5 New Questions For Herbalife Investors [View article]
Good questions. It would also be interesting to know if Ichan's agreement to hold his shares for a year is invalidated by this accounting rumpus. My guess is that Ichan definitely has an 'out'....
10 Sharp Healthcare Dogs Diagnose 7.4% To 62.1% Gains In March [View article]
GIFC has never 'comped' HLF to companies like PFE, SNY or MRK etc. If "YCharts.com" does not use that distinction, I question the usefulness and veracity of their healthcare index.
10 Sharp Healthcare Dogs Diagnose 7.4% To 62.1% Gains In March [View article]
HLF is not a healthcare company. HLF is an MLM company similar to NUS, AVP & Amway (among others). Many troubling questions have been raised about the legality and ethics of HLF's business model and --in any event-- it is clear that HLF's revenue & earnings are derived from the sale of a so-called 'business opportunity' and not from the sale of health care products or services.
What Bill Ackman Doesn't Want You To Know About The FHTM Case [View article]
Perhaps, in the "fake it till you make it" world of HLF, changing the "nomenclature" can change the facts but the rest of us --including most US courts & regulators-- honor the Shakespearean model ... "A rose, by any other name ... etc. ....". LOL.
Herbalife: 5 Common Sense Arguments [View article]
Good article. You cut to the heart of the matter ... and more.... It is 100% correct to look at the HLF business model as you describe it. I found your explication of the this aspect particularly useful: Consider the HLF business model from the point of view of the 70-90+% of 'distributors' who --on a TTM basis-- have washed out of the HLF scam ... I'll bet they would be quite surprised to find that HLF has 'demoted' them to customers. Merely for purposes of legal & regulatory compliance, of course.... LOL.
Right -- this -- and not the possibility of FTC action-- is the reason to be short HLF. Sustaining revenue & earnings (to say nothing of growth) will require something like an outbreak of 'mass delusion'; in other words, something more than the slick hucksterism (on display in the HLF video) which is so much HLF's 'stock-n- trade'. Kudos for a good article and comprehensive follow up.
Publicly Available Lessons Regarding Pyramid Schemes: What Should We Think About Herbalife? [View article]
You are simply incorrect. Information about 'retail sales' is typically gathered, interpreted & used --with a great deal of precision-- by all parties in a distribution chain. Your understanding of this subject seems so parochial that it lacks credibility. Do some Google searches of this subject: The results --together with an investment of perhaps an hour of reading-- will better inform your POV. Also, visit the websites of companies like Symphony IRI Group ... they perform these tracking services on a consulting basis for hundreds of companies up & down the manufacturing, distribution and retail chain.
Publicly Available Lessons Regarding Pyramid Schemes: What Should We Think About Herbalife? [View article]
Periodic reporting of retail sales is quite common in all distribution chains of consumer products & other goods. It is usually in all parties interest (manufactures, wholesalers, distributors & retailers etc.) to capture this data and use it.
Do you think that Clorox is just guessing when it decides how much bleach to manufacture next quarter? Or that supermarket distributors are never sure if they should send 10 gross or 100 gross of toothpaste to a particular retail store? It sounds foolish to pretend that retail sales data is so elusive to gather or somehow less than useful to any product sales business.
Of course, an MLM company generating more than half its revenue from the sale of a 'business opportunity' linked to the right to sell a particular 'product' might want to put a different spin on the collection & use of this data .... LOL.
Publicly Available Lessons Regarding Pyramid Schemes: What Should We Think About Herbalife? [View article]
No that is one of the perplexing things about this debate: HLF did not discuss (or use) actual data in an attempt to substantiate 'retail sales', instead they relied on a dubious survey process.
Publicly Available Lessons Regarding Pyramid Schemes: What Should We Think About Herbalife? [View article]
The only "BS" on offer is the assertion --in an age of mathematical analysis based on multivariate calculus & supercharged by a few thousand lines of computer code-- that an accurate estimate of retail sales cannot be derived from the data points that you mention and relating them to other known HLF manufacturing and sales data over time. This "cannot track" assertion was "BS" in 1979 (when stated by Amway) and, as William Keep points out below, is even less credible today.
