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One Billion Dollars Short, Bill Ackman, and the Siege Of Herbalife (2015)

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Re: One Billion Dollars Short, Bill Ackman, and the Siege Of Herbalife (2015)

#21

Post by valuearb »

blunte wrote: post #16
williamscales wrote: post #11

Earlier quoted context omitted.

Explain to me the case that it could be considered as such?

When you are such a big name in finance, your public statements can be judged as attempts to influence the market. And if you furthermore pay lobbyists, do advertising, and give many presentations, it is clearly going to have an impact.

We live in a free society that values free speech. We should be cautious when limiting it. In the case of market influence, it should be fine as long as there is full disclosure. In fact insider trading is perfectly legal as long as it's done with disclosure statements.

Re: One Billion Dollars Short, Bill Ackman, and the Siege Of Herbalife (2015)

#22

Post by blunte »

nodesocket wrote: post #17

I am torn, on one hand Herbalife does smell of one gigantic pyramid scheme. Howerver, they have completely revamped the company and structure havent they? On the other hand, while Ackman is savvy and smart, his activist investor style rubs me the wrong way. He has unlimited capital, and thus that affords him the right to manipulate companies for his own gain? I don't like it. Also, let's not forget... If Herbalife ev…

You do realize that traditional business is a form of pyramid scheme. Your boss probably gets more compensation than you do. He/she may have subordinate managers who themselves have subordinate managers who have non-manager employees.

The CEO makes bonuses based on performance of the company. The division managers makes bonuses based on their divisions' performance. The lowest people in the company probably make zero bonuses. And in many companies, the lowest paid workers were promised good future opportunities for growth in the company.

For every bad MLM (and there are many), I could probably identify 10 bad traditional companies.

Re: One Billion Dollars Short, Bill Ackman, and the Siege Of Herbalife (2015)

#23

Post by valuearb »

RodericDay wrote: post #18
SirLJ wrote: post #13

You got to love Carl Icahn: ON WHEN ACKMAN CALLED HIM IN 2003: "I'm telling you he's like a crybaby in the schoolyard. I went to a tough school in Queens, you know, and they used to beat up the little Jewish boys. He was like one of the little Jewish boys crying ..." ON ACKMAN AS A FRIEND: "He's the quintessential example of 'if you want a friend on Wall Street, get a dog.'" ON HAVING DINNER WITH ACKMAN: "As far as I…

Carl Icahn is not lovable at all.

Aside from all the examples just given, you mean.

Re: One Billion Dollars Short, Bill Ackman, and the Siege Of Herbalife (2015)

#24

Post by eej71 »

ridruejo wrote: post #12
anilshanbhag wrote: post #2

John Oliver discussing Herbalife https://www.youtube.com/watch?v=s6MwGeOm8iI Bill Ackmann on Herbalife https://www.youtube.com/watch?v=bQc6L4ieMwo Almost 60% of their distributors were latinos ( http://articles.latimes.com/2013/feb/15/business/la-fi-herba... ). The lengthy presentation countering Pershing Square's accusations which contained this fact ( http://files.shareholder.com/downloads/ABEA-48ZAJ9/229776353...…

You may not like it, but it is not necessarily a scam. Some of the posts by Bronte capital mentioned in the article http://brontecapital.blogspot.com/2015/06/herbalife-very-lon... http://brontecapital.blogspot.com/2016/07/herbalife-and-end-...

It's unfortunate that you are being downvoted - especially since you are citing John Hempton's excellent work on the topic. It's really worth a read and an interesting counterpoint to Ackman's analysis.

Re: One Billion Dollars Short, Bill Ackman, and the Siege Of Herbalife (2015)

#25

Post by blunte »

valuearb wrote: post #21
blunte wrote: post #16

Earlier quoted context omitted.

When you are such a big name in finance, your public statements can be judged as attempts to influence the market. And if you furthermore pay lobbyists, do advertising, and give many presentations, it is clearly going to have an impact.

We live in a free society that values free speech. We should be cautious when limiting it. In the case of market influence, it should be fine as long as there is full disclosure. In fact insider trading is perfectly legal as long as it's done with disclosure statements.

Fortunately, the legal system does sometimes consider intent. While the letter of the law may be followed, if the intent is obviously against the spirit of the law, the courts have some leeway to judge accordingly.

Re: One Billion Dollars Short, Bill Ackman, and the Siege Of Herbalife (2015)

#26

Post by harryh »

imbusy111 wrote: post #5

Explain to me how this is not market manipulation and securities fraud?

There is nothing fraudulent about shorting a stock, telling people you shorted the stock, and telling them why you shorted the stock.

