I had the privilege of being on Bloomberg for a small segment talking about Bill Ackman’s latest presentation. The 7-minute segment can be viewed above. Ackman’s presentation today, if you can spare 3+ hours, can be found here. Before summarizing his argument, it needs to be said that he heavily promoted this presentation yesterday across the news. He was like Muhammad Ali talking about the Thrilla in Manila, saying that this was “the most important presentation of his life.” He further said that this would be the “death blow” to Herbalife. He successfully spooked the market, causing it to drop 11%. Instead of “conclusively proving fraud,” which was his intent, he ignited confidence in the market due to the lack of substance, causing the stock to go up 25% in one day. I’m not making this up. Up 25% the day of the death blow. Only on Wall Street. I’ll summarize his thesis:
Below is an excerpt from my article about the Ninth Circuit opinion on BurnLounge. The article can be read in full over at Seeking Alpha. It’s an important subject. Click here to read it.
- The Court successfully threaded the needle on the issue of “ultimate users,” essentially creating two classes of participants.
- The Court provided several factors throughout the opinion to help outsiders deduce the motivation driving consumption. This is especially helpful in assessing $HLF.
- The Opinion will require the FTC’s pyramid scheme expert to create another analytical framework to distinguish pyramid schemes from legitimate direct selling companies (assuming they need one).
- The Court adopted the logic provided by the FTC in its 2004 Staff Advisory Opinion.
- The Court eliminated all confusion regarding Omnitrition as it completely ignored the widely referenced dicta that consumption from participants cannot count as sales to “ultimate users.”