Herbalife Ltd (NYSE:HLF)

CAPS Rating: 1 out of 5

A global network marketing company that sells weight management, nutritional supplement and personal care products.

HLF News and Commentary

Caps

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All Players

447 Outperform
268 Underperform
 

All-Star Players

83 Outperform
79 Underperform
 

Wall Street

9 Outperform
2 Underperform
 

Top HLF Bull/Bear Pitches

The best Bull and Bear pitches based on recency and number of recommendations.

callumturcan (86.58)
Submitted February 06, 2013

This company is not a pyramid scheme. Out of the 13 pyramid schemes brought to the FTC, they were all younger than 10 years and 11 of them were younger than 5. This company is over 32 years old and has constistently grown its EPS by double digits,… More

TMFMattyA (99.87)
Submitted January 14, 2014

Now that the re-audit is done and there were no restatements, and the fervor over Bill Ackman's short from late 2012 is mostly in the rear view mirror, I think Herbalife's value will now be weighed by the company's business model going forward --… More

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Recent Community Commentary

Read the most recent pitches from players about HLF.

Recs

0
Member Avatar kkconway (99.65) Submitted: 6/12/2018 12:33:07 AM : Underperform Start Price: $53.19 HLF Score: -5.19

Quasi-Pyramid scheme which can not go on for long because they will run out of new distributors, and then....kerplunk.

Recs

0
Member Avatar TMFRendezvous (83.28) Submitted: 4/23/2018 5:00:35 PM : Underperform Start Price: $51.17 HLF Score: -4.60

https://www.rendezvousinvesting.com/single-post/2018/04/23/Im-Shorting-Herbalife-with-Put-Options

Herbalife is a Pyramid Scheme.

Have you ever had someone from your high school hit you up on Facebook randomly and say something like "Hey, are you interested in making some extra cash on the side? Some friends of mine are starting a business, and I think you'd be a good fit."

Every time I get those messages I say "get out while you can."

You can't talk Herbalife without mentioning Bill Ackman, the activist hedge fund manager who took a 1 billion dollar bet against Herbalife in a very public attempt to sink the company. The problem with shorting is that it invites a short squeeze. And that squeeze was Carl Icahn who bought up Herbalife. Some even think this move was just as much in spite of Bill Ackman as it was taking advantage of an opportunity to profit from high short interest.

Quick short squeeze lesson: Essentially, when you short a company, you have to "buy-back" the shares you borrowed to exit the position. If you are wrong and shorts are "squeezed" into cutting their losses they have the buy the shares at higher prices. In the case of Ackman's billion dollar short, that would send the stock up significantly.

The point here is that much of Herbalife's stock price is financial engineering and NOT business fundamentals. Herbalife has bought back stock and manipulated the float (shares available) of the stock in an attempt to clear Ackman's barrage. With Ackman out of the picture, they can successfully point to their high stock price and show their "employees" and the world that Ackman's claims were wrong. Why may be false equivocation -- but it works.

However, what they're left with are a few major shareholders coming off a big gain in which business fundamentals remain questionable. So my question is... what happens when Icahn and others sell out?

Icahn is a prudent investor, but he is not as much of a business-focused as Ackman is. Ichan tends to focus more on cost structures and technicalities. In Icahn's twitter bio he says "some people get rich studying artificial intelligence. Me, I make money studying natural stupidity." Some even consider his knowledge of Herbalife as a buisness to be pretty minimal (all things considered), which signals he may not be in interested in Herbalife for the long haul.

With Ackman out of the picture, the stock is at all-time highs. But Let's look at the business.

I don't like to call tops but...

Growth? Declining -3%
EPS? Lower than it has been past 3 years, yet the stock is up
Operating Margin? Declining, poor compared to peers
Net Margin? Declining, poor compared to peers
Inventory Turnover? Down i.e. products are not selling.

P/E 39X
Forward P/E 20X

That assumes the company will continue to make as much money as it does today for 20 years. I just can't see that happening.

Walmart- the best retail operator in class trades at 17X Forward P/E

That does not make sense to me.

Other red flags:
-They are buying back stock...at all time highs -- Not smart
-Volume points are decreasing -3.6% (volume points are considered the drivers of growth for multi-level marketing companies)
-They have stopped reporting how many "members" they have, which likely means it is now lower.

My last point is that Herbalife is simply an unethical organization. I think objectivly Ackman was spot on with his analysis of Herbalife. But Ackman was betting against human nature...and he might have gotten away with it if it wasn't for Carl Ichan

Herbalife uses aggressive, aspirational advertising techniques that pull on on people's heartstrings. Often, they are roping up people who are uneducated and poor and selling them very expensive products with the promise of owning your own business. You couple that with the fact that they sell inspirational nutritional products, and you have an addictive pyramid scheme.

It is hard to tell people they are wrong about Herbalife, it's like pouring water on a grease fire-- people's pride is at stake, and Herbalife's management team knew how to burn Ackman.

The word does not need this company in an internet age when we can get anything we want for cheap. We do not need our youth and our poor succumbing to false bu
isness promises and "millionaire mindset" advertising. It is not entrepreneurial and wastes time. Selling overpriced shakers to people certainly does not make them more fit, especially financially.

I truly believe that by opening up a "short" put option position on Herbalife I am doing the most socially conscious investing I can do.

