Ackman New Herbalife Ltd. (HLF) Target: Kurt, Cindy O’Connell

CREW Herbalife Ltd. HLF Bill Ackman speaking

Bill Ackman is on the attack again. This time the activist hedge fund manager’s target is the couple of Kurt and Cindy O’Connell, independent business people operating out of Appleton, Wisconsin and Bonita Springs, Florida.

Ackman: Herbalife distributors targeted for their claims made in video

The O’Connells are featured on the web site www.HerbalifePyramidScheme.com and are used in Ackman’s attack against Herbalife Ltd. (NYSE:HLF). Ackman’s hedge fund, Pershing Square, has placed a $1 billion short bet against Herbalife in a high stakes battle to take the firm down.  It has brought regulatory heat, as investigators determine if the firm is a pyramid scheme, as well as produced a short documentary film on what Ackman calls Herbalife’s questionable business practices.  The attack targets are now including individual distributors of the company.

The apparent ire of the attack are videos the couple produced promoting Herbalife Ltd. (NYSE:HLF) to would-be distributors who would fall under the O’Connell’s revenue stream.

The O’Connell’s were struggling but “had a dream”

“Cindy O’Connell recounts that she and her husband ‘were struggling financially and we had a dream,’” the web site points out, attempting to highlight potentially false and misleading promises.  “Cindy later tells recruits that if they want to make ‘anywhere from a few hundred dollars a month really up to, like, $4,000 a month, you can do that by being in the position on the marketing plan called Supervisor or World Team.’”

The web site notes that the O’Connells outlined income expectations without disclaimers. In another example of potential misleading statements the website points out “Cindy O’Connell tells potential recruits that starting an Herbalife Ltd. (NYSE:HLF) business is a low-cost proposition that will quickly turn profitable:  ‘In my mind, I thought, it takes a lot more money to build this business than it really did.  And when I boiled it right down and actually kinda wrote down what does it cost me to keep my business running every month . . . when I broke it down and added it all up, it really wasn’t that much.  And then when I looked at what the income for my business, how much retail profit was I making, how much wholesale profit was I making, how much royalty profit was I making, how much production bonus was I making, when I was able to add and put that all together I realized, boy, it really doesn’t take that much money to run this business and for the most part, you know, your cash flow is keeping things going and then boom, before you know it, you’re into that profit level.’”

Then the web site digs into a key charge, that Herbalife Ltd. (NYSE:HLF) is all about building a distributor network underneath, bolstering the pyramid scheme claim, quoting husband Kurt.  “Kurt O’Connell then makes it clear that recruiting is the primary means by which an Herbalife distributor can achieve a substantial income.  Referring to ‘royalty income,’ he says, ‘That’s the dream money.  The dream money will come from that royalty, for those of you that are building that big dream.’”

In the O’Connell promotional videos the web site notes claims that the O’Connell’s have earned “over a million dollars last year and our check is still growing.”  That doesn’t top Ackman, who stands to make billions if an Herbalife Ltd. (NYSE:HLF) pyramid is proven and comes crashing down.

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About the Author

Mark Melin
Mark Melin is an alternative investment practitioner whose specialty is recognizing a trading program’s strategy and mapping it to a market environment and performance driver. He provides analysis of managed futures investment performance and commentary regarding related managed futures market environment. A portfolio and industry consultant, he was an adjunct instructor in managed futures at Northwestern University / Chicago and has written or edited three books, including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008). Mark was director of the managed futures division at Alaron Trading until they were acquired by Peregrine Financial Group in 2009, where he was a registered associated person (National Futures Association NFA ID#: 0348336). Mark has also worked as a Commodity Trading Advisor himself, trading a short volatility options portfolio across the yield curve, and was an independent consultant to various broker dealers and futures exchanges, including OneChicago, the single stock futures exchange, and the Chicago Board of Trade. He is also Editor, Opalesque Futures Intelligence and Editor, Opalesque Futures Strategies. - Contact: Mmelin(at)valuewalk.com

6 Comments on "Ackman New Herbalife Ltd. (HLF) Target: Kurt, Cindy O’Connell"

  1. Here is a nice video.
    Bill Ackman Herbalife MLM Tim Sales
    by Steve Swartz

  2. Of course it can go to zero, if the regulators disgorge the company, officers, and high level distributors.

  3. meanwhile back at the ranch THE STOCK IS UP THIS MONTH…..bill stiritz, carl Icahn, George soros and several other billionaires who are long the stock and selling puts have done their own investigation…this group of billionaires have a lot better investigators, lawyers, and analysts than the government could ever hire.. do you think Icahn would have put so many on the hlf board if he had not done a thorough investigation…DUE DILIGENCE..it is what these billionaires do and they do it very well, ackman on the other hand NOT SO MUCH I use j c penny , target. and now hlf as my examples…these billionaires just keep selling puts and the puts just keep expiring worthless.. and once these investigations end and hlf gets a fine and a slap on the wrist the stock goes to 100 bucks a share and all the shorts will be SQUEEEEEZED like volkswagon was..this is going to make a great movie once it is over….one more thing…only 18 percent of hlf sales are in the united states so WHAT IS THE WORST POSSIBLE OUTCOME?? they lose 18 percent of there sales…IT IS NOT POSSIBLE FOR IT TO GO TO ZERO…

  4. Herbalife operates very similar to Amway, the world’s largest MLM scam: http://www.stoptheamwaytoolscam.wordpress.com

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