With the high carry cost and large position it seems like a recipe for disaster. http://dealbook.nytimes.com/2013/01/09/loeb-counters-ackmans-bet-against-herbalife/ He might be right that its a pyramid scheme but can he afford the wait while holding 1 billion short?
"Only one investor will be right on Herbalife." That is not always true. Ackman is most likely already eased up on his position and took some profits. The stock is up 70% in the last 2 weeks. So it is actually possible for both of them to be right and make money....
maybe he is hedged with options. if not and the street gets a whiff he is toast. bankruptcy? bear stearns did that with some of the firms it cleared for. the bear squeezed their shorts until they were their toast. of course eventually bear became toast itself. what goes around comes around in both big ways and little ways.
Here is a problem with shuting down a business like HLF: "Amway? Primerica Insurance? Cutco Knives? If the government sets a precedent by shutting down Herbalife, they will need to go after ALL the network marketing companies. If they haven't been shut down by now, they never will." It makes a dangerous precedent and after that they could go after the rest of the group. They are all pyramid schemes, but they also make money too by selling products. Oh, and I haven't mentioned the biggest pyramid schemes of all, the US Social Security system, what we all love....
Options are not free. The IV on those options would have been quite high so in addition to the cost of borrow he would have to pay through the nose to go long an options position as well. My theory is TACGNOL is involved in this is situation and it will end badly for Ackman. Profit my ass. if he gets out with a small loss it will be a victory. This is an epic battle between to gamblers and in the end TACGNOL always gets them. I am not surprised that no one dare mentions that name.
Thats exactly right--- multi level marketing company's are dream thieves and need to be exposed--- every single one that makes more $$ recruiting than product which is nearly everyone of them needs to be shut down. BURN BABY BURN
This is an amusing interview with the CEO on CNBC. At 2:58, "How many of your distributors clear the 100k dollar mark..." CEO: "Oh yeah we know that, oh you mean what sales?" The rest of the answer is pure gold. I don't know who is better at evading questions, CEO's of America or its Politicians. http://video.cnbc.com/gallery/?play...sImdQYWdlIjoiMSIsInN5bSI6IiIsInNlYXJjaCI6IiJ9
speaking of pyramid schemes....I remember going to an ACN network meeting in the 90s and the reps had fake commission checks sticking out of their coat pockets in order to entice new recruits
HAHAHAHAGHAHAHA-- thanks for posting this! yeah, goes to show the MLM delusion goes all the way to the very top-- the guy just hears what he wants to hear.... surf
no way! but i am not surprised--- would love to see a picture of those bozos. this is the beginning of the end of MLM. surf