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- 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.
Slip-Sliding With Herbalife, With The FTC Or Without It
- MLM: A house that is divided against itself shall not stand. This is failure by design.
- Long or short is not the issue. A pyramid scheme should not even be listed at all.
- The target remains zero, but when? It could be a slow decline, accelerated decline or sudden shutdown.
- Quantifiable reputational issues call for an impairment against goodwill, and preferred customers should not need to sign 120-page contract or pay $59.
Herbalife And The 1986 State Of California Final Judgment: An Update
- Important new information has come to light regarding California State Attorney General Kamala Harris.
- It has been reported and confirmed that Kamala Harris's husband is a partner in a law firm that acts for Herbalife.
- This appears to present a conflict of interest and a situation Mrs. Harris needs to address.
Even The Best Bull Case For Herbalife Isn't Much Of A Higher Stock Price
- Best dream fundamental case for HLF is $69 per share even though it’s based on completely unrealistic assumptions.
- HLF isn’t even trading at much of a “regulatory” discount compared to TUP.
- The risk/reward for a short position in HLF is quite favorable.
Herbalife And The 1986 State Of California Final Judgment
- Attorney General Kamala Harris has a powerful legal tool available to her.
- That tool is Section 5 B of the 1986 final judgment and permanent injunction against Herbalife.
- Will Kamala Harris enforce the terms of the judgment, respect her predecessors' work and protect her state?
'Welcome Back Kotter' Promotion Shows Herbalife Desperation
- Herbalife's recruiting trends are declining.
- Management is pushing on a string.
- Contraction is imminent.
- The value of HLF stock may arise from non-compliance with federal law. If Herbalife eliminated inflated income claims or disclosed the actual risks of investment, recruiting would end.
- In the absence of substantive regulatory action, Herbalife shares should collapse along a slower trajectory to a near zero value. An HLF compensation plan analysis is presented.
- There is widespread public suspicion of fraud. Google data show that US consumers who search for scams are about 660 times more likely searching an MLM like Herbalife.
- In response to public demand for MLM scam information, Herbalife distributors have created a network of deceptive websites that use black hat SEO to intercept consumers searching for scams.
- Herbalife can choose compliance and abandon investors or it can choose non-compliance to force regulatory action and face charges that are decades overdue.
Myth Of Direct Selling Blinds The Bulls And Believers At Herbalife
- Herbalife bulls and believers have blind faith in Herbalife's identity as a true "direct selling" company.
- Herbalife, in reality, has little or no connection to direct selling. It is pure multi-level marketing.
- MLM is not direct selling and is not historically related to it. It assumed that identity. It did not inherit it.
- MLM is closer in character, content and style to the Great American Medicine Shows popular up to World War II, famous for bogus health remedies, high prices and group persuasion.
- MLM's true history traces to Nutrilite, the precursor to Amway. Here the "endless chain" pay plan joined with the "medical cure-all" to gain cult-power and extend the Medicine Show legacy.
Herbalife: An Open Letter To New York AG Eric T Schneiderman
- SOMOS: Hispanic politicians in hot water over accepting blood money from Herbalife.
- AG Schneiderman in unfavorable light re ex-wife and Herbalife lobbyist Jennifer Cunningham.
- Pershing Square Letter to Herbalife compliance head Pamela Jones Harbor.
- Recent arrests of MLM-friendly AGs in Utah.
- Legal assistance from Bruce A. Craig, retired Wisconsin- AAG, from veteran MLM-prosecutor, author of the text in 359fff of the Martin Act, basis of any Herbalife prosecution in New York.
- Herbalife Short Interest Climbed the past two weeks.
- Shorts seem uninterested in covering here.
- Herbalife's PR Machine contnues to undermine management credibility.
Sun, Jul. 27, 5:35 PM
Fri, Jul. 25, 12:38 PM
- Herbalife (HLF +0.3%) appoints Alan L. Hoffman to the newly-created position of SVP of Global Corporate Affairs reporting to Chairman & CEO Michael Johnson effective August 25, 2014. He joins the firm from PepsiCo where he is SVP for Global Public Policy responsible for policy development and external/government relations.
