Leaked Internal Herbalife Survey Gives FTC More 'Actionable' Results
- Herbalife sells a business opportunity that is "the solution for these tough economic times".
- Statistical evidence shows that most participants fail.
- Internal evidence reveals that the company knows these failure rates.
- Still, CEO Michael Johnson tells recruits "there's never been a better time to join Herbalife".
- Internal documents confirm yet again that Herbalife is committing fraud.
Herbalife's Unusual Foreign Currency Problem, Explained And Analyzed
- Herbalife's currency exposures are larger than one might expect.
- Currency devaluations against the dollar, because of their timing, could not have been included in management's Q4'14 and FY'15 guidance.
- An analysis of five years' worth of data on the company's currency headwinds suggests management's Q4'14 guidance is far too optimistic.
- Even a conservative assumption of constant spot rates against the dollar in 2015 will have a material impact on FY'15 results.
Analysis Of IRS Statistics Suggests A 98.94% Financial Failure Rate For Herbalife Sales Leaders
- While Herbalife does not disclose the business expenses incurred by its distributors, IRS statistics provide a reasonable basis for estimating these expenses.
- Analysis of the IRS statistics and Herbalife’s “Statement of Average Gross Compensation” suggests a financial failure rate of 98.94% for distributors Herbalife categorizes as “Leaders”.
- This finding is consistent with other estimates of financial failure rates among Herbalife distributors using different methodologies.
- The pending FTC and other governmental investigations of Herbalife should not be limited to whether Herbalife constitutes a pyramid scheme, but also whether Herbalife is deceptively representing its business opportunity.
Media Attention Moving From P-Word To C-Word For Multi-Level Marketing Stocks
- The international radio documentary, "This American Life", recently examined a popular and publicly-traded MLM, Wake Up Now, and raised the question of cult practices. The show will reverberate upon Herbalife.
- The charge of cultism has haunted MLM and Herbalife, which resembles Wake Up Now. Historically, MLM was connected to "mind-control" programs linked to the pyramid scheme structure.
- Few analysts have investigated cultism as a marketing factor, yet conventional approaches of finance and law fall short of explaining Herbalife and other MLMs' growth and power.
- The radio show introduced the concept, "economic cults", citing cult characteristics to explain self-destructive behavior of MLM recruits. Pyramid schemes facilitate economic cults, allowing them to promise heaven on earth.
- There are ten basic traits that identify cults, including "economic cults." Multi-level marketing exhibits all ten.
Apparent Proof Of A Stunning Slowdown In Herbalife Purchasing Traffic
- MyHerbalife.com is a key portal for North American (primarily US) distributors to obtain product from the company.
- Though not the only source to purchase from, one can assume looking at its traffic helps describe the larger picture of how much product is being ordered from the company.
- Traffic for this site, as monitored by Alexa and Compete, appears to be falling off a cliff. Since May 2012, the site's Alexa rank has gone from 6,000+ to 16,000+.
- This could be a key indicator that Q4 sales may disappoint.
- Due to the strong dollar, Herbalife faces serious currency headwinds from Russia, Brazil, Venezuela and other emerging markets - these could shape the international Q4 picture.
2015 Herbalife Forecast: Not Everyone's Gonna Make It To The Pope's Seat
- Herbalife tells investors it's a Nutrition Company.
- Why don't its sales results match with competitors?
- Why doesn't Herbalife show evidence of seasonality?
15 Insane (But True) Reasons The Herbalife Fraud Should Be Shut Down Today
- These are 15 reasons that the Herbalife fraud should have already been stopped - if not shut down immediately, placed under injunction until FTC investigation concludes.
- Herbalife insider caught on video calling the company "an eventual deception" and "inauthentic".
- First hand primary source evidence points to Herbalife being the largest fraud since Madoff/Enron.
- Questionable death in Mexico surrounded by 7-8 year old questions about the lead content in Herbalife's product.
- Herbalife Board Member Pedro Cardoso is wanted for fraud in Brazil. Enough is enough - shut it down.
- Investment decisions on Herbalife and other MLM companies cannot be based on reliable data.
- What passes for industry data on direct selling is demonstrably false, based on its own inconsistency and mathematical impossibility.
- Data published by the "Direct Selling Industry" contradicts itself, and completely contradicts Herbalife's narrative of how "direct selling" operates.
