Judgement at Page 5:

     

    "For purposes of this definition, “sale of products or services to
    ultimate users” does not include sales to other participants or recruits
    or to the participants’ own accounts."

     

    That still stands after de novo review, since BurnLounge was found to be a pyramid scheme in part based on that definition. The Court did not mention any sort of clear error by the lower court relating to that definition.

     

    Page 24: "We affirm the district court’s holding that BurnLounge was an illegal pyramid scheme, in violation of § 5(a) of the FTCA. "

     

    This interpretation is in line with current FTC/SEC consumer advisories related to retail sales to the public:

     

    FTC:
    ""Not all multilevel marketing plans are legitimate. If the money you make is based on your sales to the public, it may be a legitimate multilevel marketing plan. If the money you make is based on the number of people you recruit and your sales to them, it’s not. It's a pyramid scheme."
    17 Jul 2014, 11:18 PM Reply Like
  • sacathanas
    , contributor
    Comments (1744) | Send Message
     
    #Kristina, that is foolish. When an appellate court issues a ruling, it is its opinion that is authoritative, not the district court's.
    18 Jul 2014, 08:03 AM Reply Like
  • Akmanscam
    , contributor
    Comments (2113) | Send Message
     
    Is this a real news release or is this another one of QTRs sneak in another HLF bash and masquerade it as a news release? I see a lot of QTR in this. Any opinions???
    17 Jul 2014, 06:18 PM Reply Like
  • sacathanas
    , contributor
    Comments (1744) | Send Message
     
    The headline is such a BS cheap shot. As far as I know, the only one who keeps changing his story is Ackman, et al.
    17 Jul 2014, 06:40 PM Reply Like
  • Akmanscam
    , contributor
    Comments (2113) | Send Message
     
    Not a headline. Just another one of the Ackman shills HLF bashings.
    17 Jul 2014, 09:59 PM Reply Like
  • mhnash
    , contributor
    Comments (29) | Send Message
     
    #curious2
    you say 'Yes, let a few thousand employees keep their jobs, so that millions of others can be ripped off. Great analysis....NOT!'

     

    The problem is, they haven't found ANYONE who has genuinely been ripped off. Not one person. Oh they have paid millions to someone who wasn't even a distributor to bad mouth the company, but the fact is, unhappy distributors are hard to find. Ackman has had to search far and wide to find people to pay to say something negative, and the stories have been weak and contrived.

     

    Just because you can't get something to work, when thousands of others have, doesn't make it illegal. It just means you didn't get it to work.

     

    Nowhere does it say you have to buy lots of inventory—like some of the ridiculous amounts we've heard people have lost. If people choose to buy inventory and they then decide they don't like the business, well, whose fault it that? Most people starting out selling Herbalife only buy a little inventory at a time, as they sell it.

     

    What Ackman had no idea about when he set about on this foolishly ill-advised attack against a thriving, successful company, was the huge enthusiasm and loyalty distributors have for the company. He was expecting a cake walk and envisioning hundreds of disgruntled people coming to him with genuine complaints...and that hasn't happened. Oops. Could it be the company is actually enormously popular with the people who work in it? And could it be that the people who buy the products actually like them and think they are good value? Could Ackman be wrong?
    17 Jul 2014, 08:12 PM Reply Like
  • Jeffjacobjames
    , contributor
    Comments (764) | Send Message
     
    I believe SA is biased towards the shorts. Using a headline written this way sounds negative. SA loves all the articles submitted almost daily from Matt S. & QTR because of the attention they receive from both longs & shorts. The more attention they get, the more advertising money SA will charge. Smart? Sure but definitely biased. The old TV news motto is "If it bleeds, it leads"!
    17 Jul 2014, 08:16 PM Reply Like
  • Curious2
    , contributor
    Comments (1679) | Send Message
     
    I think SA is biased towards the facts.
    18 Jul 2014, 12:53 AM Reply Like
  • Akmanscam
    , contributor
    Comments (2113) | Send Message
     
    I think SA is biased towards the facts.

     

    ********

     

    You should have stopped at biased and said against the facts. Then your comment would have been correct
    19 Jul 2014, 02:37 PM Reply Like
  • Akmanscam
    , contributor
    Comments (2113) | Send Message
     
    Cowardly is a good description of Ackman and his paid shills.
    17 Jul 2014, 09:53 PM Reply Like
  • Guizinho
    , contributor
    Comments (5) | Send Message
     
    So let me get this straith: HLB had 525.251 "members" and generate approximately $881 million. If each member buy just $100,00 a month, in 12 months they bought $1200,00, ok? That is a reasonable self consuption that EVERY member do in the HLF business (I have four In laws in that thing). So, if you do a simple math, the people in Herbalife already spent $630.301,200. You guys really think that Herba do a great job in America? Man, Herbalife is a scam but I agree with the people who thinks that they invest in lobby so, don´t worry needed.
    18 Jul 2014, 07:23 AM Reply Like
  • Pelham
    , contributor
    Comments (7) | Send Message
     
    Yeah right...
    18 Jul 2014, 11:39 AM Reply Like
  • Akmanscam
    , contributor
    Comments (2113) | Send Message
     
    Over 20,000 HLF IBOs in Chicago today staging a PR campaign against Ackman and his lies. This soap opera is getting better all the time. Looks like Ackman's days of tyranny are about to come to abrupt halt.
    19 Jul 2014, 02:39 PM Reply Like
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