Activist investor Bill Ackman, the founder of Pershing Square Capital Management, has just unveiled his website taking on Herbalife, a multi-level marketing company that sells weight loss and nutrition supplements. Ackman, who has an “enormous” short position, believes Herbalife is a pyramid scheme. He also has a price target of $0 and believes the company is going to fail.
His newly launched website, FactsAboutHerbalife.com, includes Herbalife distributor presentations, recruiting material, videos, nutrition club photos, third-party investigative reports, Herbalife Today magazines, court depositions, etc.
During a special Sohn Conference presentation yesterday, Ackman talked about how Herbalife portrays its “Nutrition Clubs” as “vibrant retail channels”. To demonstrate this point, he put up a slide using a clip from Herbalife’s Today Magazine showing a crowd of happy people drinking smoothies in a sunny and airy space.
Ackman also quoted the CFO from a conference call last month saying investors are encouraged to visit the clubs.
So the Pershing Square team decided to check out some clubs in Queens, New York and Omaha, Nebraska between March and September 2012.
They took some photos and we’ve included their findings in the slides that follow. Basically, Pershing Square’s findings show that these clubs don’t look like the ones that were advertised in the magazine from Herbalife.
Following Ackman’s 342-slide presentation on his short thesis yesterday, Herbalife came out and said he used “outdated” and “inaccurate” information.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.
We called Herbalife this morning to provide us with specifics, but they haven’t gotten back to us yet.
Since Ackman confirmed his short on Wednesday, shares of Herbalife have tanked. The stock was last trading down 19 per cent today.
Now, here's what a Herbalife Nutrition Club really looks like, according to Pershing Square Capital Management.
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