Tuesday, January 29, 2013

Stocks DD Cites: Kerrisdale Capital Long thesis on Herbalife

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  1. I think not when you consider US is only 20% of the business and it will impossible to educate distributors through out the world that HLF business opportunity is likely a money losing opportunity for a lot of people...Amway has been running its business for decades around the world

  2. The "US is only 20% of HLF sales" argument is completely silly. As soon as a judge orders them to cease operations in the U.S. the SEC will halt trading in the stock. Do you really believe the stock will open on the OTC markets at any value greater than $0.05? Do you really believe that a high profile closure of an international MLM in the U.S. will not be followed by regulatory action in overseas markets?

    Ackman may be totally wrong about HLF, but don't any take comfort in the 20% US sales argument. If he is right in the US, the stock goes to zero.

  3. 1. If FTC shuts down HLF, the valuation will likely change based on 20%(?) reduction in earnings. Even if SEC shuts down trading of HLF securities, as you said it will open in OTC. I don't understand why it will trader lower in OTC. As i said it will be lower based on 20%(?) reduction in earnings.
    2. WRT US FTC action leading to cascade of regulatory in other countries, i think it is a weak argument.Amway works much the way as Herbalife. Amway has been in business for decades. Also US action leading to action in Africa,Ghana or Indonesia is a bit far fetched. The regulations and laws in those markets govern the legality of MLM in those countries.

  4. Shut down you say, UMMM
    Stock price ups and downs, sure.
    But, there's a ZERO chance of HLF being shut down.
    HLF has REAL customers, real R&D (44 million in 2012), real manufacturing (spending 130 million for new plant in N. Carolina), real products, etc... In addition, HLF's Q3 puts the "inventory loading" issue to rest. HLF provides a 100% money back on any purchase for up to a full year with no shipping charges.

  5. The real question that HLF has to answer is why do >90% of their "distributors" (members) fail and don't sign up for the next year. Nobody considers the sales to these "distributors/members" as retail sales. At least I don't.

  6. personally i have always maintained HLF is NOT a good LONG OR SHORT.