Herbalife (HLF) Exposed!

[lwlee]

So the tally is at least $1 billion on at least 20 million shares, which means a floor of $50/share that Ackman is priced in. Current price is 27.27. As it stands, Ackman is up a cool $454 million.

The fact that he owns most of the short float and shortable shares are hard to find could mean it would be VERY painful for him if let's say, HLF Jan 7 presentation proves him wrong.

As the video suggested, he put out this info now so that HLF distributors would revolt before the January requalifications.

I'll bet Herbalife's execs are wishing they stayed private like Amway now. Wall street predators like Ackman don't bother you unless there are significant gains.

 

[lwlee]

I can't believe you are actually using this as a defense for Herbalife.

Bernie Madoff was a wonderful father to his two sons. Ran a successful securities firm, Madoff Securities, with lots of high paying employees. Does that excuse what he did?

Quote from nursebee:

http://www.bizjournals.com/triad/news/2012/12/19/herbalife-to-buy-dell-plant-for-222m.html

I heard that HLF is buying a former Dell plant. Dell got lots of deals to build this, all kinds of tax breaks and incentives. I think they did not last here for long before pulling out. The qualities that I heard HLF liked about this place were the interior heights for equipment and also the room for expansion. Current plan is for 500 jobs, some very technical and high paying.

This story came out after the shorts piled in. Did the wonderful powerpoint talk about this?

 

[IeatGoldmanSnax]

Isn't this just the opposite of what stock promoters do? Am I the only one that see's a lack of skill here? I thought Bill (no we're not on a first name basis) was better than that. Wasn't he GGP? I guess that's his style.

I take a short position and make a 300 page power point to market my short position and promote the hell out of it.

That's like opening up a fire extinguisher business in a town, and just before your grand opening, you set the entire block on fire.

 

[Pekelo]

Note to myself:

1. Buy shitload of OTM puts on shitty company.
2. Make websites releasing information about company.
3. Profit.

By the way, unethical =/= illegal. There are several other companies (for example GRPN) that has shady accounting practices and they make their money in a different way, basicly misrepresenting themselves...

 

[lwlee]

Nooooo, GRPN is different. They actually had a viable product initially but it just wasn't very viable long term. Too many copycats. Too many jaded consumers. The fact that they are trying to hold up a sinking ship with accounting shenangians is pretty common for most failing companies. But anyway market has spoken, how much longer will they still be around?

Pyramid scheme is illegal. SEC is gonna have to crack down.

Quote from Pekelo:

Note to myself:

1. Buy shitload of OTM puts on shitty company.
2. Make websites releasing information about company.
3. Profit.

By the way, unethical =/= illegal. There are several other companies (for example GRPN) that has shady accounting practices and they make their money in a different way, basicly misrepresenting themselves...

 

[lwlee]

It looks like the new wave thing for these hedge fund guys. Einhorn moves the market now, everything something comes out of his mouth.

Quote from IeatGoldmanSnax:

Isn't this just the opposite of what stock promoters do? Am I the only one that see's a lack of skill here? I thought Bill (no we're not on a first name basis) was better than that. Wasn't he GGP? I guess that's his style.

I take a short position and make a 300 page power point to market my short position and promote the hell out of it.

That's like opening up a fire extinguisher business in a town, and just before your grand opening, you set the entire block on fire.

 

[newwurldmn]

Quote from lwlee:

It looks like the new wave thing for these hedge fund guys. Einhorn moves the market now, everything something comes out of his mouth.

Just like buffet. People will follow successful investors. And often successful investors will use that to their advantage. I even once saw a major fund advertise a long position hoping it would keep a bid to the stock while they were liwuidating.

 

[spencer]

Quote from Pekelo:

Note to myself:

1. Buy shitload of OTM puts on shitty company.
2. Make websites releasing information about company.
3. Profit.

By the way, unethical =/= illegal. There are several other companies (for example GRPN) that has shady accounting practices and they make their money in a different way, basicly misrepresenting themselves...

Here is a better idea that involves no ethics violations:

Wait for Falcone or somebody else to do it next, then stock up on puts.

This concept is great. It's like Inglourious Basterds for Wall St. Ackerman needs to do this more often. Somebody needs to get rid of the bad meat from the exchanges.

 

[Pekelo]

Quote from lwlee:

Nooooo, GRPN is different. They actually had a viable product initially but it just wasn't very viable long term.

So in plain English they DIDN'T have a viable product.

The US courts have ruled Amway and Herbalife several times legal. Also, some of Herbalife's products although may be overpriced but seems to be OK. If they were shitty, they couldn't stay in the business.

"In a 1979 ruling, the Federal Trade Commission found that Amway does not qualify as a pyramid scheme because distributors were not paid to recruit people and had to sell products to get bonus checks, and the company was committed to buying back its distributors' excess inventory."

 

[Pekelo]

There is nothing new under the Sun, this shorting before making bad releases has been done before, but it can backfire:

"In May 2008, the now defunct Fraud Discovery Institute, which claimed to be a consumer watchdog organization, reported that laboratory test results of Herbalife products showed lead levels in excess of limits established by law in California under Proposition 65.The Fraud Discovery Institute was founded by Barry Minkow, who served seven years in jail for stock fraud, and since disclosed that his company was profiting from the allegations by shorting Herbalife stock."

More explanation on the huge put volume:

http://seekingalpha.com/article/1038001-the-surprising-truth-behind-herbalife-put-volume