Wednesday, January 28, 2015

Bill Ackman is the Sabrina Rubin Erderly of anti-MLM campaigners

There is plenty of nasty stuff that happens on university campuses - so Sabrina Rubin Erderly wrote a story about a rape at University of Virginia that almost certainly did not happen.

She wrote it because she was ideologically committed to the idea that it did happen.

And in so doing she set back her own cause by a decade. 

--

There are plenty of abuses at multi-level marketing schemes. I have seen a few.

So Bill Ackman picks on what is probably the straightest MLM and bluntly makes up stories. In the first presentation Shane Dinneen (Ackman's staff member) got up and said that there may not be a single legitimate consumer of Herbalife products anywhere on the planet.

I promise you they are really easy to find. Daily consumers.

He did this after months of "research" which can only be like Sabrina Rubin Erderly's research - research to get your pre-determined opinion confirmed. Easily falsified research.

At some stage the anti-MLM campaigners will need to distance themselves from Bill Ackman's false research.

Sooner is better.





John


32 comments:

Anonymous said...

John, Love your blog. Just a correction that the author's name is Erdely, not Elderly!

Anonymous said...

Erdely, not elderly

Cesar said...

Big fan John.
But that's a poor analogy and not really required.

Anonymous said...

Epistemology, shepistemology. Fit the facts to the theory. ;-)

PeterBent said...

There certainly are retail customers. But lets have a look at some receipts before we go so far as to say they have $5 billion legitimate sales.

Why can't the company just crush us shorts? Wait, they tried with a boner debt offering share buyback that quickens the demise of the greatest public company pyramid scheme in history.

Anonymous said...

Dear John,

As a long time reader of your blog, I used to think that you were just brilliant, especially with short write-ups. But anytime you post about Bill Ackman and Herballife I just feel like I'm reading posts from some mediocre guy that watches Fox News. Hope you can go back to be great again!

@kev_sherry1 said...

John, I commend you for getting out there and visiting so many nutrition clubs. My anecdotal experience is limited to being pitched the biz opportunity a few times on Facebook or on the street (I live in northern Queens, New York). Your experiences have kept me from having conviction that the FTC would have enough evidence to shut them down if they chose to. My only reservations about your approach are that getting honest feedback from current distributors/members who are part of a pyramid scheme is not going to be easy. Telling the difference between the honest and dishonest ones is hard in practice.

Yet, I've held back conviction nonetheless. That's where the survey leaked yesterday comes into play. It seems to defy your anecdotal evidence. How do you interpret it? The sample size is large enough to be statistically significant (n>30), although that is only the case if the sample was randomly drawn which I cannot verify.

Anonymous said...

John

What the guy above me said!!!... you used to have a great blog, now you are just too fixated on HLF! and proving to anyone who will listen that you are right and Ackman is wrong. You really need to move on. Ego is so dangerous and ugly, easy to spot on other people hard to see on oneself I guess. Hold your position if you must...but you risk torching a great blog if you just fill it with personal vendetta's. Don't be that guy John!

Malone said...

Hempton,

If your long the name I hope you do well. Personally I think the easy Short is over. Playing anything for a zero or a multi-bagger is too binary for my tastes. Nonetheless, this company is not 100% above board. Even if 10% of their Sales are "stuffed" that 10% too much. Good luck and hopefully you will go back to your other insightful market commentaries.

Shane Dinneen said...

That's not what I said, John, but I appreciate that desperate times call for desperate statements.
-Shane

Shane Dinneen said...

That's not what I said, John, but I appreciate that desperate times call for desperate statements. It's easier to respond to an opponent's argument when you are able to put false and exaggerated words in their mouth.
-Shane

Anonymous said...

Shane - what did you say then?

Rogier van Vlissingen said...

John, it really is a shame to see you waste this much time and energy, not to mention your facility with the pen, on a bunch of scumbags in a business that materially is the child prodigy of a judicial error.

Amway '79 was unsound from the start, procedurally and materially, but HLF has exploited it to the hilt, and will make a reversal an absolute necessity, for the damage is there for all to see. But even without it, they have done enough damage to hang themselves.

The Tax research of Jon Taylor and Dave Ritchie alone is so totally damning. Here is a whole "industry" that is nothing but an economic black hole.

Anonymous said...

Still waiting for examples of the falsehoods...zzzzzzzzzzzz.

Anonymous said...

