Herbalife says there’s no “smoking gun” in a Seeking Alpha contributor’s recent post
Herbalife management has posted several responses on Twitter to an article posted by Matt Stewart on Seeking Alpha. Stewart claims to have seen an internal Herbalife survey that was leaked to him and suggests that it may be enough for the Federal Trade Commission to move on.
The nutritional supplements company has been on the agency’s radar for some time, and the investigation has remained an overhang on Herbalife shares.
In a rare interview with Harvard Business School that was published online earlier this month, (it has since been taken down) value investor Seth Klarman spoke at length about his investment process, philosophy and the changes value investors have had to overcome during the past decade. Klarman’s hedge fund, the Boston-based Baupost has one of Read More
Arrest Herbalife’s CEO?
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Stewart actually makes the bold suggestion that regulators might think now is “a good time to arrest Mr. [Herbalife CEO Michael] Johnson once and for all.” He published his February travel itinerary, which shows he’s cruising Latin America in what Stewart calls an “extravagant” way. Then he dives into the documents he says a source leaked to him.
He refers to a survey conducted by the research firm Actionable and polls former distributors. He also reminds us of something Herbalife management has said about 73% of its distributors joining to get discounts on the company’s products. However, he suggests that this statement may not be true.
The survey shows that 44% said they joined to supplement their household income, while 17% joined to get discounts on Herbalife products and 13% needed a job. He also said the survey indicates that “a very small percentage of former distributors had success building even a modest portfolio of clients,” suggesting that the majority who joined to supplement their income aren’t able to do it by selling Herbalife products.
Pyramid scheme allegation leveled at Herbalife… again
In addition, the survey indicated that 55% of distributors sold at least half their products to customers, but almost all of the rest used the products themselves or gave them to family. Also sales conversion rates tended to be lower 10%. Summing up all the results from the survey, Stewart suggests that all of the results are “entirely consistent with what one would expect from a participant in a pyramid scheme. Among the other findings of the survey, according to Stewart, are low return on time invested, “rampant” saturation evidence and “inevitable economic failure.”
Stewart has disclosed that he is short on Herbalife, siding with Bill Ackman on the company. He recently suggested that Post Holdings Chairman and CEO Bill Stiritz is unloading the company’s stock. But the opposite turned out to be true, as Herbalife’s biggest shareholder actually added to his position, according to recent regulatory documents.
Herbalife responds to Stewart’s “smoking gun”
Management at Herbalife had a four-part tweet for Stewart in an attempt to deny that his Seeking Alpha post had anything worth reporting in it. In fact, they said this survey has been published before.
The recent $HLF article on @Seeking Alpha by Matt Stewart is anything but a smoking gun. (1 of 4)
— HerbalifeTRUTH (@HerbalifeTRUTH) January 27, 2015
This report has been out in the public for several months & no publication reported any “smoking gun,” as there is no story. $HLF (2 of 4)
— HerbalifeTRUTH (@HerbalifeTRUTH) January 27, 2015
The results are exactly as we expected, as they reflect a survey of 46 Sales Leaders. $HLF (3 of 4)
— HerbalifeTRUTH (@HerbalifeTRUTH) January 27, 2015
The 46 Sales Leaders reflect a small sub-set of our millions of members who likely joined $HLF for the business opportunity. (4 of 4)
— HerbalifeTRUTH (@HerbalifeTRUTH) January 27, 2015
As of this writing, shares of Herbalife were flat at $31 per share.
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when this is all over either herbalife ceo johnson or the TRASH FUND manager ackman will be in jail!!
All network marketing or multi-level marketing (MLM) companies have a very high failure rate. However, it is my experience that with a good company (such as Amway or AdvoCare), the failure is mostly due to the effort put forth by the distributor.
Herbalife is a FAILURE OPPORTUNITY for 99.9% of their members. This is the cornerstone Big Lie that Herbalife is based upon. The Herbalife cover story is that they are a health/weight loss company despite doing no research and not tracking results.
Herbalife steals poor people’s dreams.
The sooner Herbalife is arrested and put away the better we all will be.
The government is complicit, enabling Herbalife’s lies. The agencies need to be investigated to remove those asleep at the wheel and those to timid to act.
People taking diet shake, herbs diet and exercise gain an average of 2.2 pounds per year than those using diet and exercise only.
Herbalife products contain unsafe herbs without warning labels. Top members, on the President’s Team, have been informed and no action has been taken to protect members or their fetuses, Herbalife is not a health company just a uncaring, illegal scheme to fleece the public.
Friends do not let friends join Herbalife.
Matt has not made one prediction in the last two years that came true. His “articles” or more fiction than fact. They smell of cheap tabloid like journalism. About 99% of what he says is inaccurate. Not sure if he really has a HLF short position or is just a hired gun by Ackman. If the latter is true, you would think that a billionaire like Ackman could afford better quality than Matt. I have reported his misdoings on twitter.
More of them same. Someone trying to make money by claiming to have insights, but having none.
Why did the SA author say Stiritz was dumping shares when the truth was he was adding substantially? Maybe because the author is a lying manipulator that needs to be investigated by the SEC for Stock manipulation?
How come 3/4 came 40 minutes after 4/4? And @seekingalpha wasn’t typed correctly? Seems lazy
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