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The Herbalife Ice Cube Has Almost Melted: Presenting "Cash From Operations"
Back in July, when we took one quick look at the Herbalife Q2 results, we asked:
So, is Ackman going to have the last laugh? Or will Ichan end up LBOing the company - even if at a huge ultimate loss - just to spite the fellow hedge fund manager with whom he has supposedly kissed and made up? We will find out soon, because if Herbalife is to be LBOed, Icahn knows that the window in which bond investors are willing to take a gamble on this melting ice cube is closing fast.
We repeated the same rhetorical question last quarter, when nothing had changed, and in fact things got even worse.
Moments ago, Herbalife just reported Q4 and full year results, which from 30,000 feet (preferably literally) were ok, with the company smashing non-GAAP EPS expectations:
- HERBALIFE REPORTS 4Q ADJ. EPS $1.41 , EST. $1.22
That, however, was the only good news. Because the future is no longer so bright for the multi-level marketer, which however suddenly has huge problem not because it is an alleged Ponzi, but because it is being crushed by, drumroll, the strong dollar.
- HERBALIFE SEES 2015 EPS $4.10-$4.50, SAW $6.10-$6.40
- HERBALIFE SEES 1Q NET SALES DOWN 12.5% TO DOWN 15.5%
- HERBALIFE SEES 2015 ADJ. EPS $4.10 TO $4.50, EST. $5.08
- HERBALIFE SEES 2015 SALES DOWN 6%-9%
In other words, on both a GAAP and non-GAAP basis, the magic is over.
As for shareholders, especially those who are long and are loooking to take advantage of any short squeeze to get out of the stock, this may be the best time to quietly get out of dodge, because as we warned the ice cube has now almost melted. Why?
Because ponzi schemes, alleged or otherwise, can only exist as long as they generate more cash than they burn. Sadly for Herbalife, the tipping point beyond which every pyramid sheme implodes, has almost arrived. Just ask Bernie Madoff.
Presenting cash from operations.
Form which everything else follows: since the company no longer generates exccess cash to spend on buybacks, it had no choice but to halt said stock boosting buybacks.
And the worst news of all: unlike before, when it had a pristine balance sheet which it could lever up with billions in debt and use the proceeds to pay off activist investors like Icahn, Herbalife will now be fortunate if its creditors and lenders allow it to borrow even one more dollar because they, better than anyone, know that the game is almost over.
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....... and bestest news of all ... NOBODY goes to jail !
what will happen to their soccer team?
So another few years of BTFATH?
Nope, just print more gold.
Nothing says austerity like negative cash flow.
Why would any bank give over 1 BILLION $$ credit to an MLM in the fist place?
Bank is not giving 1 Billion credit. Bank signed up to Herbalife at the $1 Billion super triple crown double black diamond executive level. Sarc.
I'd still take Herbalife stock over Amazon
I haven't looked it up on the internet yet. but what the fuck is this "Herbalife" thing? Seriously, is this like some i-phone hipster lifestyle thing? How the hell is this relevant to anything, but some horse in the stable redied to run? Cash to burn on a race, I guess.
A pyramid scheme for over priced vitamins and minerals. Think Amway.
Just one of the more obvious nags in a market full of hype and trash.
Yep, just another pyramid scam.... the us economy is full of them.
"the us economy is full of them" Amen to that brother! lol
HerpesLife
Space Herpes!
And JCP broke even during the last QTR. So much for the holiday shopping season.
http://blogs.barrons.com/stockstowatchtoday/2015/02/26/jc-penny-drops-in...
It's time for summer recovery version 7!
It was the weather. Damn you Al Gore telling us soon we could shop year round.
I'm a big fan of herbal medicine; only take the " handcrafted organic baby elk testicle cold-pressed powder " since it dissolves easier in my Himalayan yak butter. But a tip to the wise; heat it up first and the powder will dissolve quicker and not cake on the sides of the mug.
Another secret ... the Mogolian suse this mixture as an underarm deodorant ... works wonders in the yurt!
good heavens that was a weird reply
+1
yurt
butter
powder
Sales are measured in dollars, not units. Adjusted for inflation, JCP same stores sales were lower in the last quarter.
Strong dollar or completely tapped consumer wh doens't have the discretionary income to buy $40 berry juice?
Or more likely a completely tapped-out friend, neighbor, relative that is no longer interested in participating in this circle jerk. I had the misfortune of bumping into some of them at one of their annual top producer reward trips -- snakeoil salesman does not begin to describe their lack of ethics.
yellen will buy it if need be
Matzo balls crave micronutrients!
I definitely remember zerohedge being pro Icahn and bashing Ackman when this first started.
