Ackman’s short of Herbalife (NYSE:HLF) shows he simply doesn’t understand direct selling.
Bill Ackman represents the very worst of Wall Street. Not only is he attacking a legitimate company that employs thousands of people and generates part-time incomes for over 2 million independent distributors around the world, he has the unmitigated gall to style himself as a protector of the people in doing so.
His whole premise is based on the mistaken idea that Herbalife is an illegal pyramid scheme. If you really want to explore that issue, I recommend reading the FAQs on MLM Companies that Herbalife includes on their investor relations site. And even if the FTC were to take issue with some aspect of Herbalife’s compensation plan, it certainly wouldn’t be the end of the company, just as it wasn’t the end of Amway. Or Google. Or Microsoft. Take a look some time at all the companies that have had problems with the FTC before thinking that it’s the harbinger of death for an MLM company.
What’s most appalling about Ackman, though, isn’t his ignorance, but his hypocrisy. When you start digging, you find all sorts of interesting things, like his past defense of MLM when his fund was an investor in Pre-Paid Legal; his recent investments in JCP and Target, struggling retailers facing growing competition from direct sellers in the fashion, beauty and home products markets; the fact that he bet the farm ($1 Billion — with a “B”) on “driving Herbalife to zero”; and his 2009 character defense of his friend Ezra Merkin, who was charged with civil fraud by the State of New York for secretly steering $2.4 billion in client money into Bernie Madoff’s Ponzi scheme. Follow the money.
Fortunately, HLF is bouncing back, Herbalife is going on the offensive, and many other investors are going long on HLF. It appears Ackman may lose his bet…or not.
See, the thing is, Ackman doesn’t actually have to drive Herbalife to zero to make money. According to The New York Times, Ackman “is already up a couple of hundred million dollars”. And for what? For publicizing an ignorant, misguided attack on a company. He doesn’t create anything in the process. No jobs. No products. No real value.
And in the current economic climate, who does that serve?
Obviously Mr. Ackman really only cares a whitt about himself. I am proud to call myself an Independent Herbalife Distributor. I have found great pleasure in helping people with weight issues lose much unneeded weight, helped to lower blood sugars safely, blood pressure and promote well being naturally. I spent 20plus years in medicine and am happily retired yet not done with my pursuit of health for all. Why not add a little wealth for those that are interested in helping themselves and others as I have done along the way! Thank You Herbalife for providing me the means to reach more and help more!
There’s a special room in THE Hot Place for people like Ackman to intentionally trod on a reputable company and all its distributors just to make money. He already has a rep for doing stuff like this and I wonder how much longer he’ll be allowed to play like this. I am a very happy Independent Herbalife Distributor – working this business and using this product has changed my life and the lives of many other people. I’m so healthy now I’m off most all of my meds! And I’m able to make a living helping others.