Mark Luo
Long/short equity, Deep Value, contrarian, long-term horizon

How Usana Compares With Herbalife's Pyramid Scheme Allegations

As the short thesis on Herbalife (NYSE:HLF) is coming to fruition, Usana (NYSE:USNA) could very much be next. Like Herbalife, Usana sells commodity-like products at premium prices without any convincing reasons other than their recruiting activities. But unlike Herbalife where retail sales are elusive and the company assumes an arbitrary 50% suggested retail price (SRP), Usana's price list insists on a 20% SRP (aka recommended retail price) which makes it impossible for distributors to earn more income from retail sales than commission from their downlines (credit to LongShort 101). Honorable mentions to the short-thesis includes:

    Usana is currently under investigation by the SEC as executives were given stock-appreciation rights the day before favorable earnings...
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