Does he also have folks working the message boards?
The ‘Death Blow’ to Herbalife Promised by William Ackman Falls Short of Its Billing
By WILLIAM ALDEN and MATTHEW GOLDSTEIN
July 22, 2014 3:31 pm
It was billed as the event that would deal a “death blow” to Herbalife. It was supposed to be “the most important presentation” in the career of William A. Ackman, the hedge fund billionaire who has pilloried the company for a year and a half and is betting against its stock.
But on Tuesday, Mr. Ackman offered a marathon critique of Herbalife, the nutritional supplements company, that ended up being more of an attack on anyone who disagrees with his contention that the company’s multilevel marketing model is an enormous, long-running fraud.
He compared Herbalife’s sales practices and tactics to those of Enron, the mafia, drug dealers and even Nazis. He lashed out at the company’s outside professional service providers, including the auditing firm PricewaterhouseCoopers, which declined to comment. He even chided Madeleine Albright, the former secretary of state, who has spoken at company events.
It seemed like Mr. Ackman versus the world.
In a punishing referendum, Herbalife’s stock price rose throughout the talk, climbing more than 25 percent by the end of the trading day. Mr. Ackman said he did not mind, adding that he had spent $50 million attacking Herbalife and would ultimately be proved correct.
“I’m an extremely, extremely persistent person. Extremely,” he said. “And when I believe I am right, and it is important, I will go to the end of the earth.”
The presentation, which included a trove of documents, lasted more than three hours before a crowd of almost 500 people in a Manhattan auditorium. He used a similar approach to detail his $1 billion bet against Herbalife in late 2012, and he has since released reams of documents and slides to bolster his case.
Mr. Ackman on Tuesday zeroed in on one particular aspect of Herbalife’s business: the nutrition clubs, unmarked storefront locations operated by customers who complete a training process and use the forums to sell diet shakes and other products. Mr. Ackman said that these clubs, which he said accounted for 40 to 50 percent of the company’s revenue, were “entirely fraudulent.”
He appealed to regulators, saying that if the government clamped down on the nutrition clubs, the company would collapse. “If you look at the great frauds of all time, Enron had that phantom trading floor,” Mr. Ackman said. “What Herbalife has, is it has phantom or fictitious customers.”
He presented a case that a significant percentage of Herbalife’s sales came from customers who are recruited to take part in an extensive training program to sell the products. Using what he said were internal documents, he argued that Herbalife, after finding its sales sagging a decade ago, embarked on a strategy to aggressively market its products to lower-income Hispanics living in the United States, Mexico and Venezuela.
But Mr. Ackman upstaged his own presentation. At one point, noting that his father was in the audience, Mr. Ackman recounted the history of how his great-grandfather came to the United States from Russia, apprenticing as a tailor before getting his own coat factory.
He appeared to choke up as he addressed Herbalife’s chief executive, Michael O. Johnson.
“I’m a huge beneficiary of this country,” Mr. Ackman said. “Michael Johnson is a predator. This is a criminal enterprise. I hope you’re listening, Michael. It’s time to shut this company down.”
This was not the first time Mr. Ackman had shed tears in public. He teared up during a Target shareholder meeting in 2009 as his hedge fund’s failed proxy battle was coming to an end.
But the event on Tuesday was particularly steeped in drama. It was immediately preceded by an interview on CNBC with John DeSimone, the chief financial officer of Herbalife, who tried to pre-empt Mr. Ackman’s assault.
And it followed an interview Mr. Ackman gave to CNBC on Monday in which he set himself a high bar.
“This will be the most important presentation that I have made in my career,” he said. “So how’s that for raising expectations? But we won’t disappoint.”
The barbs flew for sure. Besides PricewaterhouseCoopers, Mr. Ackman criticized the investment bank Moelis & Company, which has advised Herbalife, and its outside law firm, Boies, Schiller & Flexner. Representatives for Moelis and Boies, Schiller declined to comment.
Mr. Ackman, who is still losing money on his bet, made no secret that at this point he would welcome a court battle. A lawsuit might be advantageous to Mr. Ackman and his Pershing Square Capital Management hedge fund because it would give his firm access to records at Herbalife that he might not otherwise be able to unearth.
In response to a question about whether he was almost goading the company and Mr. Johnson to sue him, Mr. Ackman simply said, “Bring it on.”
In response, Herbalife issued a statement: “Once again, Bill Ackman has overpromised and underdelivered on his $1 billion bet against our company. After spending $50 million, two years and tens of thousands of man-hours, Bill Ackman further demonstrated today that the facts are on our side.”
