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Ackman Has 6 Months Left To Come Up With The Devastating-est HLF Presentation Ever
Bill Ackman's "most important presentation of his career" is not going so well. The 'Death Blow' expectations Ackman created yesterday (that sent the stock down 13%) have been entirely wiped away as a 2-hour presentation, 100s of slides, and nothing really new sent stocks 16% higher today... It appears time is running out for Mr. Ackman as his massive put position (bleeding value every day that passes) is set to expire in six months... and we suspect Carl Icahn can outlast Ackman's view of market 'irrationality'.
NOT the best day for Bill Ackman...
And time is running out...
* * *
We're gonna need a Death-Blow-ier presentation...
UPDATE: This is now the biggest single-day rise in HLF's history...
UPDATE: Herbalife Responds...
Statement from Herbalife in Response to Bill Ackman's Three-Hour Presentation on Nutrition Clubs
Business Wire
LOS ANGELES -- July 22, 2014
Herbalife Ltd. (NYSE:HLF) today issued the following statement in response to Bill Ackman’s three-hour, presentation on the Company’s nutrition clubs:
Herbalife is a 34-year old nutrition company with 7,400 employees worldwide and millions of members. Today, Mr. Ackman highlighted many of the reasons we are proud of our company, our record and the value we bring to members, consumers and communities around the world. His presentation reaffirmed that:
* Herbalife is first and foremost a company with great products that people want.
* There are hundreds of thousands of members and millions more consumers who choose Herbalife for our products and community-based approach to health and wellness.
* There is a comprehensive training system for members who aspire to open their own nutrition club so that they are fully informed of the time, commitment and skills required to do so.
Once again, Bill Ackman has over-promised and under-delivered on his $1 billion bet against our company. After spending $50 million, two years and tens of thousands of man-hours, Bill Ackman further demonstrated today that the facts are on our side.
We will continue to focus on our mission of bringing good nutrition and economic opportunities to communities across the globe. We recognize that he is running out of time to make good on his bad bet against Herbalife, with the equivalent of 25.7 million shares in put options that expire on January 17, 2015. Today is evidence that Bill Ackman will not succeed.
To clarify, a couple of points:
* We are proud that our members are required to participate in training before deciding to open a nutrition club. Our training approach – sometimes referred to as a “university” – is similar to the training model that has been deployed by numerous consumer-facing companies.
* Club 100 was a program that contained many of the best elements of nutrition clubs, including education, mentoring and fiscal responsibility. These elements are the cornerstone of our clubs today. Herbalife is proud of our members who use nutrition clubs as an important tool of social support to achieve good nutrition and a healthy active lifestyle.
* Mr. Ackman’s claim about the earnings of Herbalife nutrition clubs is completely false and fabricated. In fact, according to a recent study commission by the Company, 87.5% of nutrition club operators feel good about the money they earn and 92% want to continue with their club.
In a separate release today, Herbalife today released the findings from research and analysis conducted by Walter H. A. Vandaele, Ph.D. of Navigant Economics, LLC regarding Herbalife’s U.S. business operations. Dr. Vandaele, engaged by the Company to conduct this economic analysis, assessed whether Herbalife’s operations appropriately are classified as a beneficial, legitimate Multi-Level Marketing (“MLM”) firm.
Dr. Vandaele is an economic expert with significant experience in, among other areas, the regulation and operations of firms in the consumer goods industry. Among his many professional accomplishments, he has previously served as Economic Advisor to the Director, Bureau of Competition and as Assistant Director for Regulatory Evaluation, Bureau of Consumer Protection at the U.S. Federal Trade Commission (“FTC”).
Among his numerous determinations, Dr. Vandaele concluded that, “Herbalife’s U.S. business operations are consistent with the socially beneficial MLM model and inconsistent with the socially harmful pyramid scheme model.”
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Does that little fella not know that Janet Yellen wants all stocks to go higher .... even the ones the shudn't?
At some point this becomes nothing more than a war between two traders.
And something tells me we've long since passed that point.
"his massive put position (bleeding value every day that passes) is set to expire in six months"
Obviously he can extend. Stupid comment.
Obozo's corruption can stay longer than Ackman can stay solvent.
This is a perfect example of what 'investing based on fundamentals' will get you, in 2014.
Mind you, if he used options then he is gambling, not investing, and he does not have ANY of my sympathies.
Ackman does have the great crash of October 2014 going for him even if fundamentals aren't worth squat.
he is betting against the incurably ignorant masses, staying incurably ignorant. (those in herbalife)
the fed who will only let the market go up
the regulators in the us government becoming competent
and the institutions who thrive on any bet even if its on the preying on the poor and stupid.
good luck bill because like us here at zh you may be right but in this clowns circle jerk your view is not tradeable..yet.