- The question of "pyramid scheme" regarding direct selling requires simple and direct investigation of company revenue and distributor income sources. Industry data should be assiduously avoided.
- Pattern of loss claims demonstrates Herbalife is a net detractor from GNP.
- Patterns of loss claims demonstrates potential tax-evasion issues.
- Rational valuation of HLF shares is nearly impossible based on hard data and imponderables.
- Herbalife is insufficiently reflected in Icahn Enterprises (IEP).
- The action now shifts to the rest of the MLM industry, and the investors that have an interest in them.
Why Bill Ackman Will Be Proven Right On Herbalife Soon
- Herbalife is running out of time.
- Herbalife is running out of money.
- Herbalife is running out of excuses.
An Exclusive Interview With Pershing Square's Bill Ackman
- Pershing Square's investment performance has been exceptional year to date.
- Bill Ackman continues to seek opportunities for his firm and his investors.
- As a fellow Herbalife short, Mr. Ackman agreed to join me for a conversation.
How Will Herbalife Survive The Latest Evidence That It Is A Pyramid Scheme?
- Bill Ackman released a video showing a top Herbalife distributor admit the company is built on deceit.
- It is important to note this video was not taken during a random meeting, it was filmed during a meeting with TOP Herbalife executives in attendance!
- The company's response to the video is that the clips were taken out of context.
- I cannot think of a context where these admissions could be taken as anything other than prove of a pyramid scheme built on deceit.
- In November 2014 the Direct Selling Association published a comprehensive industry survey.
- The results are materially different than studies published by Herbalife.
- Each statistic contradicts the statistics presented by Herbalife.
- The capital structure was weakened with an increase in long-term debt, which went from $431 million in December 2012 to $1.728 billion in September 2014.
- Long-term debt per share expanded to $18.82 from $4.18.
- $3.1 billion was spent buying back stock since 2007. That is 80% of today's market value.
Dear Kamala Harris: If It Quacks Like A Duck, It's A Duck
- Pershing Square offers investors more damning evidence of Herbalife quackery today.
- Recorded testimonials offer direct evidence that Herbalife is violating the 1986 California Injunction.
- When will either Pamela Jones Harbour or California AG Kamala Harris intervene?
- Pedro Cardoso exposed as one of Herbalife's Top Perpetrators.
Sat, Jan. 24, 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
Tue, Jan. 13, 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.
Mon, Jan. 5, 4:34 PM
- Today's sell-off wasn't kind to Herbalife (NYSE:HLF) as it dropped 12% on a 67% spike in volume. Shares have plummeted more than 60% over the past year.
- The company's fundamentals continue to deteriorate. Sales growth, earnings and cash flow from operations have all slowed. Guidance has also weakened. Updated 2014 numbers are: volume point growth: 2.7 - 3.5% from a high of 8 - 10%; net sales growth: 3.5 - 4.3% from a high of 10 - 12%; diluted EPS: $5.80 - 5.90 from a high of $6.17 - 6.32.
- 2015 Guidance: volume point growth: 0 - 3%; net sales growth: -1 - 2%; diluted EPS: $5.45 - 5.75.
- Zacks Investment Research downgraded the company on December 30 to Strong Sell based on its lower-than-expected Q3 results and weaker outlook.
Dec. 19, 2014, 11:54 AM
- FDA Deputy Commissioner for Foods and Veterinary Medicine Michael R. Taylor sends Herbalife (HLF +1.1%) CEO Michael O. Johnson a letter requesting the company remove a broadcast advertisement on YouTube that mischaracterizes the regulator's role pertaining to dietary supplements. In the video, former FDA director Vasilios H. Frankos, Ph.D., states that during his time at the agency he made sure that nutritional supplements were safe and effective for use. This is surprising since the FDA does not regulate dietary supplements.
- The FDA's request is far from urgent. The video was published on April 12, 2011.
Dec. 17, 2014, 2:19 PM
- In an interview on Bloomberg Television, Pershing Square's Bill Ackman said that former top distributors for Herbalife (HLF +2.1%) have gone to investigators to substantiate his claims that the company operates an illegal pyramid scheme. During the interview, Mr. Ackman also provided a video from 2005 that shows a top distributor acknowledging that Herbalife operates a pyramid scheme.
