With the JCP blunder and now HLF which is not going well, Ackman's career as an investment manager is most likely over. Let's be clear, if Ackman is correct on HLF, then HLF MUST CLOSE as it is allegedly an illegal business. There's no other outcome that would accommodate Ackman. If Ackman is not right, meaning HLF continues as a going concern, as it has in the past 33 years!!!, then Ackman will have a disaster of a trade on his hands. The only other outcome to him other than HLF closing and going to zero is that HLF is going to be fairly valued which would be a heck of a lot higher than it is here. Ironically his very action of going so big on the short side would most likely create one of the biggest short squeezes of all time and would crush his trade. Whatever happens, the fact that Ackman went so big on a trade, shows his complete mismanagement of risk for funds under his management which begs the question: Is he violating a fiduciary obligation to his investors by undertaking such a horrifically risky trade??? Perhaps the attorney generals of the appropriate investors' States should take a look at that one.
Your range of possibilities is very incomplete and wrong. HLF could lose sales momentum, newly conned recruits could be harder to come by creating drop in sales, regulators could let them operate but under different paramaters, other countries regulators could shut them down as belgium did, lots of potential bad outcomes. All of these would be bad for the stock price and good for shorts..............
WRONG!! Ackman's contention is that this is an illegal business and once the DOJ figures this out, HLF will be closed! That's his position, period. Then, by virtue of simple logic, which some shorts may be deprived of, any other outcome but HLF closing is opposite to his contention. The investment public will have to value the business "fairly" based on all fundamentals, including the growth rate, income, balance sheet, competitiveness, etc.
Sure there are always adjustment a business can do to be more transparent or to deal with some disgruntled, underqualified, desparate so called dealers. But that's irrelevant as far as Ackman's position is concerned. He's gone for the simple premise that this company should be shut down. It's simple and clear. It's a binary outcome with no grey area. So if you're short, you're basically taking on Ackman's position and if you're wrong your short position would have to result in a tremendous loss.
coulda woulda shoulda i think ackman should never put so much into any one stock as taught in stock 101 class, regardless what you think of a company. he is just trying to take advantage of a company with no concern for this co, but to kill it.period...
Ackman just stated that " if the FTC misses HLF, it is the equivalent of the SEC missing Madoff." He further stated the difference is that in this case they have the benefit of his thorough study. He is also saying that if the SEC or any state attorney beats the FTC to arriving at the pyramid conclusion, that they will be highly embarrassed, which should be more than enough reason for the FTC to investigate. He is also stating that KPMG should think twice as they will be liable as well. I believe all these parties don't need Ackman's ego shoved in their face, so it will be interesting to see the responses. It's one thing to have a high conviction, but Ackman seems desperate by so arrogantly challenging the FTC, SEC, state attorneys, and KPMG.
Sentiment: Strong Buy
He's so clearly making my point in my original post above. Now he's trying to underhandedly bully the government into doing something that would help him. Something the government has already taken on several times which resulted in a clean bill of health for HLF.
Once again, just bringing attention to my post of Feb 13 - HLF is either going to have to go to zero or will be back over $70 soon. There's really no other state of existence for a company making so much money. Either it's all fraud (zero) or it should be valued fairly, which is over $70. Icahn is betting on $70+. Good enough for me.
I think hlf should file a complaint on Ackman for stock manipulation for wrongful accusations to profit. I hope this fool jumps out of a building when his fund crashes. I have no position in this stock. I just feel that what he is doing is unbelievable.