I never could figure out why Ackman put so many eggs in this basket. Sure HLF is a multi-level marketing faux-business, but as long as suckers buy their overpriced vitamins like housewives buy Mary Kay or Avon, this shit can get stretched out for a long time. He should have shorted Blackberry instead...
Two words:
Pon - zi
http://market-ticker.org/akcs-www?post=229224
The theta curve steepens as duration decreases. The extrinsic value will go to zero and it will be a 100% loss if not to his strike by expiration and still a loss if not past his strike plus premium paid by expiration.
I gotta figure he knows how options work on at least a basic level and can't understand why he would not have just done it via synthetic short stock by selling calls to cover the put premium cost using leaps.
With just straight long medium duration puts it seems like he is just taking a shot and worried about the upside blowing him out again.
Missed it by that much....
Margin call for Mr Ackman on the courtesy phone. Mr Ackman, courtesy phone.
That's the problem with being right, Ackman may be totally right, but will end up completely broke in the meantime betting on being right.
Don't mess with Janet the Riveter.
Yup. He must have never heard of "Don't fight the FED".
Herbalife is a clown pyramid & the FED a cotton candy spinner but this is the circus.
Don't fight the Icahn, either.
One of the most frustrating feelings is when the trade breaks the way you positioned yourself the moment you've thrown in the towel on the trade. It's happened to me on more than one occassion, the best thing you can do is put it in the past and use it as a learning experience. The moment you let it get personal is the moment you're fucked. As far as Ackman being broke; if he isn't trading around this position he's nuts and deserves to lose his ass.
Ackman better start lubing his bunghole, cause here comes uncle Icahn!
I think Herbalife has a cure for selling?
The moment that defined Ackman's career....
...buying Canadian Pacific?
I remember back when Richard S. Fuld had 'six months left' too. The 'Gorilla of Wall Street' will soon have a golfing partner in Bill Ackman.
So little time and so many billionaires.
With Ackman, it got personal....absolute death for a stock market gambler.
Have we reverted to the techniques and games of Joe Kennedy and the stock pools of the 1920S?
And how is Ackman's position so publicly known? And with what certainty does Zero Hedge know such?
Are you trying to insinuate that there was manipulation in the stock-market back in 1920S? When DID we have an open and honest un-manipulated free-market stock-market when fundamentals allowed people to determine fair and honest prices?
From the time the SEC was established in 1934 until deregulation dismantled protection in the 80s, there was some kind of cop on the beat controlling fraud and manipulation. During that time you could invest in the stock market confident that you would not be robbed, or if you were, that something could be done about it.
The public's confidence, and money, was in the market from the early fifties until the early seventies - the biggest boom the market ever saw.
WTF market.
It was probably him covering.
Yeah, exactly. "Yes, I drove the price down, better cover my ass some!"
Russell 2000 trailiing PE is only at 76. screams 'room to grow' because we've never seen it 100.
"no bubbles or ponzi schemes around here" whistles the guy walking past Ackman's tombstone
Hey just a thought, anyone ever consider these guys might just be good cop-bad copping this thing? I wouldn't be surprised to see a ZH article showing Emails that Ackman and Icahn were working together all along, kind of a side scam on a scam.
How do we know he has these options expiring at this date? 13F filings only disclose long positions in equities.
I don't believe he is "stuck" as people say he is, and he is playing both sides of the game here.
1 year ago.
http://articles.latimes.com/2013/jul/27/business/la-fi-herbalife-ackman-...
Captain Ahab syndrome?
Or, hitman for big pharma?
If that was his best presentation I sure don't want to see his worst!
This is a complete joke and waste of time. Seriously, 100 slides to state your case. In the business world, when making a pitch for investment dollars, if you can't get your message/concept across in one to three slides (with maybe 3 to 5 key concepts/points on each slide) along with maybe a half a dozen support slides, you're toast. Period. Nobody is going to sit through 100 slides of total BS. Nobody has the time. This is most likely why the stock began its rapid assent as once the parties listening saw that there was no real message in the first 10 minutes or so, they realized the entire presentation was not going to offer much additional information. How many finance and accounting professional techies did Ackerman have supporting this effort, all to prove that he's failed at investing lesson #1. Don't take it personally when monies involved.
In the end, Ackerman may be right about the company being an MLM organization but countless other examples of MLMs operate today as well. I did not see the presentation but to me, there really is only one key issue that needs to be addressed. Of the company's total sales, what %/$ are to actual end using customers versus what %/$ are to distributors looking to resell the product? If the company knows this figure and isn't devulging it, then Houston, we have a problem. If the company does not know this figure and can't devulge it, then again, Houston we have a problem (as management must be clueless). But that's it, one key question on sales should really help all understand if this is truly a ponzi/fraud scheme (dependent on sales to distributors to support growth) or just another MLM (dependent on sales to end consumers) that is completely legal but supported by clueless consumers.
