you can go the route of Not being a distributor and just buying what you like - whether it is an energy drink - or what have you - somehow this was not pointed out in Ackman's presentation. He makes it sound that they studied the company a long time in 7 years -- Ackman has crossed new territory in what he has done. He needs to be held accountable.
with a billion dollar buy back permitted and ready to fire at any time, Ackman is aware of this, so between him buying back his 40% gain, and the potential for it to go back to 40 in two days, with an aggressive buy back program - shorting now becomes far more dangerous.
well, maybe the using as little of the billion re-purchase line - but a billion investment would probably at least stable the stock around 25-30 for now.....probably why no one is shorting with conviction any longer.
Either instititutional buyers or others will support the stock at 25 to 26 until evidence comes forth on how to rebut Ackman's assertion. What is bizarre is that Ackman says all profits made to this will go to charity? Let me get this straight, so stealing money from shareholders who invested in the company, not the management, will go to charity. He does not list the charit(ies). His self-righteousness attitude may be his downfall - let's start with this, any money that you make on this Ackman give back to the shareholders beside the 1.9 mm people that were duped allegedly. You are insulted the intelligence of people who may have wanted to be a distributor and lost 2K or 3K or so. That's not a lot. Ackman also could not state with assurity when he started shorting the stock - 7 months ago, just curious how you were doing as a hedge fund manger at that time per year.
Remaining silent can mean two things: they are formulating a big response to punch back or they're back is up against the wall, but by remaining silent, even if some of Ackman's data is out-dated or of no real consequence, makes scared investors run for the hills - it creates the exact panic that Ackman wants and desires so they need to re-issue a response prior to analyst day. It may vaccilate between low 20's to high 20's til then - who knows, and the 10th of January should right the ship which by then
Both gave exquisite presentations at Sohn conferences on these two stocks when both were trading at or about 47 -
Both said each stock had a value of zero. This is impossible if you know about incorporating in the Cayman Islands which Ackman does not point out, no equity is permitted to go to zero.
Both stocks imploded and went down almost in the same time frame (2 days) to 26 to 27.
Both were having terrible years as hedge fund managers and needed to make up for loss ground
This year, Ackman put all his money into different Johnson, Ron Johnson of JCP and that has not worked out for him.
So, now he bets all his money against a different Johnson, Michael Johnson and that has probably more than made up for his decision on betting on the wrong Johnson.
This was a coordinated attack with too many similiarities.
GMCR went from 47 to 17 before recovering to 41 six months later.
We'll see if the same pattern is followed here - I am not getting into this stock until the fire is put out.
In the interim, Ackman took the odd steps of putting up an anti-hlf website where before you can get in and read you must agree to a disclaimer which states among other things, that they may go long or close out their short at any time for any reason or no reason. I understand that may be legally necessary but it could have been followed up by Ackman saying, despite the legal disclaimer, we still believe the stock is going to zero.
Einhorn also put out a huge presentation on GMCR when GMCR was trading around 47 - not sure where he covered, but on the first two days, stock dropped to 27, and then 17, and now six months later is back up at 41. Similarly Ackman does the same thing with HLF trading at 47 of which in two days it goes down to 27. The only difference between Einhorn and Ackman is that Ackman has now even gone the step further of putting up an anti-website against HLF where you have to agree to a disclaimer before you are given access of which in the disclaimer it essentially states it may cover its position at any time and/or go long the stock. This is far different than Ackman claiming it would go to zero. I believe Einhorn also said GMCR would go to zero. It did not. The question is what these two hedge funders doing is legal? Probably not. But, they have too much money now to be stopped. That's the the problem. So, could HLF go lower then 26 plus on Friday, perhaps, will it, perhaps, but I also think it will recover substantially going into the analyst day it put out there for January 7, 2013. Why did the CEO not come to the defense right away ... well my take is two fold, most people are away for the holidays or not investing - so it would be lost in the shuffle with that and the fiscal cliff, second, when you get suckered punched as you did by Ackman, you need some time to explain his inaccuracies - Ackman did spend 1 year with his lieutenants trying to figure out how to destroy the company. Also Ackman famously has a problem with companies with CEO's with the last name of Johnson. He went long thousands of shares in JCP and RON JOHNSON has not delivered so he then goes after Michael JOHNSON of HLF to make up for his pathetic choice in JCP. He had to do this, in order to get some sort of decent number for his company before the end of the year. Don't be surprise for a turn around on HLF after the New Year.
First, Ackman uses data from almost 10 years ago when speaking about lawsuits that involve some level of MLM - he claims Pershing Sq. not to be a law firm and these are his opinions.
