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Buy The Undervalued Herbalife
As an Overreaction specialist, i saw the market reaction to Mr. Einhorn's questions at the conference call--as Overreaction.
It is also true that investors and potential investors in this stock have been shaken by this story. The "story" of course includes an extremely rare situation in which a speaker at a conference might or might not discuss a particular stock.
One human being(over all others in the world) controlling the price action of a stock is in itself a situation that doesn't make sense and if it doesn't make sense, it usually isn't true--not for a long period.
Sooner, rather than later, the common sense of "all the others" will prevail(even though they have been thoroughly shaken by all this volitility). Thus, it's not a surprise to see down days in this stock.
when your "gut" tells you it should now be moving UP after the Sohn Conference because Einhorn is now out of the way..
This makes it hard for day traders but a good opporunity for investors to go LONG in here.
With the stock at $45.00--This is the question---What will HLF hit first- $55.00 or $35.00. If you are willing to take that chance and buy the stock in here, you are an investor--not a day trader.
I am an inverstor interested in Overreactions in the markets.
The Overreaction Hotline
M. W. Goodman--editor
May 23 06:43 PM
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Is The Einhorn Phenomenon Getting Out Of Hand?
HERBALIFE and EINHORN
A stock will generally fall sharply because of earnings,corruption,di... of some kind, new investigation by a government agency,SEC, FDA, criminal activity,
Herbalife stock fell sharply because a fellow by the name of Einhorn(well known, of course) asked some questions on a conference call.
The company answered his questions properly,and some insiders bought some additional stock,that is public information.
The company then announced a large stock purchase of their own company through Merril Lynch -- to continue buying for several months- through July.
THIS stock fell sharply because one person in our entire nation asked a very few questions. As if everyone else was sIeeping and the company now decided to purchase $427.9 million dollars of it's own stock for the sole purpose of "Fooling Some Of The People All OF The Time" --The now famous book written by David Einhorn(of all people)
My feeling-----IF IT DOESN'T MAKE SENSE, IT'S USUALLY NOT TRUE !
The sudden steep decline of HERBALIFE (
), in this case, met my criteria as an Overreaction.
NOW, for the Ira Sohn Cenference and the speakers at that conference.
With fifty five years experience in the markets(and still going) i knew this stock would drop further if Mr. Einhorn spoke negatively about Herbalife at the Sohn Conference-i knew that--everybody knew that.
By putting myself in Mr. Einhorn's shoes, it was not hard to conclude that he probably would remain silent about this company during his presentation at Sohn. for the following reasons.
#1 If it doesn't make sense to do something, then Don't Do It !--and he didn't.
(Sometimes better to be a decent psychologist-than anything else)
#2 The stock was already down dramatically from the time of his "questions". He already won his Victory with this one. His Victory--the power to drive down a stock just by asking a very few questions.
Why turn a Victory into a possible loss if he continues on.
#3 Why take a chance by continuing on with this and possibly having the Federal agencies coming around, asking questions about motives, activities, short sales etc. all taking time and energy away from this bright, active, involved person.
#4 Plenty of other companies (a whole world out there) to target for a good and CURRENT short sale.(current, being the minutes he used during his short presentation)
# 5 A smart guy(Einhorn) might well say to himself something like the following before he addressed The Sohn Conference.
"Everybody thinks i might slam Herbalife at the conference.
I never like to do what people think i am going to do. That's not me.
I don't know that much about the company. i personally don't trust that type of marketing but the fact is, they are doing ok with it. Actually better than ok. I hit them with my questions and their response was sound. Some insiders bought additional stock on the open market. The Company decided to buy $427.9 million of their own stock -and some insiders bought more stock. Maybe they know more than i know, after all, they work with it every day and i don't.
Their response was impressive and i've already knocked the stock down 30 points in 13 days. Not bad for just asking a few questions.
Think i'll call it a victory, not wake up the regulators by continuing on with this one. Maybe call it a victory and remain quiet on this one.
I would like to throw in a little humor at the Sohn event. The boys do some of that so maybe i can have some fun with all this reaction to my few questions to the Herbalife execs. Something like this---
"My oh my, it was only asking a couple of questions and all this ! "
Yes, I like that line. I think i can get a good laugh out of the crowd there. They'll get it .
" But let's not go there . Enough talk about Herbalife,already.
