Global Macro Trading Journal

VW and other big squeezers were totally different situations. Completely unexpected and they had a significant amount of cornering in the float. Icahn is doing his best to do that this time but his moves have to be telegraphed, which sends the antecipators in and they will have no problems selling on the way up
 
"103. In short, many of the Distributors whom Defendants would expressly or impliedly characterize as solely “discount buyers” are, in fact, pursuing the business opportunity."
 
"104. Regardless of the number of so-called “discount buyers,” it is clear that collectively they could account for only a small percentage of the volume of Defendants’ products sold in the United States. Even using a grossly overstated measure of “discount buyers”—that is, counting as “discount buyers” the roughly 80% of participants who are not “Sales Leaders”—such Distributors collectively account for less than 25% of the volume of Defendants’ products sold in the United States. The remainder, over 75%, is purchased by Distributors at the “Sales Leader” level, who are clearly pursuing a business opportunity."
 
With regards to VRX, Ackman came out saying (and he has access to inside information) that the company has a fair amount of assets ($10b) that most people don't even know exists, he said again that the phone keeps ringing and there is demand for these assets. He said the company is likely to announce fairly significant asset sales later this year. That is because if Pearson did a good job in his aquisitions, then indeed he build a drug portfolio that is more valuable than what he paid for. This is not a stock like SUNE, LEH and others where you have a business collapse and longs keep hoping there is a turnaround on the way down in a average down rampage. Here is a situation where reality is being perceived differently by longs and shorts (The Sequoia sale is the perfect example, did they sell for reputational/survival reasons or because they want to abandon the ship?) but only of them can be right and whoever is right will get a large move in their direction. And this also is mostly a stock issue, if you look at the bonds, the company is a lot less distressed than you would think
 
Am long VRX and ENDP. Good luck to me! VRX is maybe a triple if the company doesn't flame out in Chap 11 in ~1 year.

Small size, multiyear bet.
 
John Hempton is a weird dude

He calls the Ackman HLF thesis a racist one and now calls the FTC a tool for racists HF managers for agreeing with him. Yet, the FTC is chaired by Edith Ramirez, a woman of Latino heritage. The League of United Latin American Citizens praised her appointment a few years back
http://lulac.org/news/pr/lulac_praises_appointment_of_edith_ramirez_as_chair_of_ftc/

Effectively now his thesis relies on the FTC wrongfuly describring HLF as a pyramid scheme (without using the term) and a Latino women not being able to identify racism.
 
I mean, at the very least, it should give you a stop when a Harvard graduate Latino regulator comes out and say you are wrong. At the very least, you spend a few days reworking your thesis, rechecking your facts, assesing things from a different point of view, reading articles, etc. You don't come out accusing everyone of being racists, name calling people, essentially acting like children. Someone who acts like that will be wrong more often than they should
 
The thing is, I don't even think HLF is a good short. I believe the odds favor the bear thesis (with maybe a 60-70% chance) but the bull thesis has a lot of legs to it. In particular, the chance of a buyout in case the business start to struggle. So even if the bears are right, they might still not make much money. If they are wrong, they will certainly lose a lot more. I have been in situations like this in the past, some of the obviously fraudulent chinese names still got bought out at ridiculous premiums and shorts got hurt.

I believe Einhorn is right that the stock has a wide range of outcomes and that makes it better to avoid it
 
Daal said:
John Hempton is a weird dude

He calls the Ackman HLF thesis a racist one and now calls the FTC a tool for racists HF managers for agreeing with him. Yet, the FTC is chaired by Edith Ramirez, a woman of Latino heritage. The League of United Latin American Citizens praised her appointment a few years back
http://lulac.org/news/pr/lulac_praises_appointment_of_edith_ramirez_as_chair_of_ftc/

Effectively now his thesis relies on the FTC wrongfuly describring HLF as a pyramid scheme (without using the term) and a Latino women not being able to identify racism.
More...
I am very curious... I've read Hempton's latest post on HLF and I don't see anything remotely like what you describe. Are you referring to another source?
 
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