The company added that Mr. Ackman’s claim about the fraudulent nature of the nutritional clubs “is completely false and fabricated.”
http://dealbook.nytimes.com/2014/07/22/ackman...f=business
The ‘Death Blow’ to Herbalife Promised by William Ackman Falls Short of Its Billing
By WILLIAM ALDEN and MATTHEW GOLDSTEIN
July 22, 2014 3:31 pm
It was billed as the event that would deal a “death blow” to Herbalife. It was supposed to be “the most important presentation” in the career of William A. Ackman, the hedge fund billionaire who has pilloried the company for a year and a half and is betting against its stock.
But on Tuesday, Mr. Ackman offered a marathon critique of Herbalife, the nutritional supplements company, that ended up being more of an attack on anyone who disagrees with his contention that the company’s multilevel marketing model is an enormous, long-running fraud.
He compared Herbalife’s sales practices and tactics to those of Enron, the mafia, drug dealers and even Nazis. He lashed out at the company’s outside professional service providers, including the auditing firm PricewaterhouseCoopers, which declined to comment. He even chided Madeleine Albright, the former secretary of state, who has spoken at company events.
It seemed like Mr. Ackman versus the world.
In a punishing referendum, Herbalife’s stock price rose throughout the talk, climbing more than 25 percent by the end of the trading day. Mr. Ackman said he did not mind, adding that he had spent $50 million attacking Herbalife and would ultimately be proved correct.
“I’m an extremely, extremely persistent person. Extremely,” he said. “And when I believe I am right, and it is important, I will go to the end of the earth.”
The presentation, which included a trove of documents, lasted more than three hours before a crowd of almost 500 people in a Manhattan auditorium. He used a similar approach to detail his $1 billion bet against Herbalife in late 2012, and he has since released reams of documents and slides to bolster his case.
Mr. Ackman on Tuesday zeroed in on one particular aspect of Herbalife’s business: the nutrition clubs, unmarked storefront locations operated by customers who complete a training process and use the forums to sell diet shakes and other products. Mr. Ackman said that these clubs, which he said accounted for 40 to 50 percent of the company’s revenue, were “entirely fraudulent.”
He appealed to regulators, saying that if the government clamped down on the nutrition clubs, the company would collapse. “If you look at the great frauds of all time, Enron had that phantom trading floor,” Mr. Ackman said. “What Herbalife has, is it has phantom or fictitious customers.”
He presented a case that a significant percentage of Herbalife’s sales came from customers who are recruited to take part in an extensive training program to sell the products. Using what he said were internal documents, he argued that Herbalife, after finding its sales sagging a decade ago, embarked on a strategy to aggressively market its products to lower-income Hispanics living in the United States, Mexico and Venezuela.
But Mr. Ackman upstaged his own presentation. At one point, noting that his father was in the audience, Mr. Ackman recounted the history of how his great-grandfather came to the United States from Russia, apprenticing as a tailor before getting his own coat factory.
He appeared to choke up as he addressed Herbalife’s chief executive, Michael O. Johnson.
“I’m a huge beneficiary of this country,” Mr. Ackman said. “Michael Johnson is a predator. This is a criminal enterprise. I hope you’re listening, Michael. It’s time to shut this company down.”
This was not the first time Mr. Ackman had shed tears in public. He teared up during a Target shareholder meeting in 2009 as his hedge fund’s failed proxy battle was coming to an end.
But the event on Tuesday was particularly steeped in drama. It was immediately preceded by an interview on CNBC with John DeSimone, the chief financial officer of Herbalife, who tried to pre-empt Mr. Ackman’s assault.
And it followed an interview Mr. Ackman gave to CNBC on Monday in which he set himself a high bar.
“This will be the most important presentation that I have made in my career,” he said. “So how’s that for raising expectations? But we won’t disappoint.”
The barbs flew for sure. Besides PricewaterhouseCoopers, Mr. Ackman criticized the investment bank Moelis & Company, which has advised Herbalife, and its outside law firm, Boies, Schiller & Flexner. Representatives for Moelis and Boies, Schiller declined to comment.
Mr. Ackman, who is still losing money on his bet, made no secret that at this point he would welcome a court battle. A lawsuit might be advantageous to Mr. Ackman and his Pershing Square Capital Management hedge fund because it would give his firm access to records at Herbalife that he might not otherwise be able to unearth.
In response to a question about whether he was almost goading the company and Mr. Johnson to sue him, Mr. Ackman simply said, “Bring it on.”
In response, Herbalife issued a statement: “Once again, Bill Ackman has overpromised and underdelivered on his $1 billion bet against our company. After spending $50 million, two years and tens of thousands of man-hours, Bill Ackman further demonstrated today that the facts are on our side.”
The company added that Mr. Ackman’s claim about the fraudulent nature of the nutritional clubs “is completely false and fabricated.”
http://dealbook.nytimes.com/2014/07/22/ackman...f=business