This is where the terminator with Icahn head came from. Also making fun of Ackman for having 200+ slide powerpoints.
I got no skin in the game either-way but the tune has markedly changed on this blog.
ZH has always called herbalife a ponzi scheme. Who was winning or won the icahn / ackman feud was another matter.
Zero Hedge most certainly was long HLF (or pro Icahn as you put it) in the beginning, i.e. January 2013, when the thesis was the forced short squeeze of Ackman, who megalomaniacally barged in and thought that his presentation was enough to crush the stock and instead it was his biggest ever loser. See As Herbalife Shorts Soar, The Squeeze Continues
That thesis played out in a year, as the shorts were obliterated, as the stock went from $25 to $80: a career making slam-dunk triple in one year.
Then the fundamentals finally took over, and we also covered that extensively as the stock went back from $80 to $35.
Good reporting.
...but you took a shit on Ackman when he was right and he WAS right from the very beginning.
He took a position that you opposed. You were against him and now admit he was right.
What ever helps you to sleep at night Bill....
Doesn't being a bill...ionaire help anyone sleep at night?
By your thinking, Corzine was also right. If you are too levered, having the thesis correct is not good enough. You also have to be right on the timing.
Apples to Oranges.
Pershing Square was the #1 performing hedge fund last year.
Corzine commingled customer funds and ended tits up.
At the end of the day price and performance is the final arbiter. Ackman was at the top of the stack and there are no two ways about it. He ended #1.
Not an Ackman cheerleader just a guy saying it like it is.
Good one bro. With enough capital and a long enough time frame, most every investment or trade can be right.
200+ slide PowerPoints? Sounds like a presentation on how if you like your doctor, you can keep your doctor.
Herbadeath... The debt mutilator.
It's got what Icahns crave!
Syphillife
Sorry about that Mr Banker Guy!
But hey, its Carl Icahn! "The guy who is shoeting the entire airline industry AGAIN!"
Now say hello to Virgin American everybody!
And keep those "muzzies" outta here!
wow! from 42 million to 1.1. billion in debt in 1 year. no more leverage for you......
Debt increases shareholder value by a factor of (1-tax rate)
Stupid MBAs.
What did they do with $1B...buy back stock?
Herbando!!! Its got what plants crave!!!!!
Herbalife can offer a M&A tender to Amway, Avon, or Mary Kay. They can use airline services model to shift debt liabilities to new owner.
shaklee
This may be a little off topic, but I dated a super hot chick that worked at Herballife in LA. And I mean super, smoking, pants on fire hot, crawl over broken glass to kiss her %$#@ hot, so I must give their HR department a thumbs up.
Plus they sponsor the Galaxy so step off!!!!
What does it say about Bloomberg when they host Ackman every other day to talk shit about Herbalife? LITERALLY. I'm sure lots of hedge fund managers and investment bankers would like to get on air and talk their book ALL OF THE TIME.
Also, one could cite many organizations that are structured as pyramids. It's been happening since the dawn of time and especially moreso in recent decades with executive compensation at ridiculous levels.
I'm pretty sure it's not "dating" when you are crawling through her bedroom window you just smashed.
Using past tense I see.
They have nothing to worry about, i'll go get some of my trillion dollar coins and buy some of their shit.
http://stepasideshow.com/wp-content/uploads/2013/01/coins11013.jpg
Herbalite is a ponzi scheme. On the way to zero by year end.
Herablies - the best ponzi in town.
Their growth markets are third world countries (Cambodia, India), where they apparently sell weight loss shakes to fight the global obesity crisis. Gimme a break!
They have practically no real assets - just 'distributors' who go through this revolving door and the company must churn millions a year to stay afloat.
One simple search on Google explains the scam in detail - yet there are enough morons (and corrupt politicians) to keep this sham going.
There's an energy/cell phone company out of Texas doing the same thing. They sell a real product but the sales staff is set up as a ponzi you have to buy into. A friend tried to get me to join and you have to fork over $400 for a bullshit website and sales tracking. I'm sure they use the fees from the sales force pyramid scheme to subsidize their prices hence they can compete fairly well when the sales force is growing at the beginning then later the sales force stalls and the jig is up. The people setting it up make out well.
Good morning and welcome to this Friday's edition of In the Loop on Bloomberg. Today we will speak with Mr. Bill Ackman who will talk smack about Herbalife's earnings. He hasn't been on since yesterday so he will have many new points to cover!
This was genius from Ackman.
I wonder if this story has something to do with it. http://www.ag.ny.gov/press-release/ag-schneiderman-asks-major-retailers-...
wwxx
vvvvvvvv
Now all we need is a stern slap on the wrist from the FTC and shake's the word...