Well Herbalife’s 1st quarter earnings are now history, much to the chagrin of Ackman and his army of one or two supporters and HLF shorts, Herbalife massively beat earnings, coming way ahead of expectations. And proving once again that Ackman and his entourage are always so wrong.
Herbalife ended closing @ 69.40+7.20 (+11.58%) Apparently the street liked what they saw. And apparently the shorts did not like what they saw and covered. Many of them anyway.
This is from an article in Forbes magazine earlier today…
Nearly four-and-a-half years after Bill Ackman bet $1 billion that Herbalife stock would fall–a losing bet so far for the hedge fund manager–the nutrition products company is approaching what many investors see as a watershed moment, the final test that will determine which side was right.
Watershed? I think it is pretty obvious that Ackman has been thrown over Niagara Falls. And it is also very obvious which side is right. Ackman is taking a pounding. Not even close.
More from the Forbes article:
For now, though, it’s the bulls who are winning, at least financially. Herbalife stock surged more than 12% Friday morning, adding more than $700 million to the value of the company, after its first-quarter earnings results Thursday blew past Wall Street’s expectations.
(For now? The bulls have been winning this since January 2013!!!!!!!!!!)
Investors were watching Herbalife’s earnings report particularly closely because it was the first quarter the company began implementing changes mandated by the Federal Trade Commission as part of a settlement last summer. Herbalife paid a $200 million fine in July to end the FTC’s investigation into whether the multi-level marketer of diet shakes was a pyramid scheme, as Ackman had accused.
(True. And most of that fine went back to Herbalife via fmr Herbalife distributors who returned to the company at the end of qtr 4 and beginning of q1 and used that money to buy more Herbalife products.)
But the company had also agreed to fundamentally alter its business model, distinguishing bonafide distributors from those who signed up to get a wholesale discount on weight-loss products they planned to consume themselves, a group now labeled “preferred members.” Ackman scoffed at the idea that such bulk customers could actually exist, and predicted the change would be the downfall of Herbalife, destroying its ability to recruit new distributors. The hedge fund manager reiterated in his letter to Pershing Square shareholders this year that “we believe the stock should eventually decline to zero.”
(Ackman may have scoffed at the idea. Is he ever right? Say no. And as for going to 0, perhaps he was thinking VRX or Pershing Sq. HLF stock? Should add a 10 in front of the zero to make it $100. And besides, Ackman has been uttering this same insane line for nearly 5 years now and everytime he says it, HLF stock goes up. Herbalife beats earnings. New distributors and customers come in proving that the greyhaired hedge fund manager is just so full of sh’t)
But Herbalife declared the FTC settlement a victory, and sought to prove that in the first quarter. Herbalife now has a total of nearly 600,000 total U.S. members, a spokesperson confirms to Fortune, including distributors and 360,000 “preferred members.”
(360,000 preferred members!!!! No way. Ackman and his shills always claim that Herbalife has no members)
Some short-sellers gleefully pointed to what appeared to be a dramatic drop-off in Herbalife’s new recruits.
(Some??? These two names below are the same person)
More from Forbes:
To hear Herbalife tell it, the FTC settlement was one of the best things to ever happen to the company, pushing it to make what new CEO Richard Goudis called “the most significant advancement of our business,” by forcing it to develop the ability to better track distributors and sales. “We’re getting direct transactional visibility and insights into our customer base that we’ve never had before,” he said on the company’s earnings conference call.
I guess we can call this another backfire for Ackman. While he and his shills and HLF shorts were hoping that the FTC would shut Herbalife down, quite the opposite occurred. The fact remains, the FTC does not negotiate with companies. If in fact Herbalife had been guilty of any wrong doing, the FTC would shut them down as they did with companies that were in violation and were literally pyramid schemes.
More from the Forbes article
Though Herbalife’s quarterly sales and profit dropped from the previous year, to $1.1 billion and $85 million, respectively, that was well above analysts’ forecasts. Herbalife’s adjusted earnings per share beat expectations by 35 cents. The rise in Herbalife stock Friday took the share price even higher than it was the day the FTC settlement was announced, when it rose 10%. Shares are up about 38% this year alone.
But Herbalife isn’t through the woods yet, nor is Ackman throwing in the towel. Herbalife has a deadline to hit this month to launch new sales tracking tools as part of its FTC agreement, and Ackman thinks May could be the inflection point for its business. In other words, it’s the current quarter that will be the one for investors to watch, with Herbalife expected to report results sometime this summer.