Unless --of course-- you are operating a business model that provides incentives for the purchase of product without any direct correlation to retail sales .... Moreover, since HLF requires 'distributors' to keep track of their retail customers, some POS data is actually in HLF's possession; therefore, interesting questions are raised by HLF's reluctance to use the retail sales data provided by their own distributors.
Publicly Available Lessons Regarding Pyramid Schemes: What Should We Think About Herbalife? [View article]
"Responsibility" may be the wrong term but --think about it-- 'retail sales' are always a key metric that you need to know in order to match supply with demand.
Nice article. You have focused on the real problem with HLF's business model and the reason to be short the stock. Consider this fact in support of your POV: When HLF was last 'taken private' in 2002 the buyout was for less than 1X sales. That's right, 'insiders' (who already owned more than 10% of HLF) had only enough confidence in the stability of revenue/earnings to value the company at less than 1X sales ... people who understand HLF's business model have never been --to use your metaphor-- willing to pay for more than a link or two in that endless chain of distributors....
Reply To Bill Ackman's Questions On My Herbalife Analysis (Part 1) [View article]
For anyone debating whether HLF's business is based --primarily-- on 'recruiting' as opposed to the retail sale of a consumer product I suggest that they model this scenario: Assume that HLF stops recruiting and adds no new distributors for a one year period. In this model, HLF revenue/earnings are crushed. IMO, what Ackman sees is not a business about to be prohibited by law or regulation but a business model where revenue/earnings are hyper-dependent on selling an ever increasing number of people a questionable 'business opportunity'.
Nomenclature: Will Herbalife Copy Nuskin? [View article]
You seem to be banking on the assumption that those 14 million non-ackman shorts were sold at prices below $40 ... you might want to consider the other side of the coin.... Moreover, if you look at the price history of HLF over the last year, it is reasonable to think that plenty of stock would be for sale to cover those shorts just below any $40ish takeout price. Who provides the catalyst for the price spike you think will transpire? Surely, you don't mean to suggest that a PE bidding war is likely to break out for HLF, do you?
5 New Questions For Herbalife Investors [View article]
10 Sharp Healthcare Dogs Diagnose 7.4% To 62.1% Gains In March [View article]
10 Sharp Healthcare Dogs Diagnose 7.4% To 62.1% Gains In March [View article]
What Bill Ackman Doesn't Want You To Know About The FHTM Case [View article]
Herbalife: 5 Common Sense Arguments [View article]
Herbalife's Tragic Flaw: Understanding Inventory Loading [View article]
Kudos for a good article and comprehensive follow up.
Publicly Available Lessons Regarding Pyramid Schemes: What Should We Think About Herbalife? [View article]
Publicly Available Lessons Regarding Pyramid Schemes: What Should We Think About Herbalife? [View article]
Do you think that Clorox is just guessing when it decides how much bleach to manufacture next quarter? Or that supermarket distributors are never sure if they should send 10 gross or 100 gross of toothpaste to a particular retail store? It sounds foolish to pretend that retail sales data is so elusive to gather or somehow less than useful to any product sales business.
Of course, an MLM company generating more than half its revenue from the sale of a 'business opportunity' linked to the right to sell a particular 'product' might want to put a different spin on the collection & use of this data .... LOL.
Publicly Available Lessons Regarding Pyramid Schemes: What Should We Think About Herbalife? [View article]
Publicly Available Lessons Regarding Pyramid Schemes: What Should We Think About Herbalife? [View article]
Unless --of course-- you are operating a business model that provides incentives for the purchase of product without any direct correlation to retail sales ....
Moreover, since HLF requires 'distributors' to keep track of their retail customers, some POS data is actually in HLF's possession; therefore, interesting questions are raised by HLF's reluctance to use the retail sales data provided by their own distributors.
Publicly Available Lessons Regarding Pyramid Schemes: What Should We Think About Herbalife? [View article]
Publicly Available Lessons Regarding Pyramid Schemes: What Should We Think About Herbalife? [View article]
Herbalife Is An Endless Chain [View article]
Reply To Bill Ackman's Questions On My Herbalife Analysis (Part 1) [View article]
Nomenclature: Will Herbalife Copy Nuskin? [View article]