Hedge fund manager Bill Ackman, the founder of $US19 billion Pershing Square Capital, has just put out a 29-slide presentation comparing Herbalife to Vemma Nutrition Company.
In late August, the Federal Trade Commission had a federal court halt and freeze Arizona-based Vemma’s assets for allegedly operating as an illegal pyramid scheme. The FTC has accused Vemma of luring “college students and other young adults with the prospect of getting rich without having a traditional 9-to-5 job.”
This is the sort of allegation Ackman has made against Herbalife.
For nearly three years, Ackman has been publicly crusading against Herbalife — a multilevel marketer that sells weight-loss products, vitamins, and nutritional shakes.
Ackman believes the company operates as a “pyramid scheme” that targets poor people, especially those from the Latino community. Ackman, who’s betting that the stock goes to zero, believes that regulators, specifically the Federal Trade Commission, will shut the company down. (The FTC opened an investigation in Herbalife on March 12, 2014).
“Herbalife defenders have gone out of their way to try to show ways the two companies are different,” David Klafter, Pershing Square’s lawyer said in a statement. “In reality, they are fundamentally the same.”
So far, Ackman’s short bet has not paid off. The stock is trading well above the stock price when Ackman’s short position became public in December 2012.
We’ve left voicemails seeking comment from Herbalife’s reps.
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