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