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Herbalife's (HLF) announcement it is buying back $427.9M of its shares fails to help for now,...

Herbalife's (HLF) announcement it is buying back $427.9M of its shares fails to help for now, the stock diving another 7% at the open. At $48.78 it's about 10% below the initial panic drop following Tuesday's conference call.
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Comments (4)
  • thomptex
    , contributor
    Comments (52) | Send Message
     
    To divide the price of a stock from the financial performance of its
    company is an old Rothschild trick. Money made on shorts
    followed by buying in at the bottom.
    3 May 2012, 10:10 AM Reply Like
  • ARAMAMNI
    , contributor
    Comments (46) | Send Message
     
    No one knows where or when is that bottom.
    I think there is more downside tomorrow due to the jobs report.
    We are not going to have a good job report.
    3 May 2012, 10:37 AM Reply Like
  • C Michael Croston
    , contributor
    Comments (196) | Send Message
     
    Has anyone given any strong, legitimate reasons for this company to be questionable aside from being a direct marketing company? Valuations? Competition? Cash flow? I don't get it...
    3 May 2012, 11:28 AM Reply Like
  • Afam Edozie
    , contributor
    Comments (262) | Send Message
     
    Who needs reasons when much of the market acts on emotions. The fear of potentially being on the wrong side of David Einhorn is a rational reason to sell the stock (is that a logical argument, I wonder?)

     

    I see good volume growth, good revenue growth, good free cash flow growth, strong balance sheet, lots of cash, stable receivables and falling inventories as a percentage of turnover.

     

    However, it is rational to acknowledge that I may have missed something, it is also rational to believe that David Einhorn is smarter than me (certainly as far as equity markets are concerned,) and it is also rational to believe David Einhorn has uncovered some dark secret about the company that makes it worth only half as much.

     

    So you see, if you can put enough rational facts together you can present a rational argument as to why to sell. Even if you believe (emotionally or based on your limited knowledge of the company) that it is a good company and is undervalued.

     

    Many people believed that Enron was a good company until it went bust, who was acting rationally, those who sold when the price broke down, or those who waited until the announcement got made.

     

    I personally am still long HLF and confess that it hurts (which is an admission of being emotional - though not necessarily irrational.)

     

    Fact is few people in the market know what David Einhorn's true intentions are, and given his experience you will not know until its too late. He may be busy buying HLF even as we speak, or he may be preparing to present a paper on how HLF has cooked the books.
    4 May 2012, 06:03 AM Reply Like
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