Bill Ackman, who has an enormous short position on Herbalife, believes that the multi-level marketing company that sells nutrition and weight loss supplements is a pyramid scheme. He has a price target of zero and believes the company will fail.
To highlight his pyramid scheme belief, he played an Herbalife promotional video at a special Sohn Conference yesterday of the company basically touting itself as a way to improve one’s lifestyle.
The guy in the video, Doran Andry, who is a “Chairman’s Club Member” at Herbalife, shows of his mansion and luxury rides.
“You know, it’s really amazing. I step out of the Ferrari, the Bentley, or whatever, and people go ‘what does he do for a living? — and I go, ‘I’m an Herbalife independent distributor’ and people are absolutely amazed,” Andry said in the video.
Ackman pointed out that the only way that guy could afford a lifestyle like that is to recruit a bunch of people.
Check it out: (Note: We had to pull this video from YouTube, but it’s the same clip Ackman played yesterday).
Since confirming his short position on Wednesday, shares of Herbalife have slumped.
Following Ackman’s 342-slide presentation on his short thesis yesterday, Herbalife came out and said he used “outdated” and “inaccurate” information. Herbalife said today it’s hosting an analyst day in January to try to rebut Ackman’s short presentation.
Ackman also launched a website called FactsAboutHerbalife.com.