Shane, that's a lot like the pot calling the kettle black on your part. During your short tenure you and Ackman played fast and free with the information you put out there. Using the Post hack and then hiring an ex-scientologist to aid your thesis. Leaving Pershing in the dark of night didn't help either. Just because Fusion Research pointed out your mistakes is no reason to hide.

Anonymous said...

John, you have become delusional about this position.

"...probably the straightest MLM..."

Do you honestly believe the statement that you just made?

You seriously think it is "probable" that Herbalife is "straigther" than Tupperware and Pampered Chef?

Anonymous said...

It's quite hilarious that your pin-pointing a trait that you have clearly been exhibiting onto someone else.

Anonymous said...

Ackman has created the perception that Herbalife has lost, this is what multimillion dollar marketing campaigns tend to do... But the FTC has the final call, not Ackman. Mr Hempton still hasn't been proven wrong, don't forget that.

Sandymount said...

Like it or not Ackman has been correct in terms of price. The stock has fallen hard and he was short.
He is an activist. Thats what they do. Why the surprise.
I fear that everyone will be right in the end by their own lights. Ackman will end up massively in the money and hopefully John too when the noise abates sometime later.
My worry is that John seems to have way too much invested emotionally in this trade. Note well that people who are emptionally involved in a position rarely recognise it at the time.
On a related note, anyone tempted to buy PSH NA ... Ackmans closed end fund trading on 10 plus pc discount with major fee discount to his US based version?

John Hempton said...

Shane

The precise quote - at about 55 minutes in - is "do we even know that retail customers exist?" asked as a rhetorical question.

If you had truly spent a year researching this you would of course know that they did and in huge quantity.

They are very easy to find.

But yes - what I stated was a slight misquote. Very slight. I answered your rhetorical question for you.

Yes they exist. Large numbers and you knew it or should have known it.

Anonymous said...

Rogier, why don't you enlighten the readers about your past relationship with the electric MLM company? Your confidence in the likes of Jon Taylor, Dave Ritchie and the principle at TJS Partners only goes to show how far you will reach to prove your point. Taylor and Ritchie's tax law knowledge is limited at best and the hedge fund principle has a storied past. You and numerous others have basically been allowed to hijack SA for you own agenda, having individuals and comments banned and or deleted. So much for the freedom of speech article of the constitution.

Detlef Guertler said...

John 1 - Shane 0

CHT said...

Shane - I have suspected all along you were simply riding what you thought were Greenlight's tailcoats. Admittedly, there's a lot of Einhorn-envy at the Third Point offices. That slide-deck seemed to be a rush-job once you realised DE wasn't going to come out at Ira Sohn with a short thesis. What are the chances the billion dollar short was placed the day DE asked the infamous question?

Anonymous said...

John,

I'm really disappointed in your personal attacks propped up as evidence for your long position. You are more emotionally unhinged than Ackman -- temper your own zealousness. As Ackman keeps his focus on attacking HLF and its biz model, you have come lob personal attacks. Interesting how you also said they were scum, yet saw a chance to profit. Please continue posting, for it will be a truly sad reckoning.

Anonymous said...

John, do you really think HLF is more above board than TUP??

Anonymous said...

I am pretty sure Bill Ackman is being Clay-Davised by all these politicians.

Anonymous said...

didnt you call herbalife "scumbags" a few years ago? were you just uneducated then or now?

Anonymous said...

Hi John, in case you care, it's "Erdely" not "Erderly". One "r" not two.

I wish you'd use your detective powers and find out what she's doing.

Anonymous said...

HLF is down down down. Bill Ackman has done something truly wonderful in exposing the whole operation as a fraud. Everyone underestimated the legend that is Bill Ackman.

Anonymous said...

I wonder how much money John has lost on this position. Maybe that is why he's becoming so unhinged.

David said...

"Soros increased its General Motors stake by 412,438 shares to 3.9 million shares, while also adding to its Herbalife position."

Would be interesting to know why Soros is buying HLF.

Wanda said...

I want to add that this type of foolishness happens in drug research and development as well.

General disclaimer

The content contained in this blog represents the opinions of Mr. Hempton. Mr. Hempton may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Hempton's recommendations. The commentary in this blog in no way constitutes a solicitation of business or investment advice. In fact, it should not be relied upon in making investment decisions, ever. It is intended solely for the entertainment of the reader, and the author.  In particular this blog is not directed for investment purposes at US Persons.