(the same goes for going long a stock)

Re: One Billion Dollars Short, Bill Ackman, and the Siege Of Herbalife (2015)

#27

Post by acchow »

blunte wrote: post #22
nodesocket wrote: post #17

I am torn, on one hand Herbalife does smell of one gigantic pyramid scheme. Howerver, they have completely revamped the company and structure havent they? On the other hand, while Ackman is savvy and smart, his activist investor style rubs me the wrong way. He has unlimited capital, and thus that affords him the right to manipulate companies for his own gain? I don't like it. Also, let's not forget... If Herbalife ev…

You do realize that traditional business is a form of pyramid scheme. Your boss probably gets more compensation than you do. He/she may have subordinate managers who themselves have subordinate managers who have non-manager employees. The CEO makes bonuses based on performance of the company. The division managers makes bonuses based on their divisions' performance. The lowest people in the company probably make zero…

Actually, you're describing a corporate pyramid structure, not a "Pyramid Scheme" which is: "a form of investment (illegal in the US and elsewhere) in which each paying participant recruits two further participants, with returns being given to early participants using money contributed by later ones."

Re: One Billion Dollars Short, Bill Ackman, and the Siege Of Herbalife (2015)

#28

Post by harryh »

blunte wrote: post #22
nodesocket wrote: post #17

I am torn, on one hand Herbalife does smell of one gigantic pyramid scheme. Howerver, they have completely revamped the company and structure havent they? On the other hand, while Ackman is savvy and smart, his activist investor style rubs me the wrong way. He has unlimited capital, and thus that affords him the right to manipulate companies for his own gain? I don't like it. Also, let's not forget... If Herbalife ev…

You do realize that traditional business is a form of pyramid scheme. Your boss probably gets more compensation than you do. He/she may have subordinate managers who themselves have subordinate managers who have non-manager employees. The CEO makes bonuses based on performance of the company. The division managers makes bonuses based on their divisions' performance. The lowest people in the company probably make zero…

MLM != Pyramid scheme.

Whether herbalife is the former or the latter is at the heart of the controversy around the company.

Re: One Billion Dollars Short, Bill Ackman, and the Siege Of Herbalife (2015)

#29

Post by wyaeld »

blunte wrote: post #22
nodesocket wrote: post #17

I am torn, on one hand Herbalife does smell of one gigantic pyramid scheme. Howerver, they have completely revamped the company and structure havent they? On the other hand, while Ackman is savvy and smart, his activist investor style rubs me the wrong way. He has unlimited capital, and thus that affords him the right to manipulate companies for his own gain? I don't like it. Also, let's not forget... If Herbalife ev…

You do realize that traditional business is a form of pyramid scheme. Your boss probably gets more compensation than you do. He/she may have subordinate managers who themselves have subordinate managers who have non-manager employees. The CEO makes bonuses based on performance of the company. The division managers makes bonuses based on their divisions' performance. The lowest people in the company probably make zero…

Having a hierarchy that gets narrower at the top, with people earning more, is not what makes something a pyramid scheme.

Having the earnings of the higher tier directly funded by financial contributions from the lower tiers is.

I lot of MLMs have a particular 'hiding in plain site deception'. The retail margins on the consumer goods aren't where the bulk of the top tier earnings are coming from. The conferences, training materials, tapes, courses and a raft of support systems for the distributors... all produced at very little cost are the true source. This is where the generous subsidies come from.

Re: One Billion Dollars Short, Bill Ackman, and the Siege Of Herbalife (2015)

#30

Post by btilly »

jacquesm wrote: post #15
aresant wrote: post #4

Hard to beat the hedge fund compensation model of fee on the way up, fee on the way down. Agnostic to his Herbalife bet, Ackman "has widely underperformed the S&P 500 since its EOY 2012 inception: 7.1% since inception net of fees vs. 84% for the S&P 500. Their original flagship fund's (2004 inception) track record is outstanding with returns of ~20% per annum." So his first fund killed it, he made a name for himself,…

> Every fund pitch everywhere comes with the disclaimer "Past performance is not an indicator of future success" because of funds like Ackman's. No, it's because of the simple fact that you can't predict the future. That sleazeballs can make it even worse by making funds that pretend that they had yields before they even existed (or were active only in a theoretical sense with a few bucks in it as a fig leaf and the…

Indeed.

I believe that the regulation that requires that disclosure comes from the 1933 law establishing the SEC. A specific concern was how advertising past returns fed into getting people excited about bubbles like the one which popped in 1929.

Therefore the regulation was meant to address a systemic problem rather than individual malfeasance.

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