Herbalife: When The Experts Get It Wrong!

Discussion in 'General Trading Discussion' started by Buyonthedips, Apr 9, 2018.

  1. Buyonthedips

    Buyonthedips Senior Investor

    Feb 2018
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  2. JR Ewing

    JR Ewing Super Moderator Staff Member

    Feb 2014
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    I am not a fan of MLM companies, and I tend to be skeptical of nutritional supplements in general.

    With that said, I think Ackman's biggest mistakes here were taking on such a large position, and greatly overselling his thesis.

    I actually made a bit of money here and there shorting HLF over the last several years, but I did not take overly large positions, did not stay in them very long, and didn't go around telling everyone on national tv that HLF was basically satan incarnate and that the stock was worthless...

    The company does look great on paper, and Ichan owns 25% of the company the last time I checked. And Icahn and others squeezed the hell out of Ackman. Although I am still skeptical of HLF, I would not make it my life's work to try to put them out of business. I think they have even been considering legal action against Ackman at times for his over the top campaigning against them.

    I recall one day a couple of years ago when Ackman greatly hyped up a presentation he was going to give that he claimed would put them out of business. I figured he must have had evidence of accounting fraud or something similar. But he did not - he only reiterated his emotional arguments against MLM, cried a bit, etc. And the stock actually shot UP 25% during his tirade. I ended up taking a small short position in the stock towards the end of his presentation (when the pop up in the stock seemed to run out of steam), then covered a short time later for a 20% profit.
  3. gowiththeflow

    gowiththeflow Senior Investor

    Jul 2017
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    Well done @JR Ewing :)

    These traders who have a god type complex can get carried away and often they dont know when to stop. There is a similar, albeit smaller scale, individual in the UK who targets small companies where he can influence share price movements by going short. He often shouts from the rooftops and like in this scenario the market quite often goes against him just to "teach him a lesson".

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