Global Macro Trading Journal
- Thread starter Daal
- Start date
You seem to know a lot about statistics, so, how many distributors one would need to talk to and survey before being able to make accurate conclusions about the distribution population as a whole?
Could someone just show up at their local club and that is all it takes? Or should the person diversify geographically (but still within the same country) as to avoid some kind of local bias in the sample?
What Hempton suggests might be more complicated to pull it off than he makes it to be
So I don't see anything where Hempton accuses the FTC of racism. I have read his latest post on HLF carefully and it appears rather balanced, all things considered (no matter how you slice it, he is talking his book).
I dunno the answer to your question, since it's not just a matter of statistics. Are the features of the distribution channel the same across regions? Still, Hempton seems to have done the legwork (based on his past posts), since has visited clubs in both the Asia Pacific (his local region) and the US. Those two appear to be the highest sales regions for HLF. I don't know if he has gone further than that.
His thesis does make sense, which is why I don't think the stock is a easy call here. However, when the FTC comes out and say most people in HLF are chasing a business opportunity and the company "does not offer participants a viable retail-based business opportunity" it certainly should give longs some pause.
At the very least, when the company says (on the day of the settlement) that their business opportunity is like Airbnb and Uber (where most people make some money) when theirs, most people don't make any money, i would certainly stop calling the company ethical
I haven't followed the HLF saga, so I can't really comment meaningfully. I do think, however, that it does demonstrate the folly of Ackman's ways.
I'd bet that even he would admit it was a mistake, he has said he is done with public shorts. Even if Icahn and others didn't gang up to try to squeeze him, just the risk that a crazy distributor would try to kill you or your family makes it not worth the risk. Specially in the US where anyone can get a gun
Yeah, to make it into a very public, very large long-term trade was kinda insane, IMHO... Like you say, that's just paining a ginormous bullseye on your back and inviting everyone to try their luck.
