Sunday, December 23, 2012

(HLF) Herbalife (NUS) Nu Skin: Suspect Ponzii Scheme Stocks That Look To Continue Lower

Barron's: Ackman Spares No Venue In Trying To Extinguish Herbalife

  Activist hedge-fund manager Bill Ackman launched a remarkable crusade
Thursday by renting a Manhattan auditorium to make a three-hour, 334-slide
argument that the $5 billion New York-listed Herbalife is worth zero. Funds
run by his Pershing Square Capital Management have a large short- sale bet
against the stock (ticker: HLF) of the multilevel marketer of vitamins and
weight-loss shakes.
      In TV appearances last week and a new Website (,
Ackman alleged that Herbalife is a pyramid scheme, which is illegal. The Los
Angeles-based outfit should be targeted by regulators, said Ackman, but soon
enough will run out of new recruits to push its products. His firm estimates
that millions of people have lost $3.8 billion in failed attempts to get rich
by recruiting still other people to buy and sell Herbalife items.
      The company has vigorously denied such charges in the past and said it
will hold an analyst meeting during the week of Jan. 7, 2013 to respond to the "
distorted, outdated and inaccurate information" from Pershing Square.
Herbalife's furious Chief Executive Michael O. Johnson called Ackman's
allegations "bogus" and seemed to threaten the money manager -- telling CNBC
that "the United States will be better when Bill Ackman is gone."
      The money manager pledged to make a charitable donation of his profits
from the short sale, including a guaranteed donation of $25 million to the Ira
W. Sohn children's cancer foundation, which co-sponsored Ackman's unusual Dec.
20 jeremiad. With just a few days left before Pershing Square's year-end
performance measurement, the firm's Herbalife position will likely benefit from
the stock's 38% drop on the week, to $27.27.
      The shares are down 40% since Barron's warned that Herbalife and
multi-level rival Nu Skin (NUS) disguised the failure rates of their recruits
("Where Beauty Is Skin Deep," May 14). Nu Skin shares fell last week to
$34.51, leaving them some 18% below their May level.

 ***DISCLOSURE: Looking to continue shorting (HLF) (NUS)

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