Timothy Ramey, D.A. Davidson & Co., discusses Herb Greenberg’s comments yesterday and why he still believes Herbalife is a stock worth investing in. With CNBC’s Herb Greenberg. Related see D.A. Davidson After Massive Flip Flop Says Herbalife is Now ‘our Single Best Idea’ Also see great article by Herb Greenberg on this topic titled Don’t Get Fooled by a Stock’s Price.
Herb Greenberg goes at video below (as well as the transcript)
this e-mailing of the report to the pr fishing, to me that’s one of the most bush league things. you see promotional activity like that from penny stocks, sell side analyst. that you typically don’t see with sophisticated companies. it’s just something that got me going today. well, that was herb yesterday or a static version of him because he was actually live and in person ranting about herbalife touting one very bullish analyst report. now, herb not so much slamming the analyst as how the report was distributed which was by a pr firm. herb thought it was, well, kind of hokey. that analyst is here. he has got a few words for our dear herb. he’s d.a. ramey. i’m not going to give you the first words. you had them yesterday. tim ramey, what was your beef with herb’s segment? thanks, brian. when i ewed, it i realized that that was the source of his — his ire, but i actually thought that the focus was actually kind of crazy. who cares what the pr firm does. the pr firmso what pr firms do. this is an interesting story where this stock is up 48% year to date, and yet we still, you know, kind of give these short sellers a lot of credit. i think we’re seeing blood in the water. this is — this is beginning to be the short squeeze, you know. we’ve got usana up 127%, new skin up 66%, herbalife up 48%. these are three of my best recommendations for the year, and, you know, herbalife was my number one recommendation on january 2nd. in all my years of doing this, and it’s one thing i’ve learned and it is this. just because stocks are going up on these heavily shorted names and companies where there’s a good battle, it doesn’t necessarily mean the shorts are right or wrong. what it means is generally that the stock is going up. now, again, that doesn’t bear out any argument one way or the other. well, we can take that point of view, but i think that’s sort of true for a long position. a long holder can kind of hold on forever. somebody who is short this stock at, you know, 25 has already lost 100% of the value of their — tim, this is not about the short se this is with a bigger issue. it’s about a criticism of a business model and it’s not just herbal life. sure. i can argue it’s an entire industry. the entire market level industry, there’s been very little oversight for many years, so this sort of draws attention to an industry, public and private companies, so to say that the short thesis is in tatters based on the stock price, you could say, yeah, for now, but based on the ultimate outcome i don’t think anybody knows that, and i want to say one thing. you say in one of your ports, you say an ftc investigation is likely to result in a vindication of the business model. how do you know? well, of course, there is one outcome that would not, and that is if the ftc shut them down. i don’t think that the ftc is going to do that because they are not illegal pyramid schemes, at least on the work that i’ve done and i’ve followed this stock and this industry for a long time, so if i take that off the table, almost every other ftc action, if there was one, means this stock is going to 75 or 80. let’s just say for a second, herb, that you say we didn’t like lee generation, i don’t like lee generation. i thought it was kind of a scummy practice. thankfully, it wasn’t herbalife doing it, but another practice. let’s say we didn’t like lee generation, going to fine y $50 million and never do it again. here’s the issue. you don’t know how much — this is a — get out of weeds a little bit here. the bigger issue is, herbalife has done a tremendous job cleaning themselves up and really try to change the rules and operate in a different way, how does that affect the growth? how does that affect the growth going forward because for some reason they are trying to change a lot of rules inside the company about how their distributors do business? you have one large distributor who has already left the company. there’s speculation another large distributor or two may leave the company. how does that affect the business going forward? well, i think they told you on the first quarter that january was soft. that was the impact of that and february was better. march was the best march they ever had, so i don’t view these as material changes or material impacts to their business model, and, of course, when we’re talking about the u.s., that is 20% of herbalife, so i — i think this one is going an awful lot higher, herb, and — and, you know, that’s my job is to make that call, right? and you’re making the call, and i think, tim, here’s what we ask of you. next time somebody corners you at a bar and says those jerks on cnbc, hey, they invited me back on to counter what they heard the day before. they talked and you listened. very duly noticed. tim ramey very bullish on herbalife. and herb very bullish on herb. the ultimate end game here. what’s that country song you and me and we agree to disagree. just ahead, jumbo jets going
Welcome to our latest issue of ValueWalk’s hedge fund update. Below subscribers can find an excerpt in text and the full issue in PDF format. Please send us your feedback! Featuring Point72 Asset Management losing about 10% in January, Millennium Management on a hiring spree, and hedge fund industry's assets under management swell to nearly Read More