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View Full Version : Huge short on Herbalife



artemis
25-12-2012, 10:36 AM
Interesting article at below link. There's big network of sellers in NZ.

http://www.businessinsider.com/bill-ackmans-herbalife-presentation-2012-12

"Activist investor Bill Ackman, the CEO of Pershing Square Capital Management, gave an epic presentation on his latest short Herbalife.
Ackman, whose hedge fund has an "enormous" short position, believes the multi-level marketing company that sells weight management and nutritional supplements is a pyramid scheme.
He also has a price target of $0 and believes the company is going to fail."

He is going to donate any personal profit to charity.

Halebop
25-12-2012, 09:54 PM
Well he said he was going to donate 100% of his "personal share" of profits, which could mean anything assuming he uses companies or trusts.

I've made a bit of money investing in listed MLM companies in the past but thankfully have no exposures at present.

Multilevel marketing companies tend to be counter-cyclical, performing better when jobs and pay rises are harder to come by. As confidence was likely to be high, I think this is a pretty clever bear attack. While the substance of the presentation appears fairly ho hum to me, just shaking distributor confidence can impact growth which in turn can impact share valuations.

By publishing such a broad attack including many arguments, Pershing Square are also opening themselves to counter-arguments. More than a few of their points looked spurious to me. Suspect it won't be long before lawyers are involved.

If I was to make a prediction, Herbalife will not go to zero but will get swallowed by a large global branded goods company.