Herbalife Ltd. (HLF) Blogger Unmasked; Tilson Weighs In

Herbalife Ltd. (HLF) Blogger Unmasked; Tilson Weighs In
By Herbalife International of America, Inc. (http://www.herbalife.com) [<a href="http://creativecommons.org/licenses/by-sa/4.0">CC BY-SA 4.0</a>], <a href="https://commons.wikimedia.org/wiki/File%3AHerbalife_Nutrition_Logo_2016.png">via Wikimedia Commons</a>

Whitney Tilson, who has a short in Herbalife Ltd. (NYSE:HLF) weighs in on the latest controversy regarding the ‘ousting’ of a Herbalife long by  Michelle Celarier of the NY Post. Tilson supports the action and  Tilson also responds to a critic who questions his support. Below are Tilson’s comments and his response to the critic.

EDITOR’S NOTE: We have been covering the Herbalife Ltd. (HLF) saga for a LONG time (mostly by Michelle Jones, who has provided excellent coverage of the long battle) and while I cannot speak for the company, I have to say I find the actions of Celarier to be disgusting IN THIS MANNER. I am friendly with her and think she is a good person, but did something very wrong here (this is not a secret so I can say it openly). I did not want to weigh in, but now I am forced to. Unless there is evidence of wrong doing (in which case Pershing can submit that to the SEC, FTC etc.) this seems like intimidation of someone who cures cancer for a living, solely because he is very bullish on Herbalife. I have interacted with many Herbalife ‘trolls’, and many of the longs are nasty and pathetic, The Skeptic is an exception, and I have always found him to be a gentleman.


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This is also very disturbing for anyone who is covering news. I receive information which is highly confidential, and I am expected to protect sources to the best of my ability. I take this VERY seriously and have never provided any information even when threatened with lawsuits by certain financial firms. If anonymity is not respected, journalism dies and all you are left with are cat GIFs…..

Certain parties will be upset with this piece but I think its important. Nonetheless, the recent saga should not impact our coverage of the company. 

On a side note, I think I know how the IP address of the Skeptic was discovered. If anyone is interested in that topic contact me on Twitter (I get too many emails).

Tilson on Herbalife Ltd. (NYSE:HLF)

My goodness, just when you think the Herbalife saga can’t get any more entertaining – it does! (It’s one of my largest short positions.)


Check out this story by Herbalife ax Michelle Celarier that she published today on the NY Post web site, in which she outs a formerly anonymous HLF-pumping blogger: “Jeffrey Gardner, 37, a cancer researcher at New York City’s Memorial Sloan-Kettering” and, according to one message board post (below), “a pompous belligerent cocky braggart.”


So why is Gardner pumping the stock and how does he have such (occasional) good information? Celarier writes:


“Chin, 40, is Gardner’s longtime girlfriend, domestic partner and, throughout most of Gardner’s 15-month tweet-athon, an equity analyst with Visium Asset Management, a Manhattan hedge fund that owned Herbalife stock…over this same time period, Chin was a prominent and visible Herbalife supporter. She was the only hedge fund analyst to ask questions on the company’s quarterly conference calls since its battle with Ackman began…“We have a strong history … You know us very well,” Herbalife CEO Michael Johnson said on the company’s July 30 call, in response to a question from Chin.”

Yet Gardner, in a pious, whining, self-pitying (yet also attacking) blog post (below), claims that his girlfriend had nothing to do with his posting on HLF:

(Note the careful phrasing – nobody is claiming that she posted anything – because she had her boyfriend do it!)


If you think this is mere coincidence, please contact me ASAP, as I have a bridge in Brooklyn for sale.


Say what you will about Ackman, but at least he has the guts to stick his neck out and say what he believes and subject himself to all sorts of slings and arrows. I respect that, just as I respect others who do the same like (off the top of my head) Carl Icahn, Andrew Left, David Einhorn, John Hempton, Sahm Adrangi – and me for that matter. We don’t sling mud while hiding behind the cloak of anonymity like gutless weasels.


