Herbalife's Misleading Lesson About The Collapse Of Qualification Buying
Christine Richard • 304 Comments
Christine Richard • 304 Comments
Mar. 12, 2015, 6:39 PM
- The WSJ reports the FBI and prosecutors within the Manhattan U.S. attorney's office are "probing potential manipulation" of Herbalife (NYSE:HLF) shares, and have interviewed people hired by (drumroll...) Bill Ackman.
- Prosecutors are reportedly "looking into whether people, including some hired by Mr. Ackman, made false statements about Herbalife’s business model to regulators and others in order to spur investigations into the company and lower its stock price."
- Public statements and allegations passed on to regulators by Herbalife critics are being studied, as are connections between those critics and Ackman, who has taken a $1B short position against Herbalife.
- The paper cautions "neither Mr. Ackman nor Pershing Square has been served with a subpoena or been visited by FBI agents in connection with the probe." A spokesman for Ackman's Pershing Square Capital insists the firm has been "completely transparent about our position and our research," and acted lawfully.
- Herbalife has jumped to $34.90 in AH trading.
- Previously: Ackman predicts Herbalife will collapse in a year
- Previously: Ackman calls Herbalife a pyramid scheme in interview
- Previously: Pershing posts new Herbalife-bashing video
Mar. 10, 2015, 10:53 AM
- The attorneys general from Connecticut, Indiana and Puerto Rico form a coalition to investigate the business practices of the herbal supplement industry to ensure that the manufacturers and retailers comply with the law. The initiative seeks to improve transparency and make certain that the industry is making an effort to validate their marketing claims, including authenticity and purity.
- A recent analysis by the New York AG's Office found undocumented substances in certain store brand herbal supplements, including contaminants and unlabeled plant species. In addition, many of the supplements had been processed to such a degree that the plant source's genetic material was undetectable.
- The FDA requires drug makers to verify the safety and integrity of their products, but dietary supplements are currently exempt from the process despite that fact that more than half of FDA Class I drug recalls (the most serious) between 2004 and 2012 were for dietary supplements.
- According to the Canadian Institutes of Health Research, there are ~65,000 dietary supplements consumed by more than 150M Americans representing a $61B industry.
- Related tickers: (GNC -5.8%)(VSI -1.8%)(HLF -1.2%)(OTCQB:MSLP -1.4%)
Mar. 1, 2015, 10:13 AM
- Herbalife (NYSE:HLF) cut the pay of CEO Michael Johnson 36% for 2014 after he failed to meet performance goals, such as levels the company set for earnings per share and sales growth in 2014.
- Missing out on the $3.7M incentive plan compensation he received two years ago, Johnson received total compensation of $6.73M in 2014, down from $10.5M the prior year.
Feb. 26, 2015, 4:56 PM
- Herbalife (NYSE:HLF) Q4 results ($M): Total Revenues: 1,133.6 (-10.7%); North America: 204.8 (-2.6%); Mexico: 132.7 (-6.9%); South/Central America: 173.2 (-40.3%); EMEA: 200.2 (+1.3%); Asia Pacific: 245.6 (-12.2%); China: 177.1 (+19.3).
- Net Income: 103.3 (-16.4%); EPS: 1.21 (+5.2%); CF Ops: 61.9 (-68.4%); Quick Assets: (-33.7%).
- Volume Points: North America: 268.6 (-6.4%); Asia Pacific: 263.0 (-10.1%); EMEA: 215.5 (+17.2%); Mexico: 204.9 (-6.3%); South/Central America: 211.6 (-24.0%); China: 118.2 (+15.1%).
- 2015 Guidance: Volume Point Growth: (1.5 - 4.5%) from (0 - 3.0%); Net Sales Growth: (6.0 - 9.0%) from (1) - 2%; EPS: $4.10 - 4.50 from $5.45 - 5.75; CAPEX: $120M - 140M from $145M - 165M, Free Cash Flow: $430M - 460M from $470M - 500M.
- Q1 Guidance: Volume Point Growth: (5 - 8%); Net Sales Growth: (6.0 - 9.0%); EPS: $1.00 - 1.10.
- Shares up 2% after hours.
Feb. 26, 2015, 4:21 PM
- Herbalife (NYSE:HLF): Q4 EPS of $1.41 beats by $0.19.
- Revenue of $1.13B (-11.0% Y/Y) misses by $30M.
- Shares +6.7%.
Feb. 26, 2015, 1:58 PM
- Herbalife (HLF +1.7%) reports Q4 and full-year results after the close of trading today. The conference call will begin at 5:30 pm ET.
- Consensus views for Q4 and 2014 are EPS of $1.22 and $5.78 on revenues of $1.2B and $5.0B, respectively.
Feb. 25, 2015, 5:35 PM
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Feb. 17, 2015, 11:11 AM
- Former Herbalife (HLF +3%) distributors who are part of a class-action suit claiming the company operates a pyramid scheme that has caused more than 1M distributors to fail plan to reject a $15M settlement proposed by the company to resolve the matter without admitting any wrongdoing. The suit was filed in 2013 by former salesman Dana Bostick.