Just one slide in the PPP needed to tell the story.
Of the company's total sales, what %/$ are to actual end using customers versus what %/$ are to distributors looking to resell the product?
This, from what I gathered was kind of the meat of the presentation (I got cut off before they could finish). They were attempting to illustrate how HLF has muddied the waters between customers and distributors by exploiting low income (even 3rd world) peoples by turning the process of Distributor/Recruiter (classic MLM structure) into "trainee" who has friends and family behave as "customers" buying one serving a day, in an effort to help the trainees through a "training program" (all in quotes because in reality it's just a way to move product one cup at a time) in the hopes of being able to start their own "Nutrition Club" (actual term used by HLF) aka a training facility and recruiting station.
If the people didn't have a goal of starting a club themselves, and didn't have to go through this process (can't start a club without it), then it's very unlikely people would be consuming the substances of their own will. Especially because these clubs are not allowed to advertise, display or in any way lead people to believe they are selling a product, per HLF internal document rules.
So, hard to say. They seem to make sales...
You answered my question. If the company can not provide clear and concise information on exact sales figures, then this is either intentional by management (most likely the case) or due to complete incompetence. Either way, a very bad sign from a long-term investment perspective as if you can't trust/rely on management, game over. The problem is that with a market hellbent on going higher, no matter what the environment, it raises the question of my biggest fear. While I'm very fearful of staying long in this market, I'm scared to death to go short (as TPTB appear to be willing to stop at nothing to perserve the fabricated wealth created by their policies over the past half decade).
Good luck to the shorts and parties that rely on fundamentals as I believe you're correct on this company. But as they say, timing is everything and right now, timing has slaughtered more than a few bears.
Yea, there's no way I'd sit thru more than 10 slides.
Huge investigative effort and enough meat on the bone for interested regulators to sink their teeth into.
HLF may CYNK unexpectedly if its friends start running for cover...
This little freak actually cries telling the Fed's to close down HLF so that he can cover his short and make lots of $$$!!! What a loser!
He's fighting the FED, that's a pretty bad idea. Nothing can save him now except a crash in the market, which will never happen.
Best of facts are a bad bet if government regulators acting 'FOR the little guy's interest over Corporate profits' is part of the equation. Rocks break Paper in this game of customers willing.
He's just pumping up the price so his new buddy Icahn can dump all his stock and make a killing.
The top tick will come when he finally throws in the towel (or dies).
Only a corrupt judicial system can deem Herbalife not to be a pyramid scheeme
Ackman left people yesterday feeling like he had a smoking gun that exposes the fraud. He failed to do that but that doesn't mean Herbalife has ethical business practices. They do prey upon the poor. They search in poor communities for uneducated people desperate for another regular income stream. Herbalife misleads them into thinking the public actually wants Herbalife's products which members quickly find out to be false. These poor people borrow from family and friends to come up with the initial seed money to buy the inventory Herbalife requires, then when it doesn't sell they opt to sell memberships to other uneducated fools with the same BS sales job that got them stuck with the Herbalife product. As each new member discovers an inability to sell the product inventory they bought, they find other morons which trickles upward to earlier sellers. It is a pyramid scheme to be sure.
If they have products, it's not a pyramid scheme. It's multilevel marketing.
Market saturation, so what? The market for cars was saturated in 1925, the market for computers in 1985, yet they still sell cars and computers.
Herbalife has the added advantage of selling products people use up, and buy again next month. Like Avon, Mary Kay and other direct sales companies.
I don't know if Herbalife is a scam or not, but if they were, they would have blown upa long time ago. Real pyramid schemes are not sustainable, and typically blow up in 2 or 3 years.
Anyone who shorts anything is nuts.
We are in a Fed/ESF controlled market and they are playing endgame strategies. ZIRP, derivative manipulation of interest rates, commodities and currencies....oh and equities, are all tools of a currency management system that has unlimited funds. These guys are desperate, serious and know how to play. The endgame is not that complicated really, all fiat currencies go through it ...in the end.
As long as they can keep up appearances on the monetary plane all will appear to be fine.
When those who have the power to demand real stuff instead of paper decide to stop trading it could end in a New Jersey HFT nanosecond.
Shortz?...not for me, except gold puts to protect something precious.
Everyone is scared to death to go short... At least do the prudent thing and convert all of the promises of earnings next decade into cash and gold today. All of the high multiple, weak balance sheet companies are at extraordinary risk. We are already in one of the longest "bull (shit) markets". The odds of another 5 years so NFLX, AMZN, LNKD and all of the option driven trading scams growing into their valuations on realized cash flows is zero. So convert all obvious bubbles today and let those who broke the market buy it... The way to end the games is to convert ponzi stocks to cash and real assets.