Bill Ackman is a hedge fund manager. It sounds like he has made it his personal mission to destroy Michael Johnson and Herbalife. Of course, being a finance guy, he also plans on making a fortune from this collapse.
I've become obsessed with this Herbalife story.
Ever seen those signs on phone poles, "Got a computer? Get rich!" "Work from home, $1500-$3000 month." That's mostly Herbalife.
Looks like HLF gets a substantial, if not most, of their revenue from "startup fees" from new recruits, then loads them up with inventory, most of which never gets sold. Basically extracting a few hundred to a few thousand dollars out of new "distributors" who quickly fail.
HLF eventually runs out of customers who are willing to fork over several thousand dollars for a bunch of powder that will sit in their garage for years, and they've been forced to move from country to country, as they churn through all the available desperate/naive marks.
It's the "only $5 billion dollar brand nobody's ever heard of."
Their literature and practices are filled with all this weird schemey-sounding terminology, obfuscatory and nonsensical explanations that smack of ulterior motivates, scamming, and cult-like behavior.
But is it an illegal scheme? Not technically -- they engage in lots of accounting, pricing and descriptive trickery to ensure that a minimum amount of their revenue comes from "sales" (as opposed to "recruitment").
They are based in the Caymans. Their CEO Michael Johnson is a former Disney guy, and is one the HIGHEST PAID CEO's in the US.
It's gross and disgusting. But hey, just because revenue comes from victimized suckers doesn't mean it's not revenue. What do you call cigarette revenue? And you could make a similar case for potato chips, cable TV, etc.
Equally depressing is Wall Street's blithe acceptance of their "admirable growth."
Big HLF investor conference to respond to Bill Ackman scheduled for January 10.
Ackman's (16 hour!?!?) presentation contains references to some video clips, but technology being what it is, the links aren't clickable. I transcribed a couple of them, in case you are interested.
Video 3 8
Combined videos 1
No comments:
Post a Comment