Another listener asks about Ackmans losing bet on J.C. Penney. Ackman says those are two different types of issues: J.C. Penney needed a new business model. Herbalife is violating the law.
Herbalife closed down 1.2%. The S&P 500 was down 0.5%.
Ackman says Herbalife has not sought whistleblower compensation.
Another listener asks why former L.A. mayor Antonio Villaraigosa would get involved with Herbalife. Ask Antonio Villaraigosa, Ackman replies.
Ackman: I would encourage Madeleine Albright to do a little bit of research and make sure shes not tying herself to a pyramid scheme.
Ackman says hes shorting the Herbalife stock because he thinks its best for the country. He says the press attacked him when he shorted MBIA as well.
Ackman says he is shocked by the behavior of the Herbalife board of directors, and predicts that regulators will go after them.
In response to a question, Ackman jokes (we think) that Herbalife will expand into North Korea when they run out of other countries.
Ackman says he regrets that honest people will lose their jobs when Herbalife is shut down, and says they should find other jobs asap. WorldCom also employed a lot of people when they blew up.
Ackman says, essentially, that Post Holdings CEO Bill Stiritz hasnt done his due diligence.
Herbalife shares more than doubled last year, to $78.70 from $32.94. Theyre down about 16% so far this year, trading around $65.75.
Bloomberg News exams whether Herbalife is ripe for some rich investors to step in and take it private.
Maybe the most painful slam of all. Ackman on Herbalife:If you talk to any nutritionist theyll tell you its not a good way to lose weight.
Ackman says he has no idea on timing of any regulatory action.
Set aside Herbalife for a moment. Ackman is a big investor in Fannie Mae and Freddie Mac, and theyre getting killed today, hours after U.S. lawmakers introduced a reform proposal.
Does Pershing Square Capital Management ever take on interns?
W e do.
Ackman: As a philanthropic matter, I will pursue this to the end of the earth.
Oh, that didnt last. The stock is down 0.8%.
One listener asks: What makes you think the FTC will do anything about Herbalife, especially knowing that a hedge fund would benefit from the companys downfall? Ackman says he expects the government will have to get involved, considering the attention brought by The New York Times story though Ackman adds that the Times story, which focused on his lobbying against the company, was not my favorite.
Ackman: If the company were to disappear tonight, we would make a couple billion dollars.
A lot of Herbalife salespeople are undocumented immigrants who are not going to approach authorities if they feel theyre ripped off, Ackman says. Its the ideal scam. You can target people who are never going to complain.
Ackman says his firm has identified more than 200 Herbalife victims and handed it over to state attorneys general and the FTC. But one state AG handed the info over to Herbalife, Ackman says, and Herbalife followed up with them by making threats.
Finally, a question that isnt just sucking up: One listener asks, is there anything that might make you think youre wrong?
Ackman says he has not discovered one new fact to dissuade him from his original thesis, made public more than a year ago, that Herbalife is a pyramid scheme.
The company could exonerate itself by simply inviting the FTC in to investigate.
Herbalife shares turn positive. Theyre now up 0.1%.
Ackman will start taking questions. Send them to questions@factsaboutherbalife.com
Herbalife hasnt filed any new statements on its website today, after yesterdays statement that Ackman was waging a cynical, self-serving attempt to manipulate the market by buying his way into an investigation to cover his own reckless $1 billion bet.
But shortly before Ackmans presentation started, it posted this helpful hint: Fermented foods like yogurt, kefir, miso and tempeh bring good bacteria to the place we need it most: our gut!
The New York Times storyimpliesthat Ackman is overstepping it in his involvement with Herbalife. Former SEC chairman Harvey Pitt makes a similar point on CNBC.
Of course its worth noting that Herbalife has vehemently denied Ackmans accusations. Ackman has staked a big bet that Herbalife shares will fall. So as Herbalife puts it, his lobbying efforts are only meant to bring the company down for his own purposes. (Ackman said today he would donate any profits he made on his Herbalife investment.)
Klafter says that Herbalifes practice of paying salespeople based on how much product their recruits purchase breaks Chinese criminal law.
David Klafter says that Herbalife is breaking Chinese law by requiring recruits to pay a fee to participate.
Some of you might think we are doing pyramid sales, an Herbalife representative told recruits at an Herbalife store in October, Smith-Levin says. The representative said he thought it was a pyramid scheme too, until he saw a big Herbalife billboard and figured that a pyramid scheme wouldnt be advertising itself.
Hourly consulting pay is a totally fictional thing, Smith-Levin says.
To get around Chinese pay rules, Smith-Levin says, Herbalife says it pays via an hourly consulting pay. It enables them to talk to recruits without seeming to break the law, Smith-Levin says.
About half an hour into Ackmans presentation, and Herbalife stock is down 2.4%.
According to Smith-Levin, Herbalifes salespeople buy products up front, then try to sell them to earn money. They also can make money if someone theyve recruited buys Herbalife products.
Aaron Smith-Levin of OTG Research says his agency sent employees to attend Herbalife sales-pitch meetings and to meet one-on-one with Herbalife salespeople in China.
Klafter says Herbalifes pay practices in China break that countrys direct-selling rules. For example, Klafter says, Herbalife encourages sales people to recruit other sales people, but participants are supposed to be recruited by the company itself.
Pershing Squares David Klafter says Herbalife is keeping its compensation plans for China under wraps, referring to how the company recruits and pays sales people in China.
Ackman reiterates his contention that Herbalife preys on poor people, using deceptive claims to recruit people to sell its products. Ask yourself why poor Latinos would purchase overpriced nutrition products?
Ackman says he has not donated to Markey, a Democrat in Massachusetts, nor does he actively follow Senate races. He says he learned about his sisters $500 donation to Markey from reading the Times, and when he asked her about it she said it was because she was a Democratic softie.
Ackman says he did not receive advance copies of Sen. Edward Markeys letters about Herbalife, but found out about them when The New York Times called for comment. Im sure Senator Markey does not care whether we make money on Herbalife.
Ackman says he did meet with Washington officials last year to raise attention to Herbalifes abusive practices, hoping that the Federal Trade Commission would investigate.
Herbalife is trading down 1.5%, just before Ackmans presentation starts.
Source: http://blogs.marketwatch.com/thetell/2014/03/11/live-blog-bill-ackman-attacks-herbalife-again/