- Mr. Hoffman was formerly VP Joe Biden's Chief of Staff and President Obama's Deputy Assistant.
- Separately, SVP of Global Corporate Communications Barbara Henderson retires. She will assist with the transition to Mr. Hoffman and remain President of the Herbalife Family Foundation.
Tue, Jul. 22, 1:05 PM
- Shares of Herbalife (HLF +14.8%) pop on a 5x surge in volume after investors regain confidence that the company "ain't done yet." In this morning's webcast, Mr. Ackman presented the findings of the investigation into the firm's Nutrition Clubs (NC) that Pershing Square sponsored. Unfortunately for shorts, there was little new information that would portend a collapse of the company. The investigative team looked into > 240 Nutrition Clubs in the U.S., Mexico and six other countries. There are > 37,000 NCs in Mexico that account for 75% of HLF's business in that country. Latinos figure prominently in Herbalife's growth.
- Investigative reporter-cum-analyst Christine Richard was the person who gave Mr. Ackman the idea of shorting Herbalife. She led the investigative effort into the NCs. She says that the clubs make money via the "certification" process for aspiring NC owners. They work for free, must consume and pay for product each time they report to a club and must deliver at least 10 repeat customers to the teaching club before they are allowed to open their own. The total investment is ~$3,000 which is similar to the initial investment in inventory for Supervisor status, it's just spread out over time. Mr. Ackman asserts that the NCs use deceptive tactics and violate labor laws by forcing people to work for free.
- According to the company, 33 - 41% of its earnings are derived from NCs. If they were to be shut down (by government action) the company would face a catastrophic collapse. Mr. Ackman believes the proportion is as high as 50% of earnings. He admitted that Canada is the only government that has looked into the situation thus far.
- As a crowning touch at the end of presentation and prior to the Q&A, Mr. Ackman called Herbalife CEO Michael Johnson a predator and a criminal. He then got emotional as he described his immigrant ancestors' pursuit of the American Dream. Regrettably, the camera didn't pan the audience to see how many members were teary-eyed as well.
Tue, Jul. 22, 12:47 PM
Tue, Jul. 22, 7:02 AM
- In an interview on "Bottom Line" yesterday, Bill Ackman declared he will show how Herblife's (NYSE:HLF) Nutrition Clubs are frauds similar to Enron's fake trading rooms reports Bloomberg. He confirmed that Pershing Square Capital Management has spent $50M of investors' money to prove the company is a pyramid scheme. He confidently stated, "Trust me, when you see the stuff we have you will conclude the money was well spent."
- Herbalife plunged 11% yesterday. Shares are down another 4% premarket on light volume.
- The webcast is scheduled for this morning at 10:00 EDT via www.HerbalifePyramidScheme.com.
Mon, Jul. 21, 3:46 PM
- The softness of Herbalife (HLF -11.3%) shares continues as the end of the trading day approaches. Shares are down on a 4x surge in volume.
- In an attempt to set the tone for tomorrow's webcast by Pershing Square, the company issues a press release about its Nutrition Clubs. The bullets address the qualitative advantages/benefits for members but do not address the financial details, an area that was most certainly the focus in Mr. Ackman's investigation.
Mon, Jul. 21, 1:49 PM
- Shares of Herbalife (HLF -6.2%) tank on a 2x surge in volume ahead of tomorrow's webcast at 10:00 am EDT by Bill Ackman's Pershing Square Capital Management. Mr. Ackman et al. will be presenting their findings from their investigation into the company's Nutrition Clubs.
- Interested persons may access the presentation via www.HerbalifePyramidScheme.com.
Fri, Jul. 18, 12:24 PM
- At Herbalife's (HLF +0.7%) Extravaganza in Chicago, members hold a press conference to convey their displeasure over what they perceive as misstatements by Pershing Square Capital Management.
- Pershing has scheduled another webcast for July 22 at 10:00 am EDT to discuss its investigation into Herbalife's Nutrition Clubs. Interested persons may access the event via www.HerbalifePyramidScheme.com.