I think Celarier’s story is an outstanding piece of journalism, but to those who think it’s wrong to out a blogger who wishes to remain anonymous, read these four posts (on Gardner’s blog and http://brontecapital.blogspot.com/2014/05/the-lesson-of-todays-new-york-post-story.html):


Tom Salvatore May 8, 2014 at 3:17 PM

you should consider the implications of your position and relationships before holding yourself and your opinions out publicly. when you step into the arena, particularly when your commentary is sharp tongued, expect to get it back twice as hard. and any expectation you had of anonymity is an illusion. if you have nothing to hide, then you shouldn’t need to hide. days ago, you had a swagger and hubris in your tone. today, you have a decidedly different tone as the veil of secrecy is about to be removed. sounds like guilt and regret, mixed with anger, bitterness and resentment, of course. i empathize…

…TheSkeptic21 was a pompous belligerent cocky braggart who deserved to be outed. And the fact that he was live in partner of a buy side ally of HLF and clearly getting fed info directly or indirectly from the company, he deserves NO anonymity. So, get over yourself and your argument.



I don’t think it’s all that unreasonable to ask questions about a blogger who pumps the stock of a company his girlfriend invests in and somehow gets info before the rest of the world.




Fred Schwed said…

Uh… journalists only have a professional obligation to respect anonymity when the anonymous source contacts them and provides information. Identifying a prominent anonymous blogger is a legitimate news story.


From the mountain top the thin skinned speaks. Your dislike for those who disagree with you is evident. The arrogance in your replies speaks volumes about your character.


In response to my email last night, a friend wrote:


If someone is knowingly publishing false rumors, fine – out them.  Like if they were spreading M&A rumors that weren’t true to juice the stock.  But if someone wants to express opinions, analysis, and facts that they have every reason to believe are true but don’t want to be in the spotlight…what’s wrong with that?  The only people who can be in the spotlight are people whose names are on the door.  And there are plenty of people either running big money (some up to $1 billion) under someone else’s umbrella or doing tons of the heavy lifting on ideas whose hands are tied when it comes to going to the press.  This outing is going to totally stifle the flow of ideas and information, which had become so much more robust in the age of Web 2.0…


…[Publicly sharing one’s views] is a complete non-starter for 99% of the people in this business who don’t have their name on the door.  You cannot use your name or you will lose your job.  Period.  So should only the billionaires get a voice?  Half the reason that ValueInvestorsClub is so much higher quality than SumZero is because you can be anonymous on VIC but not SZ.  There are plenty of people with massive amounts of relevant information running money under someone else’s umbrella with strict rules.

I agree that Skeptic21sounded like a giant obnoxious a**hole but I have read large amounts of outstanding commentary that is anonymously generated and I fear it is going to go away now.  Some of the best info I’ve gotten on certain stocks was from anonymous bloggers.

I agree entirely. So why do I still support outing Chin and Gardner? Because they went way beyond publishing their own opinions and, it seems clear, on multiple occasions were getting info directly from Herbalife, making them, effectively, mouthpieces for the company (and, of course, neither they nor the company disclosed this; if the company was, in fact, leaking important information to anonymous bloggers, that’s the much bigger story here).


My comment about “gutless weasels” wasn’t directed at all people who post anonymously but rather just at people who “sling mud while hiding behind the cloak of anonymity.” Having been occasionally subjected to vicious blog/message board attacks myself, I don’t have a lot of patience for this. If you want to say stuff like that, say it to my face.


As for Celarier, I’ve read criticism that she’s just a mouthpiece for Ackman. She has indeed used him as a source and quoted him, and her articles generally support his critical take on Herbalife. But so what if she thinks Ackman is correct? She doesn’t hide her connection to him or her viewpoint. I think her reporting has been accurate and courageous – she’s one of the very few journalists who’s actually done a lot of work on the merits of Ackman’s case against the company (vs. the vast majority of journalists who just mindlessly report on the Ackman-Icahn war, etc.). Celarier reminds me of Christine Richard, the Bloomberg reporter (and, later, author of Confidence Game: How Hedge Fund Manager Bill Ackman Called Wall Street’s Bluff, about whom many similar things were said as she covered Ackman favorably during the 5+ year MBIA saga. Needless to say, she and Ackman were both vindicated – and history will repeat itself here, mark my words.


I think once you do the work on HLF, it becomes blindingly obvious that the company is areally bad actor in many, many ways, so the investment case, long or short, really just boils down to what the regulators might do. My general view is that regulators, having been shamed by their ineptness leading up to (and enabling) the financial crisis, are now getting a spine, so I have a Revenge of the Regulators theme across maybe 20% of my short book in stocks such as K-12, Questcor, World Acceptance, Lumber Liquidators, Neustar, Chemed, Lifelock and, of course, Herbalife.

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