Wed, Feb. 25, 5:35 PM
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Tue, Feb. 17, 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.
Wed, Feb. 11, 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.
Tue, Feb. 10, 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.
Wed, Jan. 28, 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)
Wed, Jan. 28, 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.
Tue, Jan. 27, 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.
Mon, Jan. 26, 6:04 PM
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.
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