Recs

0
Member Avatar InvestRight (93.68) Submitted: 4/19/2018 2:05:54 PM : Underperform Start Price: $51.42 HLF Score: -4.80

"Without an elaborate pyramid scheme of recruiting sellers to recruit their friends and family, Herbalife is an unpopular smoothie shake. Put that overpriced thing in a Walmart and you won't sell jack squat." - Daniel Scrugham, Podcast Host of Early Investing

Leaderboard

Find the members with the highest scoring picks in HLF.

Score Leader

smisra2

smisra2 (96.95) Score: +1,403.74

The Score Leader is the player with the highest score across all their picks in HLF.

Top
Pick
Member Name Member
Rating
Start
Date
Call Time
Frame
Start
Price
Stock
Gain
Index
Gain
Score Commentary
smisra2 96.95 3/23/2009 Outperform NS $3.23 +1,661.54% +257.80% +1,403.74 0 Comment
Dann68 70.87 3/24/2009 Outperform 3Y $3.31 +1,617.16% +253.12% +1,364.04 0 Comment
charliebottle < 20 3/24/2009 Outperform 5Y $3.33 +1,611.32% +253.29% +1,358.03 0 Comment
GoingPro 75.79 11/24/2008 Outperform NS $3.64 +1,463.08% +236.91% +1,226.16 0 Comment
sushmitasri < 20 3/27/2009 Outperform 3Y $3.69 +1,442.61% +249.68% +1,192.93 2 Comments
notzia 57.98 4/3/2009 Outperform 5Y $3.83 +1,384.43% +246.27% +1,138.16 2 Comments
DOCFOSTER54 51.60 4/3/2009 Outperform 1Y $3.85 +1,380.07% +243.78% +1,136.28 0 Comment
FoolishRomantic 94.93 11/17/2008 Outperform NS $3.87 +1,369.40% +237.81% +1,131.60 0 Comment
lawjeseps 67.21 11/17/2008 Outperform 5Y $3.87 +1,369.40% +237.81% +1,131.60 0 Comment
lawjes < 20 11/11/2008 Outperform 5Y $4.20 +1,256.13% +223.02% +1,033.11 0 Comment

Wall Street

See what the Wall Street professionals think, according to their public statements and filings.

Player Name Player
Rating
Start
Date
Call Time
Frame
Start
Price
Stock
Gain
S&P
Gain
Score End Date Commentary
TrackJimCramer 85.53 3/17/2015 Underperform 3W $17.22 +230.58% +37.20% -193.38 0 Comment
trackbtigresearc 50.32 11/19/2014 Outperform NS $19.19 +196.56% +38.36% +158.20 0 Comment
TrackPivotalRese 74.61 10/20/2014 Outperform NS $23.20 +145.35% +50.99% +94.36 0 Comment
TrackJGreenblatt 58.48 4/25/2014 Outperform 5Y $28.67 -9.59% +13.60% -23.19 5/28/2015 @ $25.92 1 Comment
TrackJimCramer 85.53 7/31/2013 Outperform 3W $32.30 -46.71% +22.72% -69.43 3/17/2015 @ $17.22 0 Comment
TrackJimCramer 85.53 12/21/2012 Underperform 3W $13.44 +143.65% +18.15% -125.49 7/31/2013 @ $32.75 0 Comment
TrackCarisandCo 88.76 5/17/2012 Outperform NS $24.32 +133.97% +113.80% +20.17 0 Comment
TrackUltraLong < 20 2/27/2012 Underperform NS $31.62 +79.98% +108.84% +28.86 1 Comment
TrackCarisandCo 88.76 9/13/2011 Outperform NS $26.16 -10.27% +16.14% -26.41 5/9/2012 @ $23.47 0 Comment
TrackHeebner < 20 9/30/2010 Outperform NS $14.07 +304.36% +152.52% +151.84 0 Comment
TrackArgus 85.81 7/1/2009 Outperform NS $7.20 +247.92% +102.57% +145.36 3/21/2014 @ $25.05 0 Comment
TrackArgus 85.81 2/3/2009 Outperform NS $5.13 -28.78% -6.69% -22.09 2/26/2009 @ $3.65 0 Comment
TrackBarclaysCap 89.03 12/18/2008 Outperform NS $4.35 +1,209.72% +218.72% +991.00 0 Comment
TrackJGreenblatt 58.48 12/15/2008 Outperform 1Y $4.11 +152.04% +27.23% +124.81 12/15/2009 @ $10.36 1 Comment
TrackBerkowitz 86.24 8/27/2008 Outperform 1Y $11.31 -65.12% -36.12% -29.00 11/24/2008 @ $3.95 1 Comment
TrackCanaccord 63.80 8/6/2008 Outperform NS $9.98 +470.02% +129.12% +340.91 0 Comment
TrackWedbush 87.53 2/28/2008 Outperform NS $9.51 +498.52% +114.77% +383.74 0 Comment
TrackJefferies 79.68 12/7/2007 Outperform NS $9.12 +524.10% +96.54% +427.55 0 Comment
TrackJimCramer 85.53 5/15/2007 Outperform 3W $8.70 +56.67% -5.17% +61.84 12/21/2012 @ $13.64 0 Comment
TrackAvondale 74.98 3/30/2007 Outperform NS $8.32 +584.31% +111.17% +473.14 0 Comment
TrackLehmanBros < 20 2/27/2007 Outperform NS $8.48 +304.80% -3.96% +308.75 4/17/2012 @ $34.34 0 Comment
TrackJimCramer 85.53 1/31/2007 Underperform 3W $8.16 +20.68% +4.74% -15.93 5/16/2007 @ $9.85 0 Comment

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