Valeant is getting plenty of attention due to its association with Pershing Square, one of its largest shareholders which also helped the pharmaceutical company try to buy Allergan last year. (Bill Ackman has full confidence in Valeant’s chief executive, Mike Pearson. Goldman Sachs… less so.)
Thoughts have turned to Valeant’s cash flow once ties to Philidor, a controversial specialty pharmacy responsible for 6 per cent of sales in the first 9 months of this year, are severed.
One sometimes-overlooked aspect to note: the circa $340m $290m* contribution to operating cash flow last year from that attempt on Allergan. Read more
Pershing Square, the hedge fund dedicated to the destruction of Herbalife for truth, justice and a tidy profit, will hold a presentation on the subject of Nutrition Clubs run by the multi-level marketing company shortly on Tuesday.
In advance of that Herbalife has released a summary of its own research, a report prepared by a former FTC advisor on the company’s business model. Walter H. A. Vandaele of Navigant Economics:
assessed whether Herbalife’s operations appropriately are classified as a beneficial, legitimate Multi-Level Marketing (“MLM”) firm.
Bill Ackman, who will be making a new Herbalife presentation on Tuesday at 10am EST in New York, has given CNBC a small taste in advance. Well, by taste we mean he predicts ithe company’s rapid and imminent exposure as a fraud.
Valeant Pharmaceuticals To Hold Conference Call On Tuesday, June 17, 2014 To Correct Recent Misrepresentations
LAVAL, Quebec, June 13, 2014 /PRNewswire/ — Valeant Pharmaceuticals International, Inc. (NYSE: VRX) (TSX: VRX) today announced that it will conduct a fact-based presentation to refute recent misleading assertions made by Allergan, Inc. (NYSE: AGN) and others, as well as answer additional investor questions, on June 17, 2014.
Bill Ackman, founder and showman in chief of Pershing Square is adding a new string to his bow on Monday morning as co-host of CNBC’s squawk box for an hour. He’s joined by Michael Porter, professor at the Harvard business School, to discuss the mooted deal where he has teamed up with Valeant to purchase Allergan and the changing structure of the pharmaceutical industry.
The two have been a CNBC double act before, but it seems a good a time as any to dust off the stale sell case against Valeant that is still floating around. In short, it is a company that only makes a profit after a lot of accounting adjustments.
In case you were wondering, this has been a painful one to be short for most of the last year or so. Read more
The US Court of Appeals in San Francisco on Monday upheld a district court ruling that BurnLounge was a pyramid scheme. A closely watched case — the first appeal court judgement on pyramid law in almost two decades — the judgement affirmed the existing case law and paves the way for the Federal Trade Commission to clarify the way it interprets that law.
However, the court didn’t need to answer one of the most contentious legal questions to resolve the case, so it didn’t. It also said that there is no basis in the case law to assume a simple definition of what constitutes a customer, a blow for those in favour of a clear cut pyramid rule that leaves room to argue the status quo is fine.
So, the ruling can be seen as positive for Herbalife (which has claimed validation), even if it is far from conclusive. What it emphasises is that proving a pyramid case remains fact specific, where legitimacy turns on the structure of a multi-level compensation plan and the motivations of those involved. The FTC investigation into Herbalife, which rumbles on with the company’s co-operation, remains the best chance of resolving whether widespread industry practices are legitimate. Read more
It’s not just ABC News which has cameras. Bill Ackman’s Pershing Square will unveil a documentary on Friday, with interviews of individuals and families who tried out the Herbalife multilevel marketing plan.
That’s Herbalife President Des Walsh, telling ABC News that he is appalled at the behaviour of distributors who were captured on hidden cameras making bold claims for the health benefits of his company’s products (like curing brain cancer, for instance).
He was interviewed as part of an investigation by ABC, including an interview with a whistleblower who didn’t disclose at the time that Bill Ackman had agreed to pay up to $3.6m in bespoke unemployment insurance.
