Bill Ackman’s latest hit at Herbalife hasn’t really moved things anywhere. In fact it missed to make a mark on Wall Street, with stocks soaring by 25% for the company.
Ackman’s told an audience of 500 at the New York auditorium and thousands tuned in via webcast that Herbalife is nothing but a criminal setup that lures in minorities, considers non-existent customers while promising business and profits, and breaks labor laws. He further went on to state that Herbalife runs on a pyramid scheme that makes the members earn from recruiting new members instead of selling the products.
The presentation made on Tuesday also shed light on Herbalife’s method of recruiting freshers, often Latinos, to work for free as trainees before giving them the actual distributorship.
Ackman’s research worth USD 50 million has video, audio, and other data that has been collected from 240 Herbalife clubs.
Herbalife has only rejected these claims. John DeSimone, the nutrition company’s CFO stated that all these claims are completely fabricated, and they have commissioned a study to vindicate the company standing.
Ackman said the probing officials from FBI, Federal Trade Commission, and Securities and Exchange Commission are taking far too long than expected against Herbalife.
However, Vijay Marolia, a fund manager at Regal Point Capital Management said that the much-hyped presentation by Bill Ackman was over-promised to begin with, and thoroughly under-delivered to end with. Some more hedge fund managers seconded this sentiment and retained the stock, despite Ackman’s appeal to every investor to sell it.
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