Herbalife: Quote of the Day

“Herbalife is not an illegal pyramid scheme.”

– Herbalife Statement in Response to Ackman Presentation

We do not have a position in the stock, but Pershing Square’s three-hour webcast at last week’s Sohn Conference and accompanying presentation titled, “Who Wants To Be A Millionaire?” suggest otherwise. The evidence is compelling and all of the data is available at www.FactsAboutHerbalife.com which includes:  distributor presentations, recruiting scripts and presentations, distributor lifestyle videos, nutrition club photos, third-party investigative reports, , court hearing and deposition transcripts, archival video and other materials on the history of the company, lead generation systems, SEC correspondence, and other data that will assist the public in understanding the facts about Herbalife.

This is quite simply one of the most comprehensive pieces of security analysis we have seen since Pershing’s Confidence Game or Greenlight’s Fooling Some of the People All of the Time. For those of us with a passion for investing, it’s better than porn.

We look forward to Herbalife’s update at the company’s analyst meeting on January 10th, although it is difficult to imagine how management can possibly respond with any dignity.   To date, the response has been typical of a company with something to hide – a personal attack on the notorious “short seller” and claims of outdated and inaccurate information without any specifics for shareholders.  Perhaps the pending response on the 10th will be, “Herbalife used to be an illegal pyramid scheme, but we operate with the highest ethical and quality standards today, and have always accounted for said scheme using GAAP standards.”  This should be good.