Tag Archive for Herbalife

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Ackman Sends Warning To Herbalife’s New Compliance Chief

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The NY Post reported earlier today:
Bill Ackman wants to give Herbalife’s new head of compliance, Pamela Jones Harbour, a few pointers.
The billionaire activist and Herbalife’s biggest critic on Thursday fired off a 19-page letter to Harbour — who has been on the job just a month — telling her that she has her work cut out for her.

“Based on our extensive investigation over the past three years, we believe Herbalife operates the largest and best-managed pyramid scheme in the world,” David Klafter, a lawyer for Ackman’s Pershing Square hedge fund, wrote in the letter first reported by Reuters.

Harbour is facing an “immense” challenge as the company’s business will likely collapse if she does her job and acts in the best interests of consumers, the letter warns.
“You may find yourself at the fulcrum of choosing between protecting consumers or protecting the company. Based on our research, we do not believe you can do both,” Klafter said.
Herbalife’s declining sales in the US over the past two quarters indicate that is already happening, Klafter suggested.
Since Herbalife stunned Wall Street on Monday with lower-than-expected earnings and dismal projections, the stock has fallen about 30 percent, closing at $39.99 on Thursday.
While Herbalife has suggested

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“Pyramid Scheme Or Not, Herbalife Is Tanking”

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The LA Times released the following article today, making a bold prediction about industry giant, Herbalife:
In  December 2012, Hedge fund investor Bill Ackman painted a huge bull’s-eye on the back of Herbalife, labeling the Los Angeles nutritional supplements company an illegal pyramid scheme and placing a $1-billion short bet against its shares.
Ackman supported his bet with a 334-slide PowerPoint presentation that eviscerated the company in heroic detail. Whether Herbalife’s business model is illegal — ongoing investigations by federal and state authorities have that issue, and others, under scrutiny — much of what Ackman said at the time appears well-taken today.
So far this year, Herbalife’s shares are down about 43% — including a roughly 20% drop Tuesday (as of this writing) after the company shocked investors with a bad quarterly report and a pessimistic view of the future Monday. Its shares are currently trading below $45. Ackman, whose short bet is thought to have been made at about $50 a share, appears to be back in the black, after having faced a hefty loss when the stock reached the low $80s earlier this year.
As Ackman observed, Herbalife’s business model has long been questionable, relying on overhyped products, an almost invisible research-and-development program, and the targeting

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Herbalife Reported 3rd Quarter Results, Sales Up 4%

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Herbalife Ltd. (NYSE: HLF) today reported third quarter net sales of $1.3 billion, reflecting an increase of 4 percent compared to the same period in 2013. Adjusted1 net income for the quarter was $125.1 million, or $1.45 per diluted share, compared to $152.1 million, or $1.41 per diluted share for the same period in 2013.
On a reported basis, the company announced third quarter net income of $11.2 million, or $0.13 per diluted share, compared to $142.0 million, or $1.32 per diluted share for the same period in 2013.
Third quarter 2014 reported net income was negatively impacted by $139.5 million in pre-tax charges, or $0.97 per diluted share after tax, related to the remeasurement of Venezuelan Bolivar denominated assets and liabilities at the SICAD I and SICAD II rates, and $17.5 million in pre-tax charges, or $0.13 per diluted share after tax related to a legal reserve.
For the quarter that ended September 30, 2014, the company generated $101.9 million net operating cash flow, and purchases of property, plant and equipment in the period were$34.5 million.

Michael Johnson, chairman and CEO stated, “In the quarter we saw volume increases in two-thirds of our 91 countries, especially Russia and China. Excluding the impact of currency translation in Venezuela, the company had solid increases in both volume and net sales.
We continue to

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Herbalife To Settle Class Action Lawsuit, Denies Any Liability

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On October 31, 2014, global nutrition company, Herbalife Ltd. (NYSE:HLF) entered into a settlement agreement that, if approved by the court, will resolve a class action lawsuit against the company.
The company has been aggressively defending itself against the plaintiffs’ allegations set forth in Bostick v. Herbalife ever since the lawsuit was filed in 2013. Yet, the potential cost, as well as the distraction, disruption and burden of prolonged litigation on the company and its management team, led the company to decide that the terms set forth in the settlement agreement provided the best path for moving forward.
The company notes that the settlement does not contain an admission of liability or wrongdoing and still asserts that the suit has no merit. Additionally, the company notes that the plaintiffs’ counsel acknowledge that a finder of fact could reasonably conclude there is substantial demand for Herbalife product and Herbalife is not in violation of the law.
Mark Friedman, general counsel of Herbalife, stated:

“We are fully confident that we would have prevailed. Settling this matter, however, is in the company’s best interest as it allows us to put it behind us and focus on the future growth of the company.”

About Herbalife Ltd.
Herbalife Ltd. (NYSE:HLF)

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Herbalife Introduces Green Tea Line

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Herbalife (NYSE: HLF), a leading global nutrition company, in anticipation of the holiday season, announced the launch of a new Green Tea Line, which is comprised of two unique flavors: Original and Pomegranate.

“We are excited about bringing this new product to market, because it is in line with our company’s nutrition philosophy of supporting healthy, active lifestyles and providing good alternative options to the ever-increasing health-conscious consumer”

Green Tea contains antioxidants that help protect against free radical damage, and mixing with water and drinking throughout the day supports hydration. This new line is manufactured with the highest quality green tea leaves sourced primarily from selected growers in the Hunan Province in China, and extracted at Herbalife’s state-of-the art Changsha facility.
As temperatures drop across the country and the holiday season rapidly approaches, Herbalife is betting on consumers finding warmth in the sweet and soothing flavors of pomegranate, as well as the rich and refreshing properties of green tea. With only 25mg of caffeine per serving, Herbalife®’s new Green Tea line offers a low calorie option free of artificial colors, flavors or sweeteners1, which you can enjoy at any time of the day.
“While we understand that green tea does not have medicinal purposes,

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Herbalife Will Be Exonerated After FTC Probe

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Herbalife Ltd. (HLF), the nutrition-product maker facing allegations that it runs a pyramid scheme, expects to be cleared of wrongdoing when regulators complete an investigation of the company.