- An investigation into the company's practices by the Federal Trade Commission is ongoing.
- HLF shares are down over 50% this year.
Dec. 11, 2014, 9:27 AM
- Bill Ackman's Pershing Square Capital Management posts a new video this morning accusing Herbalife (NYSE:HLF) of continuing to make misleading claims about the medical benefits of some of its products. This would be a violation of a 1986 injunction handed down by a California Superior Court.
- The 6.5-minute video also targets the apparent contradiction of Herbalife's statements about its R&D commitment to its "de minimis" R&D budget stated in its regulatory filing (2013 10-K). R&D spending the last three years was "not material." The company spent almost $60M in marketing in 2013.
- Some consumers of Herbalife's products have complained to the FDA about adverse effects they've experienced.
Nov. 26, 2014, 8:34 AM
- In a letter to shareholders, Pershing Square's Bill Ackman says recent developments at Herbalife (NYSE:HLF) reinforce the fund's short thesis.
- Herbalife missed Q3 earnings consensus, reduced guidance and took an impairment charge on the currency exchange rate assumption pertaining to its business in Venezuela.
- Previously: Herbalife chief boosts stake in company
Nov. 25, 2014, 5:34 PM
- Herbalife (NYSE:HLF) calls it a vote of confidence, but others are skeptical, given the CEO parted with exactly $0 on the deal.
- Michael Johnson was granted 750K in stock options 10 years ago which are set to expire next month. "Because of his complete confidence in the continued and future success of the company," he's holding onto all the shares except for those he needs to sell to cover the exercise price and taxes. The net effect: Johnson is boosting his stake in the company by about 292K shares for no additional cash investment.
- Source: Press release
- The stock's higher by 0.6% after-hours.
Nov. 14, 2014, 8:15 AM
- SA Contributor Matt Stewart writes that Herbalife (NYSE:HLF) Chairman's Club and board member Pedro Cardoso is one of 12 people charged in a years-old embezzlement case in Brazil. Mr. Cardoso was a partner in a company that was connected to a firm that allegedly siphoned 26.7M Brazilian reais ($10.4M) from the state government in Espirito Santo under the guise of making donations to community centers, schools and hospitals. Instead, the money was used to fund private events that had no public interest.
- The company in question is the Assembleia Legislativa do Espirito Santo (ALES) headed by Jose Carlos Gratz. Mr. Cardoso was a partner in a firm that cashed an ALES check in 1999 for 6,000 Brazilian reais that was signed by Mr. Gratz.
- Under SEC disclosure rules, companies must report legal proceedings that are material in evaluating the integrity of a director. Herbalife has not done so. In a statement mailed to Reuters by an Herbalife official, Mr. Cardoso said the case is a private matter dating back to 1998 which has no bearing on his work with Herbalife. "I have received no official notification of any kind with regards to this matter, " he said.
- The 8th Criminal Court of Vitoria ordered bailiffs to serve him with a subpoena in 2010 but they were unable to locate him because he moved several times without notifying the court so the case remains open.
- Herbalife and the SEC declined further comment.
Nov. 4, 2014, 12:44 PM
Nov. 4, 2014, 9:15 AM
Nov. 4, 2014, 6:59 AM| 2 Comments
Nov. 3, 2014, 5:38 PM
Nov. 3, 2014, 5:02 PM
- Herbalife (NYSE:HLF) Q3 results ($M): Total Revenues: 1,256.2 (+3.5%); Gross Profit: 1,001.2 (+2.7%); Operating Income: 27.6 (-85.6%); Net Income: 11.2 (-92.1%); EPS: 0.13 (-90.2%); Quick Assets: 449.5 (-30.0%); CF Ops (9 mo.): 449.5 (-22.1%).
- 2014 Guidance: Volume point growth (ex. Venezuela): 0 - 3% from 5 - 6%; Volume point growth including VZ: (3) - 0% from 2.7 - 3.5%; Net sales growth: (8) - (5)% from 3.5 - 4.3%; EPS ex. items: $1.30 - 1.40 from $5.80 - 5.90; capex: $52M - 62M from $170M - 180M; effective tax rate: 27 - 29% from 27.5 - 29.5%.
- Shares off 13% after hours on robust volume.
Nov. 3, 2014, 4:44 PM
Nov. 2, 2014, 5:35 PM
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