Better stories to tell ! I've got the whole world out there to talk about.
Let's see, maybe Martin Marietta (MML) a more intriguing story to tell this bunch listening so intently to my presentation at Sohn.
Now, this MML is one for them. I'll get em on the edge of their seats with Martin Marietta and Vulcan---Yep that's the one for today.!
* One time fiscal stimulus to wind down !
*Valuation as measured by PE.
*Share exchange offer manueuvering
*Question on the EV/EBITDA multiples.
All kinds of intrigue here and plenty to talk about
MML and VMC will be what i talk about today !---Yes ! "
The ABOVE is what an intelligent person would say to himself
before speaking at this important conference.
"If it doesn't make sense, it usually isn't so "
It didn't make sense that Einhorn would continue on with Herbalife
at the Sohn Conference
Because of that, I bought HLF just before Einhorn spoke at conference (the hardest time to make the choice is often the best time) and sold it at the market close on Wednesday.I'm now finished with Herbalife.
I don't know that much about Herbalife or any other company and with 83 years of life's experiences, i've learned not to fool with Earnings Expectations, PE ratios,Ebitdas etc. etc.
As an amateur psychologist, I have a better chance with the next Overreaction in the markets. The Herbalife/Einhorn story and the Sohn conference is an example of overreaction.
.Overreaction has been my interest for many years and somehow, i am right more than i am wrong. So still in there plugging and continue to look for the next "Overreaction"---and the next.
The Overreaction Hotline
May 18 04:08 AM
Link to Comment
Shares of Herbalife (
in premarket trading after the
David Einhorn Effect
continues to weigh on the stock. In the latest blow, Caris
the company to Hold on fears that Einhorn will present his thesis on HLF at the Ira Sohn conference.
View news story
I have fifty five years experience in the markets and still can't tell you what the market will do tomorrow, next week or next year, If someone tells you they can, do yourself a favor and run the other way.
But, don't hang up yet.
In my fifty five years, i found overreactions to market events and have a record in trading those Overreactions.That is what i do.
That continues to be is my only stock market activity.
When i saw BP on television night after night showing the oil gushing out into the gulf with the price of BP stock falling day after day and our government and the public overreacting in every conceivable way, i then took a look at that corporation's financials only to find a great company that was involved in some way with an accident and subsequent explosion--and sadly some deaths involved.
I am somewhat ashamed to say (because of the deaths and injuries) that i profited from that trade because there was an overreaction in the dramatic fall of the share price of BP, a very substantial company undervalued at the time because of overreaction(fear)--But, it is true that there was an accident deep under water, an explosion on a rig and sadly some deaths and injuries.
Yet, a profitable trade. i am a bit ashamed to say that.
That's what i do. It's the only thing i do in the markets. i look for overreactions. I find them from time to time and i often win on those trades. I continue on after all the years
Obviously, in my 55 years, there have been hundreds of what i call overreactions--many including sad events as described above but others including criminal behavoir, SEC investigations, sexual activity, FDA troubles etc. etc.
When i spot trouble, i go looking for OVERREACTION in the market because of that "trouble"
Now, all of a sudden ,HERBALIFE some company that i had no interest in shows up with all kinds of trouble yet, there is no accident, explosion, deaths, or shock because of earnings decline, no criminal activity--NOTHING i am used to seeing in my work--only the shocking name of Einhorn shows up with a few questions that the company answers satisfactorily then immediately sets about buying it's own stock-Big time !
It turns out that Einhorn is not right every time. He had some connection with New Century, the subprime mortgage lender which filed for bankruptcy in 2007. So he is not perfect nor should he be expected to be perfect every time.
When i get involved, i usually see some accident, explosion, crime, investigation, earnings disappointment, SEC trouble, FDA trouble, scandal of some kind etc.
But with this Herbalife, all i see is EINHORN (of all things) who hasn't been perfect all the time and doesn't have to be.
David Einhorn and i have something in common. We both know how to ask questions that will stir some real excitement but they are only questions.
My question to Greenlight Capital on this "conference call"
"David, did your fund short Herbalife HLF before you asked your questions during the call"
Don't get Excited David! It's only a question-much like yours.
I am long HLF (stock-no options) only because this story fits my criteria of an Overreaction
The Overreaction Hotline
May 9 07:10 PM
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