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Critique of Herbalife as a Pyramid Scheme
- jimrandomh 14y agoAt first, I thought this was just exposing the Herbalife multi-level marketing scam. This has been around for decades, and I remember reading about it years ago. The premise is that "distributors" are tricked into thinking they can get rich by reselling weight-loss and other supplements, and paid for recruiting others. But there's actually no market to be found, so they just get stuck paying a bunch for some unsellable inventory. The presentation argues that this is violating laws. But then I checked out the root web page of the domain, http://factsaboutherbalife.com http://factsaboutherbalife.com, I found a far more interesting story. A popup there says, among other things, that: > Pershing Square currently maintains a substantial short position in the common stock of Herbalife Ltd. (“Herbalife”). So Pershing Square Capital Management, LP found a large company built on fraud, shorted its stock, then set up a web page and presentation to encourage prosecution. Now that's more interesting!
- veidr 14y agoThat is actually pretty interesting. However, that info is also in the linked PDF, on page 2: "Pershing Square currently has a short position in Herbalife Ltd. ('Herbalife') common stock. We do not own any options on Herbalife common stock. Pershing Square will profit if the trading price of Herbalife common stock declines and will lose money if the trading price of common stock of Herbalife increases."
- zv 14y agoYou are making wrong judgement. They state clearly that they want to short Herbalife. They calculated that it's pyramid scheme and either way unsustainable growth and the owners of HL stock, should know that fact.