While Bill Ackman has been basically monopolizing the short view of Herbalife Ltd. (NYSE:HLF) with his continual attacks, now another hedge fund manager is getting in on the action. Vijay Marolia of Regal Point Capital Management told ValueWalk that he trusts Ackman’s due diligence more than he does Carl Icahn’s.

Herbalife

New short thesis on Herbalife

Regal Point issued its short thesis on Herbalife Ltd. (NYSE:HLF) last week. The firm states that Herbalife’s business model is not sustainable and that while recruitment is vital to success, it becomes difficult to recruit while regulators are scrutinizing the company. Marolia’s firm also points to the recent ABC News investigation into the controversial company, increasing regulatory probes, and sell-offs of Herbalife stock by institutional investors.

On the bullish side, Regal Point does say that Herbalife Ltd. (NYSE:HLF)’s valuation looks cheap as its business grows. It plans to complete $266 million worth of share buybacks during the second quarter, and Carl Icahn and other big investors “seem to like it.” In addition, Herbalife has been around for more than 30 years and operates in more than 90 different countries.

The firm does state, however, that it is maintaining its short position in Herbalife Ltd. (NYSE:HLF), siding with Bill Ackman. “The best companies to short involve fraud, fads, and failures–this company fits all three,” Marolia said.

Selling snake oil?

In an email, fund manager Vijay Marolia told ValueWalk that he believes a “Snake Oil” salesman started Herbalife Ltd. (NYSE:HLF) and that its “entire business model is based on recruiting new snake oil salesman [sic].” He also explained why he sides with Bill Ackman rather than Carl Icahn.

“If there’s one thing you can count on regarding Bill Ackman, it’s this–he has done some intense due diligence,” Marolia told ValueWalk. “If there’s [sic] two things you can count on regarding Carl Icahn, one is that he has NOT done nearly as much DD, and two, his main motivation is rooted in revenge.  He’s trying to get back at Bill for the whole ‘shmuck insurance’ ordeal.”

Why hasn’t Herbalife settled the issue?

Marolia also points out that Herbalife Ltd. (NYSE:HLF) could put an end to all the debate very quickly if it wanted to. Ackman has repeatedly called the nutritional supplements company a pyramid scheme. One of the things regulators may be considering in their investigation is how much of Herbalife’s sales are to end customers outside its membership. He believes if the company just disclosed details about its retail sales, the fight would be over. He also questions whether it’s “really cheaper to burn millions on lobbying.”

The hedge fund manager also had some critical comments for regulators, saying they’ve been “embarrassed repeatedly for being asleep at the wheel” and that their investigation is now their “chance to save face.”