“We anticipate at the end of the day we will be exonerated,” Chief Financial Officer John Desimone said in an interview. “We will wait to say anything more until the investigation is complete.”

The U.S. Federal Trade Commission is probing the Los Angeles-based maker of weight-loss shakes and nutritional supplements following accusations by billionaire hedge-fund manager Bill Ackmanthat the company misleads distributors, misrepresents sales figures and sells a commodity product at inflated prices. The Federal Bureau of Investigation also opened an investigation and several states are looking into complaints.
“We will respect the integrity of the investigations,” Desimone said. “We will fully cooperate and we have complete faith in our members and our business model.”
With a $1 billion bet against Herbalife, Ackman’s Pershing Square Capital Management LP is trying to profit from a drop in the shares. He’s been campaigning to shut down the company since December 2012, saying it exploits distributors rather than selling products to consumers.
Looking Glass
Ackman’s latest salvo came yesterday. Christine Richard, a Pershing-hired researcher who first brought Herbalife to Ackman’s attention, posted

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‘Herbalife Will Strike A Deal With FTC’

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Herbalife Ltd. (NYSE:HLF) bull Tim Ramey is back in the saddle again, this time at Pivotal Research. Unsurprisingly, he’s covering the nutritional supplements company again, and he’s initiated coverage with aBuy rating. The analyst has set a $110 per share price target on Herbalife.
He also says he’s expecting the company to make a deal with the Federal Trade Commission and that it will be so good for it that shares will skyrocket as a result.
Herbalife as “alpha”
Ramey remains just as bullish on Herbalife as ever. In his report dated Oct. 20, 2014, the analysts said Herbalife Ltd. (NYSE:HLF) is the best “example of ‘alpha’ in the stock market today.” Although his 12 to 18 month price target is $110, he expects Herbalife shares to climb to between $150 and $200 in the long term.
He calls the recent pullback in Herbalife stock “déjà vu,” suggesting that the company’s miss of 2 cents per share isn’t a big deal. He notes that when activist investor Bill Ackman thought he had finally dealt the “death blow” to Herbalife, investors weren’t impressed, and shares climbed 25%. Because of this increase, he suggests that investors shouldn’t worry about a small miss of 2 cents per share.
Herbalife’s growth has slowed
Ramey does point

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Herbalife Will Ban All USA Reps Websites

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Herbalife Ltd. (HLF) is already dealing with the allegations of running a pyramid scheme, and has once again become the topic of discussion due to its new policy. This time, however, it’s for something that can counter the allegations.
As a part of its strategy to prove the allegations wrong and make its business model more transparent and understandable, Herbalife has come up with a new policy that is expected to be enforced on November 15. According to the reports from New York Post, Herbalife will ban all the websites run by USA distributors and will take their business to a corporate controlled website. The company designed the website goherbalife.com for specifically this purpose.
This website not only helps the company take the distributors’ business into its own hands, but will serve several other purposes as well. Herbalife has recently started to focus on improving its brand image and the use of direct marketing strategies. It is now taking new initiatives for building a strong relationship with the community and giving its consumers a feel of connection with the Herbalife brand.
This is because the website will enable the nutrition-products manufacturer to provide a consistent image of its brands. While earlier each distributor was presenting

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Herbalife Moves To Curb Rogue Sites

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Herbalife, the diet shake seller being probed over pyramid scheme accusations, is making another move to keep regulators at bay.
The Los Angeles company is banning independent web sites run by US distributors and migrating their businesses to a corporate-controlled hub (goherbalife.com).
The change, which goes into effect Nov. 15, is an attempt to exert more control over Herbalife’s sales force and follows some instances in which distributors were accused of making false health claims about the company’s products.

“The web sites are designed to be in compliance with applicable requirements about product claims and they provide a consistent brand image for Herbalife products,” the company said in its advisory, adding the goal is to “promote a level playing field for all members.”

The Federal Trade Commission opened an investigation into Herbalife after hedge fund activist Bill Ackman lobbied hard for a probe and placed a $1 billion short bet on the company.
Ackman, whose big Herbalife short is now closer to $2 billion, claims the company is a pyramid scheme in which distributors earn more money from recruiting other distributors than by selling products to the end user.
While Herbalife denies the allegations, it has taken steps to address some potential trouble spots, including a

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Is End Of Battle For Herbalife Near?

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Senior executives at Herbalife (HLF) are telling investors it’s all but certain the Federal Trade Commission will not shut down the company at the conclusion of its wide-ranging investigation, though they expect some form of disciplinary action, FOX Business Network has learned.
Since March, the FTC has been investigating whether the nutritional supplement outfit operated as an illegal “pyramid scheme,” meaning its sales were largely derived from attracting people to distribute its product, rather than actual sales to customers. The FTC action follows claims by short seller Bill Ackman, who says the company’s business model violates a host of federal and state laws, and that Herbalife should be shut down by the government.
Despite the increased attention on the company, Herbalife executives have been speaking to attorneys, academics and former FTC officials, and have come to the conclusion that the chances of a shutdown are remote, according to people with direct knowledge of the matter. In recent weeks, senior executives have been making the rounds with Herbalife’s top investors and explaining while the FTC’s investigation hasn’t concluded, they feel confident the company will avoid a corporate death sentence.
An Herbalife spokeswoman declined to comment on the matter, but would not deny such conversations

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