Which has prompted Herbalife to get a bit of retaliation in at the short seller behind Pershing Square, asking:Read more
The latest dossier from Pershing Square has landed, and this time the Herbalife short campaign would like to draw your attention to a Dallas-based marketer of the nutritional-shake business opportunity.
Dan Waldron is a 30 year Herbalife veteran. He is affiliated with several businesses that have ties to Herbalife and has the broad smile of a self-made man when he poses for photographs with Michael Johnson and Des Walsh, chief executive and president of the multi-level marketing group.
More on Mr Waldron in a moment, but we thought it might be useful to explain where Pershing are going with all this. In addition to the lobbying battle, Bill Ackman and co are attempting to show a pattern of bad behaviour by senior members of the Herbalife hierarchy that might interest the US authorities. Read more
The Journal of Historical Research in Marketing, Volume 6, Issue 4 will not hit the shelves of your lending library until November, but Professor Bill Keep has helpfully posted his forthcoming article on the TCNJ School of Business website.
Essential reading for anyone interested in Herbalife, it is undersold by the title — Multilevel Marketing and Pyramid Schemes in the United States: An Historical Analysis. A bit of false modesty there, as it addresses head on the problems at the heart of a business model built around a narrow and potentially flawed idea of legality.
Note also that the paper’s co-author, Peter Vander Nat has been involved in all the recent prosecutions of pyramid schemes bought by the Federal Trade Commission, which has lauded him as “arguably the country’s preeminent expert on pyramids”. Read more
OK, endgame might be premature, this Herbalife saga has plenty of life in it yet. But after more than a year of debate, and with stirrings of interest on Capitol Hill, we want to offer some conclusions and an actual solid prediction in this, the first of three posts.
The second will look at how the multi-level marketing industry walked its legal position out onto sand, and the third will deal directly with Herbalife’s claims of legitimacy. But this one is about the Federal Trade Commission and that forecast: we think the regulator, at some point this year, will rewrite its guidance to the industry on the way it analyses pyramid schemes.
Why it will, and the significance of such a move, is going to take a bit of explaining. Read more
Pershing Square has launched a new line of attack on Herbalife with a study of Shawn Dahl, until last year one of the top businessmen in the California based multi-level nutritional shake marketing scheme.
We won’t comment either way on Pershing’s allegations — Mr Dahl and the company he represented, Online Business Systems, have never taken up our invitations to discuss their operations, and any allegations should be treated as such. Instead, let’s have a quick look at the idea of whether it is possible to have a bad apple within an otherwise kosher marketing scheme. Read more
So Bill Ackman gave it one more concerted public shot. After spending a year of his life and half a billion or so of Pershing Square dollars shorting Herbalife, he might take a lower profile from now on.
Herbalife, meanwhile, has tried to turn the tables on the hedge fund, going active on the activist investor’s investors, according to Bloomberg. And a Belgian appeals court has reversed an early ruling that the company was pyramidical. So, victory to the bulls?
Not just yet. For a start, not everyone has got the message that Herbalife absolutely, positively, is not a pyramid scheme. 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 innocentquestions… Read more
Bill Ackman is considering launching an IPO of a new fund to raise as much as $3bn in permanent capital for investments, the FT says. The activist investor, whose hedge fund Pershing Square has $10bn under management, laid out his desire for a reliable source of capital in a letter sent to investors on May 25. Finalternatives adds that the Ackman is currently in talks with investors about a closed-end permanent capital vehicle, although nothing has been finalized. The activist firm could list a fund by the end of this year, although an early 2012 listing is also possible. DealBook notes that so-called ‘sticky money’ or permanent capital has become a hedge fund obsession in recent years.
Bill Ackman cannot be pleased. Target’s shareholders on Thursday voted to re-elect its four incumbet directors, defeating the fiery hedge fund manager’s proxy contest to achieve five seats on the retailer’s board.
Ackman, whose Pershing Square Capital has a 7.8 per cent stake in Target, launched the proxy contest in March after Target rejected his proposal to spin off its land holdings into a REIT. Read more