"Now four years in the making, the protracted battle Pershing Square - Herbalife (HLF) is detailed nicely in the most recent New Yorker magazine article "Financiers fight over the American dream"by Sheelah Kolhatkar.
I don't wish to talk about HLF, rather I look at Ackman' moves that scream 'wrong' in general:
Going Big (10% AUM is huge) instead of tip-toeing.
Sheep-herding -As you learn that Ackman went after Herbalife following David Einhorn, you wonder if he didn't know Einhorn is an able poker player. If this was that good, why didn't Einhorn take a big bite to begin with.
Herbalife was a long lived MLM, has been around for decades. Whether for the right or the wrong reasons, a business that has survived for a long time / many lawsuits /economic cycles is not "garbage" or can be easily dismissed. If HLF was an easy target it would have fallen by then.
If PSC has a L/S strategy that is in fact mainly L(Long) why commit so many resources to a short ? To add injury to the offense "Ackman pledged to donate his personal profits from the short to charity." Not in the [realDT] world, not in any world !
Ackman: "I am more interested in fighting evil." If you need a government investigation, do you really think the government is going to favor a hedgie [profiting from the fall of it] ?
Then came the CNBC Ackman-Icahn face-off that was of comic proportions, most of you watched it. I think Icahn was trying to irk Ackman. A stock drawn into a public battle almost never goes down (unless it's an epic fraud something like Enron).
Another moral of this story is not to fall for a a business that easily morphs forms. MLM "adjust their business models to remain in the zone of legality." Ackman was vindicated as far as the government investigation that ensued and the settlement the company had to reach. Morally he won...yet lost the pocketbook score."
- More: here
As I have said repeatedly, I think Ackman is a terrible investor, partly for reasons you've given above.
Meh... I'm very torn here. I very much support what Ackman is doing with Herbalife from a moral point of view, although his move had really jeopardized significant amount of capital he was entrusted with. I personally hate every fucking MLM company out there, including all the idiots it breeds. It fucking thrives on the stupidity of people, often those who are promised false hope and have no intellectual capability to make a proper judgment. I'm sure everyone has had one of those idiot friends who strayed from a real career and started soliciting you about their wonderful new business venture. Some people are just so fucking gullible beyond belief.
Ackman's Herbalife short (Originally Posted: 07/15/2016)
So we all know about Bill Ackman's war against Herbalife, he's been short the stock for like four years now. Recently he has been releasing youtube videos of people claiming to be defrauded by the company and yesterday on CNBC he renewed his crusade, calling the company a pyramid scheme and hinting that the FTC would penalize them as such. Oops. The FTC just announced a $200 million settlement with the company and determined it not to be a pyramid scheme. The stock is up 18% on the day as of this writing. It closed at $59 yesterday and is now at $70, his break-even on the trade is reported to be approximately $30. My question is, do you think he'll wave the white flag now or is he just going to double down on what seems to be a purely emotional gambit at this point?
I don't know what it is, but I like seeing that guy's investments sour. I don't know why I do; I'm not an asshole by any means, but it's entertaining to see these developments.
Herbalife Registers Bill Ackman-Related Domains (Originally Posted: 01/30/2013)
I really don't know why they've decided to do this, and it's quite shady to me as Ackman mentioned... but he ended up the hypocrite registering some of his own domain addresses about Herbalife. I'm not sure this whole crusade could get any weirder, but I'm slowly siding more and more with Ackman on this one, especially after the Icahn battle which blatantly neglected any fundamental discussion of the business.
Herbalife Ltd. (HLF), the nutrition company that hedge-fund manager Bill Ackman has called a pyramid scheme, has registered several domain names that include the activist investor’s name.
Domain names such as therealbillackman.com and billackman.net were acquired by Herbalife as of Jan. 18, according to www.domainsearch.com. The websites are blank.
Herbalife has been battling accusations from Ackman, founder of New York hedge fund Pershing Square Capital Management LP, that it uses inflated pricing, misleading sales information and a complicated incentive structure to hide a pyramid scheme. The company this month held an investor meeting to defend its direct-selling model and said Ackman had grossly mischaracterized its business.
Ackman quickly took issue with the Herbalife domain names. “What legitimate company would do something like that,” he said today in a telephone interview. “The spotlight is on Herbalife and they are doing everything they can do to turn it away.”
