Yes, we said that the Herbalife sell case would be the next installment of our series on the company, but we interrupt that train of thought to bring you this fascinating piece of due diligence.
I went to see your health and scientific center, and the dedication of your scientists there and how they were thinking there about how they could create a product that actually did what it said it was supposed to do. And to make sure is it was absolutely dedicated to a scientific basis, that it understood what it is in peoples bodies that requires them to have certain nutrients, and I was very impressed, truly impressed.
This could be a four word post – Bill Ackman is wrong – but for reasons that we’ll explain here and in the next post, the future for the Herbalife share price is now subject to questions about the multi-level marketing industry as a whole.
What we want to do then, is share some of the reasons that we’ve heard for why people have bought the stock of a company that the Pershing Square activist has said is going to zero, and we think still has some serious questions to answer about its business model. Read more
Up until now the FTC has been the ghost in the machine as the debate about Herbalife’s business model has raged. Often invoked and implored, the direct seller’s share price has in many ways been a referendum on any ultimate action or inaction from the regulator.
However, the debate has expanded beyond Herbalife to look at practices across the whole direct sales industry, and pressure is rising on the FTC to pick a side.
Indeed, on Thursday a significant coalition of consumer activists, economists, lawyers, entrepreneurs and former participants in mutli-level marketing programmes will submit a petition to the Federal Trade Commission calling on it to take enforcement action and set new rules for the industry. Read more
There has been a lot of attention recently on Herbalife’s Californian business, where the company has received some criticism from within the Latino community.
Herbalife says that this is unfair, and that it would be delighted to help its critics understand the opportunity it provides to its many keen salespeople. What it might consider is a field trip to Mexico, where its nutritional shakes and direct sales model appear to be wildly popular.
Just how popular? Read more
Fancy that. We were only just discussing the powers available to the Californian authorities to look at Herbalife the other day. And then we woke up to this press release:
New coalition seeks AG Kamala Harris and Santa Cruz DA Bob Lee’s assistance to investigate Herbalife’s pyramid scheme targeting the Latino community. Read more
California has nurtured Herbalife for more than three decades. From Los Angeles, the multi-level nutritional-milkshake marketing and distribution scheme has spread to 75 countries worldwide.
Yet the state was not always friendly. In 1986 it won a permanent injunction against the company that is still in force, and we wonder if — following a more recent California court ruling — it might look at that injunction once again. Read more
Real life actual judicial opinion on Herbalife arrives from California. Click for the full document
It is only denial of a Herbalife motion to dismiss a suit from a former salesman, Dana Bostick, but there are some significant judicial thoughts that add useful perspective on what we have been reporting about the pyramid scheme case law as it applies to Herbalife. Read more
There is something weird about the way that Herbalife has been responding to questions about its customer base.
Faced with a barrage of scrutiny over the claims from Bill Ackman that it is a pyramid scheme, and as Herbalife has insisted that it is legitimate, it has turned to market research companies to show that it has plenty of real customers. Read more
Who are Herbalife’s customers?
A fair question, yes. An innocent one, not at all. And answers came there… well many, actually. Read more
We like a lot of what Bronte Capital’s John Hempton writes, but we think he has got two things quite wrong: New York laundry and Herbalife.
The reasons for both are similar: overlooking deep seated structural factors in favour of personal impressions and a partial analysis. Read more
Which was your favourite Herbalife moment this year? The billionaire playground spat, an inside trading auditor, the dubious surveys and unanswered questions, George Soros, angry Latinas, the whistleblower, or the high profile departures and appointments?
Yet the fun has also obscured the underlying issues. While there have been some great pieces looking at parts of the story – the Verge on online scammers pitching the Herbalife business opportunity, or the NY Post on the departure of top Herbalife salesman, Shawn Dahl, for instance – there was little that got to the heart of accusations that Herbalife is a pyramid scheme.
We want to change that, starting with this post about why the question for Herbalife investors should be less about whether the FTC will investigate Herbalife and more about what the Federal Trade Commission has already said and done. Read more
Herbalife was having another good day in the market at pixel time.
If that picture could be conveyed aurally, that first plunge in 2012 would be the sound of analyst jaws dropping as David Einhorn appeared on the Herbalife conference call to ask three
innocent questions… Read more
There have been several letters this year to the FTC urging it to investigate claims that Herbalife is a dastardly pryamid scheme, from consumer groups, congress people and others. Most have leant on the arguments made by short seller Bill Ackman, but today’s from MANA, a National Latina Organisation, has some of the strongest and most specific language we have seen.
Herbalife claims it is both a product company and a business opportunity, but clearly this is a deceptive claim since the majority of Herbalife distributors make little or no income. According to Herbalife’s own 2012 data, 88 percent of their participants received no payments from the company at all. Read more
This guest post is submitted by Dan McCrum, the FT’s US investment correspondent.
Hoisted from the web archives of the wayback machine, lets take a look at what 4u4meletsdream.com had to offer back in 2004.
In February it looked like this: