The Shorting of Frauds, Overhyped and Bankrupt Stocks Journal

Some rambling observations:

* Yesterday I wrote here that I doubted Ackman's presentation would move the stock much. I was wrong.

* I noted quite a lot of cynicism on the Twitter stream for HLF today, specifically:

(1) Stock will bounce once the presentation is over.
(2) Ackman is not publishing much new info

Regarding (1), HLF made new lows after he went on TV.

Regarding (2), this may be true, but the damage to the company's reputation could be significant, especially if it leads to fewer people joining as 'agents', and/or government investigation.
 
Quote from m22au:


Regarding (2), this may be true, but the damage to the company's reputation could be significant, especially if it leads to fewer people joining as 'agents', and/or government investigation.
More...

Its a bold bet that he is making, we will see if he is famous enough to pull it off. What's crazy is that he reveled the size of his short, any good government action and people will just squeeze the crap out of him

Here is a video from 2007 about the ponzi USNA

http://www.youtube.com/watch?v=91UW5JMcyFc

Ages ago and they game is still going
 
Quote from Daal:

Its a bold bet that he is making, we will see if he is famous enough to pull it off. What's crazy is that he reveled the size of his short, any good government action and people will just squeeze the crap out of him

Here is a video from 2007 about the ponzi USNA

http://www.youtube.com/watch?v=91UW5JMcyFc

Ages ago and they game is still going
More...

Did he mention how many HLF shares he is short?

I agree that pyramid schemes can last for ages before they come undone.
 
Quote from m22au:

Did he mention how many HLF shares he is short?

I agree that pyramid schemes can last for ages before they come undone.
More...

I believe he said he accounted for most of the short interest. I will have to rewatch the andrew sorkin interview later
 
He might have done part of the short as equity swaps so he is not exposed to buyins and rising borrow costs. Thats the advantage that the big boys with prime brokerage accounts at goldman sachs and others have
 
HLF is similar to QCOR (which I covered). They have extraordinary operating performance using completely crap business models that will blow up one day, you just don't know when

QCOR PEG ratio is 0.25
HLF is at 0.75

This draws a lot of "value" investors looking for any reason to disagree with the bear thesis just so they can feel that they are in a growth stock at a cheap price. I rather wait for when it becomes clear that the house of cards is imploding before taking a short. I think there are better opportunities that won't be as volatile to the upside as these
 
Quote from Daal:

I believe he said he accounted for most of the short interest. I will have to rewatch the andrew sorkin interview later
More...

http://blogs.wsj.com/corporate-inte...balife-shorters-he-is-the-herbalife-shorters/

In an interview with Bloomberg TV this afternoon, Mr Ackman said his fund has over $1 billion riding on this bet, and is short over 20 million Herbalife shares as part of the trade. According to Factset, there is currently about 20.7 million Herbalife shares on loan for short trades, meaning that Mr Ackman’s fund doesn’t just have the largest short position in the company — it pretty much IS the short position.

http://www.bloomberg.com/news/2012-...-short-ackman-after-pyramid-claim-retail.html

"Pershing Square is short more than 20 million shares, Ackman disclosed in an interview, which is about 97 percent of the 20.7 million short interest shares outstanding today, according to data compiled by Bloomberg. He pledged to donate his proceeds from the bet to charity. "
 
HLF is setting up for a monster bounce play QCOR/BPT style at some point next week. There is a huge seller just smashing every rally today
 
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