[I strongly disagree with this on both counts. Herbalife is out of the woods and it is only a matter of time before Ackman throws in the towel. Ackman does maintain a great poker face. He will say he is not changing then take action. Remember, he was “long and strong” on Valeant, very bullish, sending memos right up to just before he sold it. Look for Ackman to do the same with his Herbalife short play. Let me add, a very reckless, poorly planned and winless short play. And regarding 2nd qtr earnings, all we have heard all this year is that the 1st qtr is where it will show up. Now it’s the 2nd qtr. And when Herbalife substantially beats earnings in the 2nd qtr, I am sure they will then say, “No it’s the 3rd qtr that matters.'” LOL]
The company knows it has an ultimatum. “We have a war room, our distributors are active.” Goudis said on the call. “This is job one for everybody right now in the month of May.”
[Here again is something Ackman and his shills never counted on; continued support from their distributors. Did Ackman really think he would shake distributors out? Hardly. And I know the Herbalife reps are now working harder than ever.]
Some will remember that Herbalife faced a major challenge back in 1985. Prior to the media attack then, Herbalife’s sales were over $512 million annually and were up to over $90 million a month in January, 1985. After the media attack, Herbalife sales dropped all the way down to only $10 million annually. This occurred in the 1980s. We all know Herbalife came roaring back. Also, I think that challenge was far more potent that what little weenie Ackman has offered. Herbalife is very resilent and has always proved that they are following the laws. Legal and ethical.
The FTC was yanked into this by Ackman via his buddy Sen. Markey. What was the result? Ackman lost again and we haven’t heard from Sen. Markey. I wonder if he is still close friends with ACKMAN after this embarrassment????
More from Forbes….
And it’s not only complying with the FTC that will be the challenge for Herbalife. The second quarter of last year was the company’s best ever, making it more difficult to top this year, the executives warned analysts. Should the company fail to meet Wall Street’s expectations, it’s likely the stock will fall back down. Will it be enough to make Ackman quit shorting Herbalife once and for all? At the stock’s current levels, it would need to crash more than 50% in order for the hedge fund investor to make any money on the bet.
As already mentioned, that FTC settlement to so called Herbalife “victims” has brought more former distributors and preferred members back to Herbalife and they are using that money to buy more Herbalife products. So the settlement is actually being redirected back to Herbalife. Interesting. Or at least much of it.
Also, Herbalife as we all know has their WinBack program in place which has been very successful bringing back more former distributors and preferred members. And of course Herbalife reps are hard at work building their businesses. I see the button “Lose Weight Now – Ask Me How” everywhere and Herbalife reps inviting people to their nutrition clubs. Speaking of which, I love the nutrition clubs. They are very powerful.
Another thing, spring is always the best time of the year for Herbalife as people are focusing on losing weight for summer and warm weather season. Expect sales to SOAR. And there are ads all over for Herbalife. Not to mention that Herblaife’s product line goes beyond just weight loss to sports supplements, wellness products, skin care and more. All of these things are positives and I expect Herbalife to have a OUTSTANDING 2nd quarter.
I also enjoy playing with quoththeraven aka Chris Irons, Ackman, his braindead shills and the stupid and ignorant HLF shorts. Every single time they open their mouths via the internet with outrageus, ridiculous “what ifs” and “maybes” Doom & Gloom predictions, yet they are always wrong and I am always right. I look forward to doing it again next quarter and watching them be oh sooo wrong yet again. My guess is that Ackman will be gone by then. But this guy will continue. I guess he really needs that $35 an article and a penny per click from the garbage he writes on SA.
They are like the guy who hits himself on the head with a hammer. He should only have to do that one time to realize, “Ouch, that hurts.”
Overall, not a bad article from Forbes. He attempts to be neutral, but slides bearish. Also, I have to question the reasoning on quoting Chris Irons (and his alias) aka quoththeraven when he is obviously no authority and doubtful if he even has a short position. And finally, this author from Forbes seems to over use the word (but) doesn’t he relaize that but regates everything that came before it? And he only used it in reference to any positives with Herbalife. Just an observation.
And then there is the Trump/Icahn connection. Ackman is and will continue to be on the losing side of “The Art of the Deal”
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