- Plaintiffs lawyer Douglas Brooks says that at least $100M is necessary to adequately compensate the class, which represents 1.55M people. About one quarter of the group were "supervisors", people who spent at least $3,500 and had an average loss of $8,500. Even if the losses were half that, a $100M settlement would represent only ~10 cents on the dollar.
- League of United Latin American Citizens' Julie Contreras is organizing the group objecting to the settlement. Formal objections are due by March 24.
Feb. 11, 2015, 10:50 AM
- Herbalife (HLF +1.5%) critic Julie Contreras of the League of United Latin American Citizens takes exception to Federal Trade Commission Chairwoman Edith Ramirez's plan to share the stage with Herbalife compliance chief Pamela Jones Harbour tomorrow at a meeting of the American Bar Association. Ms. Ramirez is scheduled to speak after Ms. Harbour.
- Ms. Contreras is miffed because Ms. Ramirez bowed out of an event she organized after learning that short seller Bill Ackman was on the docket to speak. She says, "It's like re-victimizing the victims to know that the top law enforcement official is sitting at the table with the alleged perpetrator."
- In any event, the NY Post loves to stir up controversy.
Feb. 10, 2015, 10:32 AM
- Herbalife (HLF -3%) bucks the market's up move this morning as investors react to the Venezuelan government's announcement that it will unveil a new currency exchange system today at 10:30 am ET that will result in a significant devaluation of the bolivar.
- The current three-tiered system sets the bolivar/dollar exchange rate at 6.3 for food and medicine and 12 and 52 for other goods through Sicad 1 and Sicad II. The black market exchange rate is 190 bolivars per dollar. Observers think the exchange rate will settle out at 120 - 140 bolivars once the new systems opens.
- Herbalife generates ~15% of its revenues from Central/South America including ~5% from Venezuela. Pershing Square's Bill Ackman says that the company has been using the 6.3 bolivar/dollar exchange rate in its accounting of sales from that country, thereby artificially inflating its actual revenue.
Jan. 28, 2015, 2:09 PM
- Blogger TheSkeptic21 says that Herbalife's (HLF -1.1%) steady gross margins should be just that since the effects of currency swings are captured in SG&A, possibly an atypical place to account for them, but clearly disclosed in the company's regulatory filings. In his opinion, large swings in gross profit, should they occur, would be more noteworthy.
- Previously: Herbalife gross margins show remarkable long-term stability (Jan. 28)
Jan. 28, 2015, 11:26 AM
- In an analysis done by long time SA Contributor Quoth the Raven (QTR), Herbalife's (HLF -1.7%) gross margins have shown incredible stability for almost eight years, ranging between 77.3% to 81.3% over 31 quarters. This is the fourth lowest variance in the entire S&P 500 over this time frame.
- QTR finds this remarkable in light of the company's presence in more than 90 countries and exposure to the swings in 20 major currencies, although it's possible that Herbalife has a world-class hedging competency that smooths out the vicissitudes better than larger, more complex firms.
- According to QTR, his research is meant to spur discussions about Herbalife as investors debate its prospects and its reactions to the pronouncements of short seller Pershing Square.
Jan. 27, 2015, 2:01 PM
- Herbalife (HLF +1.4%) appoints Mr. Marcus Reese to the newly created position of Vice President, State and Local Affairs, reporting to EVP, Global Corporate Affairs Alan Hoffman. He joins the firm from Tusk Strategies, a public affairs consulting firm, where he was Chief of Staff. Earlier in his career, he provided legal and crisis communications advice for corporate clients as well as serving various roles in politics.
- Mr. Reese will be responsible for managing the company's relations with state and local governments.
Jan. 26, 2015, 6:04 PM
- Herbalife (NYSE:HLF) will report Q4 and full-year results on February 26 after the close. The conference call will begin at 5:30 pm ET.
- Consensus views for Q4 and 2014 are EPS of $1.25 and $5.80 on revenues of $1.17B and $4.99B, respectively.
Jan. 24, 2015, 2:30 PM
- PE giant TPG Capital "seriously considered" buying Herbalife (NYSE:HLF) last year. It also took a look at Nu Skin (NYSE:NUS).
- It is not clear why TPG’s interest in Herbalife and Nu Skin ended without any investment.
- On Thursday, Avon (NYSE:AVP) jumped 15% on reports TPG was interested in acquiring it, only to drop 7.9% on Friday after Wells Fargo told clients in a note it was skeptical of the prospect.
- If TPG does not buy Avon, it “might take a new look” at Herbalife, with its stock falling in half over the last 12 months, a source says.
- Source: NY Post
Jan. 13, 2015, 3:50 AM
- Renewing his attack on Herbalife (NYSE:HLF), Bill Ackman reiterated his prediction that the company's stock price will collapse to zero - within a year.
- The hedge fund manager has been betting against Herbalife shares since 2012, claiming the company is a pyramid scheme.
- "We shorted it at $47 but because of option premium, borrowing costs, dividends, investigative expenses, our break even is around $31, $32," Ackman said.
- Herbalife's stock price closed at $32.73 yesterday after dropping 52% last year.
Herbalife Ltd. is a global nutrition company. It offers range of science-based weight management products, nutritional supplements and personal care products intended to support a healthy lifestyle. The company's products are categorized into four principal groups: weight management, targeted... More
Industry: Drug Related Products
Country: United States
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