Thu, Jul. 17, 2:12 PM
- Herbalife (HLF -1.2%) publishes an updated refutation of Pershing Square's statements questioning its business model and the satisfaction of its many distributors.
- The company has created a website, iamherbalife.com, where Herbalife customers and distributors share their positive experiences.
- The last statement in the main body of the press release concisely sums up its opinion of the affair: "Ultimately, Pershing Square's campaign is based on propaganda, and we look forward to demonstrating that its assumptions will crumble under serious and independent scrutiny."
Mon, Jun. 2, 8:15 PM
- The U.S. Court of Appeals in San Francisco rules that digital music seller BurnLounge is an illegal pyramid scheme because its distributors pay for the right to sell products and are motivated primarily by payments by the company for recruiting new members. The income from merchandise sales is incidental to the income from recruiting. The court did not state that commissions paid to the sales force, rather than customers outside of the firm's distributor network, are illegal.
- Observers of Herbalife (HLF -0.1%) have been closely watching this case. Many believe the court's ruling is a positive for the company because it clarifies the issue of paying commissions to distributors purchasing products. Multilevel marketing attorney Kevin Thompson says, "As long as the products have legitimate value the company will be in a good position to thwart off pyramid arguments."
Thu, May. 15, 4:53 AM
- Perry Capital has increased its holding in Herbalife (HLF) to 4.8M shares at the end of March from 3M in December, giving the New York hedge fund a 4.9% stake.
- The move comes despite Herbalife being under investigation in the U.S. over whether it's a pyramid scheme.
- Perry also raised its stake in eBay (EBAY) to almost 2M shares from 500,00, and it upped the amount of call options it holds in the auctions Web site.
Mon, May. 12, 9:22 AM| 42 Comments
Fri, May. 2, 1:34 PM
- Joel Greenblatt's screen looks to find stocks with high "earnings yield" - a high ratio of profits to enterprise value. Companies are further screened for a strong return on capital. When a stock scores well with both criteria, it's usually a good company being undervalued by investors.
- For picking individual stocks, there are probably better methods, but as a group, Magic Formula names have vastly outperformed the broad market.
- Although defense names have done well over the past couple of years, the Magic Formula continues to identify Northrop Grumman (NOC +0.2%), General Dynamics (GD +1.4%), and Raytheon (RTN +0.6%) as attractive. Firearm names Smith & Wesson (SWHC +0.8%) and Sturm Ruger (RGR +0.3%) also make the cut.
- A number of videogame makers show up as well: Take-Two (TTWO +0.3%), Activision Blizzard (ATVI +0.2%), GameStop (GME +2.8%), and the struggling recent IPO King Digital (KING -0.3%).
- Not too surprisingly, the Magic Formula also continues to like plenty of big-cap tech names: Cisco (CSCO -0.2%), CA, Inc. (CA -0.5%), Microsoft (MSFT -0.5%), Hewlett-Packard (HPQ -0.5%), and Apple (AAPL +0.1%).
- Hardly market laggards, media names like Time Warner (TWX -0.8%), Viacom (VIA +1.4%), Omnicom Group (OMC), and Starz (STRZA +2.3%) also show up on the list, as do struggling multi-level marketers and for-profit education stocks: HLF, NUS, APOL, ESI, CPLA.
- Punished by investors for not being as hot as they once were, Coach (COH +0.2%), Francesca' Holdings (FRAN +0.1%), and Gap (GPS -1.3%) are Magic Formula picks today.
Mon, Apr. 28, 4:45 PM
- Global volume growth: 9%. EPS: $0.74 (-32.7%).
- CF Ops: $190.6M (+39%).
- Q2 guidance:
- Net sales growth: 10% - 12%, volume growth: 7% - 9%.
- EPS: $1.51 - $1.55.
- Common shares to be repurchased: $581M.
- 2014 guidance:
- Net sales growth: 10% - 12%, volume growth: 8% - 10%.
- EPS: $6.10 - $6.30.
- Quarterly cash dividend terminated. Cash will be used to buy back shares.
- (HLF +1.8%)
Mon, Apr. 28, 4:31 PM
Sun, Apr. 27, 5:35 PM
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