Mon, Apr. 6, 9:19 AM
- Herbalife (NYSE:HLF) eases 5% premarket on average volume in response to the news that federal law enforcement agencies have queried ~10 members of the company's top-level distributors about their business practices. The specifics of the interviews or the identities of the individuals are not known at this point. According the company, it has offered legal counsel to those involved.
- The company is under scrutiny for its marketing practices from various law enforcement groups. Short seller Pershing Square maintains that it operates an illegal pyramid scheme.
Mon, Apr. 6, 9:18 AM
Mon, Apr. 6, 4:52 AM
- U.S. federal law enforcement agencies contacted about 10 Herbalife (NYSE:HLF) members last week for information about their own business practices. HLF said it is cooperating with requests for information, and "remains confident in the integrity of our business practices." HLF is offering members assistance with legal counsel.
- Separately, Herbalife also received inquiries recently about irregular trading in its stock as part of a broader investigation into possible market manipulation. In a statement, HLF said the investigation is focused on Bill Ackman's "nearly three-year effort to drive down HLF's stock," adding, "We are cooperating with these requests for information, remain confident in the integrity of our business practices, and are hopeful Ackman's long-term campaign of distortion will be found to be illegal."
- Also Sunday, Bill Stiritz, HLF's fifth-largest shareholder (8.2%), said he has no plans to sell his stake - deflating speculation after an April 3 SEC filing disclosed a change in his investor status from active to passive. “As I sit right now, I couldn’t be happier with my investment in Herbalife,” Stiritz said Sunday. Stiritz said the filing was intended to accurately reflect his dealings with Herbalife, which he expects won’t be shut down by regulators as predicted by Ackman. "People that are long in the stock are looking at the impact of the FTC case closure,” he said. “Herbalife will likely get little if any fine.” Herbalife shares and sales will rebound once the FTC investigation ends, he added.
Tue, Mar. 31, 1:42 PM
- Even after his big win with Allergan, Bill Ackman's Pershing Square maintains significant exposure (~50%) to the healthcare sector. In a recent regulatory filing, Pershing disclosed a 19.5M share stake in Valeant Pharmaceuticals (VRX -0.2%) valued at ~$3.83B, making it the largest position in its equity portfolio. It also has a 41.8M share stake in Zoetis (ZTS -0.2%) valued at almost $2B.
- In case you were wondering, Pershing is also maintaining its short position in Herbalife (HLF -0.9%).
Tue, Mar. 31, 2:37 AM
- Shutting Herbalife (NYSE:HLF) is "one of the most important things" I can do, declared Bill Ackman yesterday at the Council of Institutional Investors' in Washington.
- Ackman noted that when he first bet against Herbalife, he had not anticipated that Carl Icahn would come in and take a long view on the company.
- Had Icahn not shown up, Ackman said, the whole thing would be over in a few months and Herbalife's alleged pyramid scheme would have collapsed.
- HLF shares are up over 13% for the year.
Tue, Mar. 24, 7:28 AM
- Herbalife (NYSE:HLF), already up over 19% this year, plans to add to its momentum with a seven-figure image-building advertising campaign that will begin as early as this week. FOX Business Network's Charlie Gasparino says the campaign will include print, TV, radio and online ads, with an initial focus on the Los Angeles and Miami markets. The company has supposedly purchased ad slots during the NCAA basketball tournament as well.
- The company's uptrend this year, +63% from the low of $27.60 on January 7, has given management a long-awaited respite from the pressure of short seller Pershing Square.
Tue, Mar. 17, 6:54 PM
- California federal judge Dale Fischer has thrown out a shareholder class-action suit accusing Herbalife (NYSE:HLF) of running a pyramid scheme, arguing there was no evidence the company had made disclosures to investors that caused its shares to fall.
- Fischer rejected the plaintiffs' argument that a Dec. 2012 presentation from Bill Ackman's Pershing Square Capital calling Herbalife a pyramid scheme was a corrective disclosure. "The [amended complaint] and plaintiffs’ related arguments are insufficient to compel the conclusion that the Pershing presentation was based on previously unavailable information or that the information could not be understood absent expert analysis."
- "What I heard from plaintiff counsel was 'Ackman, Ackman, Ackman'," said Herbalife attorney Jonathan Dickey at a hearing earlier in March. He argued the plaintiffs, who also alleged Herbalife published false financial statements and hid attempts to pressure members to buy more products from distributors, "slavishly copied from the Ackman accusations."
- Herbalife has risen to $36.24 AH.
- Earlier: Consumer group protests Herbalife's $17M distributor class-action settlement
Tue, Mar. 17, 12:39 PM
- Ad watchdog truthinadvertising.org filed a brief yesterday with the U.S. District Court for the Central District of California opposing Herbalife's (HLF -1.7%) proposed $17M settlement of a class-action lawsuit filed in April 2013 by a former distributor. A tentative settlement was reached in October 2014 whereby the company would pay $17M to resolve the action and prevent the ~1.3M class members from ever suing it again.
- Last month, the plaintiffs stated that they intended to oppose the settlement as well. Attorney Douglas Brooks claims that at least $100M is necessary to adequately compensate the class.
- If the proposed settlement goes through, most class members would receive no more than $20 each, while attorneys who negotiated the deal would pocket $5.25M. A hearing on the proposed settlement is scheduled for May 11.
- Previously: Former distributors reject Herbalife proposed settlement (Feb. 17)
Fri, Mar. 13, 5:40 PM
Fri, Mar. 13, 1:46 PM
- The public affairs firm that Pershing Square's Bill Ackman hired to advance his views that Herbalife (HLF +7.7%) runs an illegal pyramid scheme, Global Strategy Group (GSG), declares that it is not the subject of a federal investigation. In a statement, GSG says, "It is our clear understanding that we are not a target of any investigation and we are confident that all our work surpasses the highest legal and ethical standards. We spoke with the government and provided full transparency into all of our efforts. GSG has never made false statements about Herbalife nor do we believe anyone else has either."
- In an interview on CNBC this morning, Mr. Ackman said that Pershing Square hired GSG who, in turn, hired subcontractors around the country. His understanding is that the FBI interviewed a "handful" of the subcontractors.
- The probe is investigating whether certain individuals made false statements about Herbalife's business model to federal officials and regulators in order to incite a federal investigation into the company and manipulating HLF's stock price.
- Previously: Herbalife +5%; Feds reportedly interview Ackman hires in manipulation probe (March 12)
Thu, Mar. 12, 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
Tue, Mar. 10, 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%)
Sun, Mar. 1, 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 $10.5M the prior year.
Thu, Feb. 26, 4:56 PM
- Herbalife (NYSE:HLF) Q4 results ($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.
Thu, Feb. 26, 4:21 PM
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