• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Financial Services

Another Salvo Fired in Ackman-Herbalife Battle

Activist investor's ongoing battle with the nutrition-products distributor heats up with a webcast.
By JAMES PASSERI Feb 09, 2016 | 12:20 PM EST
Stocks quotes in this article: HLF

The drama between Bill Ackman and nutrition-products distributor Herbalife (HLF) heated up Tuesday as the billionaire activist's hedge fund, Pershing Square, unveiled its latest webcast, "American Dream Denied," reinforcing Ackman's allegations of an alleged pyramid scheme.

Ackman's battle with Herbalife originated when he disclosed a roughly $1 billion short position in the firm in 2012, criticizing its compensation plan and what he viewed as predatory and deceptive business operations.

The two subsequently entered into a protracted feud, in which Ackman doubled down on his claims the company misleads its employees with false promises, while Herbalife derided Ackman as "a Wall Street gambler who placed a reckless $1 billion short bet." Real Money has reported on potential problems with Ackman's challenge.

Two federal investigations were ultimately launched into Herbalife's compensation system and business model, as well as into whether Ackman unfairly attempted to weigh down the company's share price with distorted information in order to profit on his bearish position.

As Real Money reported, it now appears the probes are coming up empty-handed, which has likely prompted Ackman's latest swing at the firm. 

Tuesday's webcast was posted on factsaboutherbalife.com, accompanied by a cartoon presentation titled, "How to Spot a Pyramid Scheme," and a ticker that reads, "1 distributor drops out of Herbalife every 16.7 seconds. Since 2013 alone, 5,870,091 distributors have dropped out."

The video, subtitled, "Herbalife Victims Speak Out," is set against a black backdrop, with former product distributors rehashing promises made to them for "big checks," grueling hours, and claiming Herbalife is a pyramid scheme, defined by employees earning more from recruiting than from selling products to customers.

The first distributor discusses losing $32,000 to $36,000 while at Herbalife over a roughly three-year period. Others said they were pressured to quit their regular jobs, and questioned the legitimacy of Herbalife's disclosure policy, alleging the company did not distribute a required form stating that 89% of distributors fail to turn a profit.

Pershing Square also released a news release as a preview to the webcast, alleging that Herbalife operates a systematic business of "predatory" deceit.

"Herbalife has attempted to convince regulators, elected officials, and the public that it has cleaned up its act and made substantial improvements to its business model," the hedge fund said.

"But the stories of Herbalife distributors show that millions of people are still being harmed by the company every day," according to the release. "The changes the company has made do not impact Herbalife's pyramidal compensation plan or the predatory practices Herbalife uses to deceive aspiring entrepreneurs."

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Employees of TheStreet are restricted from owning individual securities.

TAGS: Investing | U.S. Equity | Financial Services

More from Financial Services

Square Still Looks Vulnerable Despite the Recent Bounce

Bruce Kamich
Mar 2, 2021 11:00 AM EST

SQ's overall chart picture suggests more weakness is possible.

Rocket Companies Is Not Ready to Blast Off

Bruce Kamich
Mar 1, 2021 10:36 AM EST

The company went public seven months ago.

Wells Fargo's Quant Downgrade Signals the Stagecoach May Be Slowing Down

Bruce Kamich
Feb 25, 2021 12:23 PM EST

This is a good time to check out the charts of WFC.

Upwork Needs Some Consolidation Before Renewed Gains

Bruce Kamich
Feb 25, 2021 9:05 AM EST

The shares have made a good run since early April.

Brink's Safely Delivers an Upside Breakout

Bruce Kamich
Feb 24, 2021 8:30 AM EST

Here's how to play BCO stock.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 06:05 PM EST PAUL PRICE

    Michael's (MIK) Up on Takeover Rumors

    The NYT says talks are underway regarding a buyout...
  • 08:09 AM EST GARY BERMAN

    Monday Morning Fibocall for 3/1/2021

    Always a good idea to know where our bounce zones ...
  • 11:51 AM EST REAL MONEY

    Watch Bob Lang and Doug Kass Discuss Short-Selling!

    Bob Lang and Doug Kass with an engaging and educat...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login