Ackman has his own website: factsaboutherbalife.com.
Barbara Henderson, a spokeswoman for Herbalife, didn’t immediately respond to a request for comment.
The debate over Herbalife has also sparked rare public disputes among high-profile investors. Last week, Ackman and investor Carl Icahn sparred on CNBC about the company and past dealings with each other. Icahn later said on Bloomberg Television that he didn’t “like” or “respect” Ackman.
Ackman’s shorting of Herbalife was countered by fellow hedge-fund manager Daniel Loeb. On Jan. 9, three weeks after Ackman disclosed his bet against Herbalife, Loeb’s Third Point LLC disclosed that its hedge funds held 8.9 million shares of Herbalife at year-end.
Herbalife’s shares have rebounded since Ackman first made his comments. They fell 3.4 percent to $38.67 today in New York, up from a low of $26.06 after Ackman’s presentation.
Ackman said last month that Pershing Square is short more than 20 million shares, which was about 97 percent of the 20.7 million short interest shares outstanding at the time. .
The New York Post reported the domain name registrations earlier today.
Waging a moral war on Herbalife (Originally Posted: 12/21/2012)
Considering most of my clients are out in their beach and country homes vacationing leading to a very slow day at work, I figure I write about one of my favorite market developments of the year, The Hedge Funds vs. Herbalife war.
EDIT: Guys I think its important to get this site to the top of the google search when you search for 'Herbalife': http://factsaboutherbalife.com/
Herbalife LTD. is a network marketing company that sells weight management, nutritional supplement, and personal care products. The Company sells its products globally through a network of independent distributors. Herbalife also sells literature and promotional materials.
Man I love this story. As some of you know, Einhorn started the war on MLM in May of this year, when he nonchalantly asked a couple of questions on HLFs earning call which led to one of the most awesomes live drops in a stock price I've seen. (You can hear and read WSO comments about the call here. Now it seems to be Bill Ackman's turn. According to Dealbreaker and CNBC, Bill Ackman revealed that he is short HLF and he is willing to wage a moral war on this pyramid scheme of a company.
From CNBC:
From Dealbreaker:
I don't particularly have beef with HLF (Wish I would have short it earlier this year though!), but I do have strong hate towards Multi-Level Marketing. I have a family member in Miami who makes a living out of this and he tried to recruit our family members through the most confusing business proposal I have ever seen (I wish I still had that email, unfortunately he sent it to my old hotmail and I deleted that account). I also have a friend starting his 'business' at another MLM, and I sat down with him for 3 hours and he could not articulate how he plans to make money...all he knows is that if he gets enough people he will. He did help me come to a few conclusions about this way of doing business:
The revenue scheme is extremely complex
The whole business drives on 'motivation' (Case in point, my friend revealed that his favorite part of being part of his MLM are the conferences and the success story speeches. He told me about a success story in his MLM, a guy in Massachussets who now makes $20,000 a month after 11 years in the business. I explained to him that $240,000 a year, while being a good amount of money, is not an incredible amount. Most small business owners make multiples of that. He still wants to be the guy that does the success speeches)
What does WSO think of this? Do you think this is a market manipulation scheme by the heavy weights? Or is it a good thing that these guys are using their power to try to squash an industry that in their (and mine) opinion thrives on manipulation and deceit?
Links:
http://dealbreaker.com/2012/12/bill-ackman-full-of-praise-for-company-h…
http://dealbreaker.com/2012/12/bill-ackman-unimpressed-by-business-mode…
http://www.cnbc.com/id/100328657
Someone is trying to give you good advice. You might want to take it (and save yourself time, money and disappointment), rather than lashing out because it doesn't confirm your narrative.
IB might be a little different from other parts of the corporate world in that keeping the job is at least as hard as getting the job. Maybe you can do this 3-2 thing and skip the analyst program, but you will then be in a cohort of associates with way more experience (and maturity) than you, and you'll be competing against them for bonus dollars, and eventually - if you make it that far - VP slots.
And for what? You'll have paid for an extra year of school that could have been spent working and actually making money, potentially putting yourself at a recruiting disadvantage, and all for a degree that is no longer required for an associate promotion anyway.