Hedge fund manager Bill Ackman gave another presentation on Herbalife — a multi-level marketing company that he’s betting $US1 billion will go under.
Ackman, who runs Pershing Square Capital, declared over a year ago that he’s shorting Herbalife because he believes the company operates as a “pyramid scheme.”
Herbalife has publicly denied Ackman’s allegations.
So far, the short hasn’t played out in his favour either. He’s lost an estimated $US500 million in mark-to-market losses.
His latest presentation focuses on Herbalife’s business practices in China. In short, Ackman believes that the nutrition company is violating Chinese direct-selling laws.
Specifically, Pershing Square alleges that Herbalife violates Chinese laws by doing the following:
- “Paying multi-level, royalties based upon unlimited downline levels”
- “Paying royalties and commissions totaling more than 30% of sales volume.”
- “Incentivizing Distributors to recruit a potentially infinite downline in order for Distributors to reap sales-based ‘Consulting Fees'”
- “Permitting and incentivizing individual Distributors to recruit other participants.”
We’ve included his slidedeck. This time it was only 56 slides compared with his famous 342-slide presentation when he first unveiled his short thesis.