Opinions on Ackman vs Herbalife?
I find this Ackman/Herbalife story very interesting.
I talked to an aquaintence who has been working at Herbalife on the side for over 20 years and he says Ackman's totally wrong and dosen't understand MLM marketing, blah blah. He didn't exactly convince me.
Ackman, who i've followed for a while, shocks me bc this is only the 2nd time he's ever been short. He also said he is giving the money he makes to charity. Also his conviction is significant.
“We welcome their suing us. If they sue us, we get access to inside information on Herbalife that we can prove that we are telling the truth. For me to say a company is a pyramid scheme is something I do not do lightly. This is a company we started analyzing a year and a half ago, this is a company that we have done an enormous amount of work. We will make our work available…I believe that it is a certainty that this company is a pyramid scheme. And I would not say that if I did not believe that to 100% confidence level because I understand the implications of saying publicly that a company is a pyramid scheme if it’s not a pyramid scheme. This is what I believe based on very careful and thorough analysis of every fact we’ve found. There is not a fact we have learned that is inconsistent with this company being a pyramid scheme…This is the highest conviction I have ever had about any investment I have ever made, full stop.” - Ackman
An analyst at the firm, Shane Dinneen, took the audience through the details, showing charts of the company’s sales structure. Levels in the structure have names like “millionaire team” and “founder’s circle.”
Mr. Dinneen zeroed in on the way Herbalife reports sales. The suggested retail price that the company uses is not the price at which products are actually sold, Mr. Dinneen said. That suggested price is an “artificial, inflated number,” Mr. Dinneen said, while the actual price can be significantly lower.
If Ackman is wrong, however, this would be an EPIC buying oppurtunity to buy a growth company at basement prices. I will be looking for the three hr presentation he gave today, and post it here if I can.
I'd love to hear what you guys have to say about Ackman/Herbalife. Is it a pyramid? Is it a buying oppurtunity? Is it too tough to call?