Second, Ackman explains that most people fail at this job and lose money. That they buy expensive product - at a discount, to get that product, and then fail to sell it and then as a result, must keep the product (can not return or if they can return it - its a convoluted return policy that makes it inordinately diferent)
Third, he focuses on about 5 Nutritional Clubs - all of which have restrictions on how they can be presented - most likely to save cost and found probably the most grimy locations - all which looked to be outside of the U.S. - he did not list where these locations were --
Ok, here's how I look at this, if I was Michael Johnson - first off, Ackman is using old data -
Second, Ackman may be right that most people fail, and he notes in his presentation (not sure of the accuracy - that failure has cost people in total 3.8 bln dollars - (noting 1.9 mm people x 2k (costs of failure) comes 3.8 bln - let us not forget though JP Morgan had one soldier called the London Whale who lost close 4 bln in one trade - but I digress - You do not see Ackman calling out JP Morgan Chase - probably dines with Jamie Dimon.
Further, most sales people fail at their sale jobs and most sales jobs have some level of mlm marketing - just not as deep or layered - its called Sales Manager and then Sales Director and they exist at every financial firm that I ever witnessed that have financial advisors, wealth advisors, investment advisors, you name it.....firms like Bank of America, ML, UBS, etc. Financial Advisors charge a client a commission for buying/selling stock. Let's say that commission is $300 - at the end of the day, advisor has special contract with firm, let's say, his take-away his only 10% - so he makes $30 dollar on that sale, the other $270 goes back to the firm, some goes to the Director (Branch manager), some goes to the Sale Manager (who is never selling the product) - some go to the partners - in the end, you have 4 level MLM scheme when it comes to advisors and most firms and most sales company.
Most financial advisors fail, and when they do, the firm keeps the clients and re-distributes them to their top sales producer who makes more money and perhaps get 20% on each of their commissions -- plus there are bonuses and clubs too, like the Chairman Club -
Of the more than 1.9 mm advisors across numerous financial companies who have signed up, many have lost their reputation, their client base (far more than the lost of $2000 dollars), and required to go into other careers -
What Herballife provides is an opportunity to build the American Dream. Is it exaggerated - perhaps - but what isn't when it comes to advertising. I mean why do you buy Nikes, oh right, Michael Jordan, because if Michael Jordan is good enough to wear the shoe, then you must be too.
Herbal life ad costs are de-minimus because they have developed the first primitive social media advertising network by WORD of MOUTH -- they could advertise and some of their products are actually very good.
Like any good investor, in any investment, it states past performance is not indicative of future results - that being said, oh, I do not mean to digress, but did not Bill Ackman fail at first hedge fund and how much money did he lose his first set of clients - oh I get it, that's not important, because now he has figured out how to succeed by over exaggerating HIS CLAIMS against companies like Herbal life.
Oh, what about all the lawsuits - I am sorry, but was there not a company not so long ago named AIG, that the Feds bailed out - why they sold things that were bundled (what were they called again - oh right, collateral mortgage swaps at 40 x the notional value ) and they were bailed out by over 100 billion dollars -- no one watching the boat here, and...wow in just four short years, AIG is now a wall street darling again - who would have thought -
What Ackman did should be considered criminal while his facts may be right - he may have found poor looking nutritional clubs (5) - How many McDonald's or other fast food restuarants or restaurants in general are not up to snuff or disgusting in some level. You can find bad apples in every batch if you search long enough - law of averages.
Ultimately, Johnson may have to revisit compensation for his employees and consider opening stores to sell Herballife like GNC, and do the best of both worlds and still provide some level of MLM where there is a cut off. His business is a legitimate, sales are doing better than this time last year, and Ackman needed a big way to finish the lousy 2012 year where most hedge fund managers are down this year - did anyone ask how Ackman's record was this year as a hedge fund manager ---
In short, hedge fund manager is like a fighter pilot - they like to take out the perceived enemy as fast as they can and then get out - safely if they can - sometimes they do it, and sometimes they get taken down - I think in this case, Ackman, maybe not right away, will have some of his own explaining to do.
His last quote by the Justice was ridiculous. Here's a better last quote: One should not throw stones at others when he himself lives in a glass house. In time, Ackman's way of business will be investigated.
we shall see
well either a little above or little lower - but approximately 509.75 to 510.25 - or thereabouts
yesterday as institutional sellers decide to sell two of the 5 dollars stores FDO and DG down hard, this was a shift, for a day, to get people out of a stock that is an easy buy back up as hard as they both have fallen in the last week.
I feel it - I know this stock is going higher again starting tomororw.
Pure manipulation now - algobots have taken over -- freaking people out.
If 21% increase in profits with conservative guidance makes for a 8% smack down - then I am missing something here - I really think this is way oversold - how can a stock be at 50 plus one day before and then down so much in so little time over an EARNINGS REPORT that was GOOD -
this makes no sense whatsoever - 3Q profits up 21%, but CEO guides conservatively - country still in a "masked" depression no matter what the Feds do - and yet, this gets pummelled - was at 50 less than week ago.