Time For Herbalife Ltd. (HLF) to Put On Its Big Boy Pants

Time For Herbalife Ltd. (HLF) to Put On Its Big Boy Pants
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This, in my humble opinion is the most pathetic thing I’ve seen in a long time. Herbalife Ltd. (HLF), the $4.7B company is going to court after a twitter user with 82……yes, 82 followers. The reason? This person’s tweets have “defamatory, disparaging, and deceptive posts about Herbalife and its products, but also contains numerous insulting and offensive statements about Herbalife’s management team, its members, and even federal regulators”.

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Why is this so pathetic? Well, Bill Ackman who runs the $12B hedge fund Pershing Square has called Herbalife Ltd. CEO Micheal Johnson “a criminal”, he has said the rest of management are “criminals” also. He has called the company a “fraud” , “a criminal enterprise”, “a pyramid scheme” and countless other defamatory, disparaging, and deceptive (according the Herbalife Ltd. (HLF))” statements. He even has a website “Herbalife Pyramid Scheme” devoted to trying to destroy the company. Still, other than the occasional snark from management, they have taken no action against him.

Ackman has even gone so far as to practically beg Herbalife to commence legal action against him and his claims. But, nothing from Herbalife….When asked point blank if he was worried about legal action from Herbalife, his response? “I’d welcome it”. Why has Herbalife left Ackman alone?

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Proceeding against Ackman is something the company is terrified to do. Why? Well, they’d have to prove his allegations were false and that would involve discovery. Discovery is the last thing this company wants against a deep pocketed adversary. By picking on some small time twitter user who most likely does not have the cash to even begin to defend themselves against the legal firepower of a $4.75B company, Herbalife can silence them. THAT would put a chill on other twitter users expressing their negative opinions about the company and who do not want to run into a load of legal bills.

Is Herbalife simply doing this in an attempt to squash negative twitter sentiment about them? If so, then this case has much larger 1st amendment ramifications.

Things might get really fun here should someone step in and decide to bankroll this person’s legal bills. Does Herbalife back down? Do they press it?

Let’s be honest, if this person stood in the middle of Times Square and said the things about Herbalife they have tweeted they would reach more people daily that they do with their twitter feed.  The insinuation $HLF and its reputation is being “materially harmed” by anything that twitter feed produces vs the 2yr war Ackman has waged against it is beyond laughable on its face a seriously delusional on a deeper level.

Were they going after Ackman also, I’d say this action is just another in a series of legal confrontations the company has embarked on. But they haven’t so this isn’t. They are trying to bully someone into shutting up.

I don’t think this has anything to do with what this person tweeted and much more about shutting down negative twitter opinion about Herbalife Ltd.


Herbalife Ltd (HLF.N) filed a petition seeking information from micro-blogging company Twitter Inc (TWTR.N) to identify an anonymous user who posted defamatory tweets against the weight-loss and nutritional products maker.

The petition for “discovery before suit” seeks to identify the person against whom a lawsuit can be filed.

Herbalife said it wants Twitter to provide information such as IP addresses and account details of the user who vilified the company and its management as “thieves, pill pushing frauds and bullies”.

“The twitter feed of @AfueraHerbaLIES contains not only defamatory, disparaging, and deceptive posts about Herbalife and its products, but also contains numerous insulting and offensive statements about Herbalife’s management team, its members, and even federal regulators,” the company said in the petition filed on Monday in Illinois.

Full article here


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Todd Sullivan is a Massachusetts-based value investor and a General Partner in Rand Strategic Partners. He looks for investments he believes are selling for a discount to their intrinsic value given their current situation and future prospects. He holds them until that value is realized or the fundamentals change in a way that no longer support his thesis. His blog features his various ideas and commentary and he updates readers on their progress in a timely fashion. His commentary has been seen in the online versions of the Wall St. Journal, New York Times, CNN Money, Business Week, Crain’s NY, Kiplingers and other publications. He has also appeared on Fox Business News & Fox News and is a RealMoney.com contributor. His commentary on Starbucks during 2008 was recently quoted by its Founder Howard Schultz in his recent book “Onward”. In 2011 he was asked to present an investment idea at Bill Ackman’s “Harbor Investment Conference”.
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  1. Or, HLF is using this case to show that Pershing Sq is setting up Twitter accounts for the sole purpose of anonymous slander, since this is just a motion to request Name and IP Addresss of the Twitter user.

    I doubt it will get that far though. Said user will probably just delete said account and Twitter might not have to release the information for a deleted account.

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