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Herbalife Trading Halted: FTC To Investigate: Video Presentation
I have no interest in investing in something that labels itself a "multi-level marketing company". I think Ackman is probably right to some degree, although I don't believe the company is worthless.
That said, I do think this investigation is the moment where Ackman is either proved right or wrong. If there is an FTC investigation and they either do nothing or give the company a slap on the wrist, what else can he really do at that point.
Herbalife's head guy was on Bloomberg, I remember. Last year or the year before. They re-define words to misrepresent what they are actually doing. If it's legal, my impression after watching and listening is that it's nevertheless unethical. No way they will see any money from yours truly.
I have almost zero knowledge of how Herbalife works and whether it is legit.
But given the amount of lobbying it has done relative to Ackman in amount of dollars spent and its moneyed backers, this move by FTC, I suspect, is precipitated by Herbalife itself with a pre-arranged outcome as a way to incontrovertibly legitimize its business and make Ackman go away for the reason @scott mentions above. The temporary hit to stock price won't hurt the company. Perhaps, I am too cynical. We will see.
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That said, I do think this investigation is the moment where Ackman is either proved right or wrong. If there is an FTC investigation and they either do nothing or give the company a slap on the wrist, what else can he really do at that point.
If Ackman is right, it may have some effect on POST (http://www.forbes.com/sites/nathanvardi/2014/01/27/herbalife-shares-rise-after-william-stiritz-hires-bullish-analyst/) and particularly on IEP, but will likely be buying opportunities for both.
Bill Ackman and the New Pirate Establishment
By Benjamin Wallace-Wells
Notes on visiting a Herbalife nutrition club in Queens
But given the amount of lobbying it has done relative to Ackman in amount of dollars spent and its moneyed backers, this move by FTC, I suspect, is precipitated by Herbalife itself with a pre-arranged outcome as a way to incontrovertibly legitimize its business and make Ackman go away for the reason @scott mentions above. The temporary hit to stock price won't hurt the company. Perhaps, I am too cynical. We will see.