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Herbalife: Is it Legit?
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brunosbud posted:
http://money.cnn.com/2013/01/08/investing/herbalife-ackman/index.html?hpt=hp_t2

Bill Ackman, the hedge fund chief of 11 billion dollar fund, Pershing Square, is "all in". He's bet the farm that Herbalife, the vitamin and weight loss supplement distributor will tank by year's end.

Last year, Herbalife reported over 4 billion in revenue.

Ackman has shorted the stock because he claims Herbalife's products have no real value to the public. What is of value is the selling of Herbalife "distributorships" and the money that can be made via multi-level marketing. In other words, it's not that Herbalife's products work. It's all about the commissions to be made from selling Herbalife products, work or no, that sustain the Herbalife health products business model.

On its website, Herbalife says its "cutting-edge science" can help people lose unwanted pounds with shakes and snacks.


On news of Ackman's recent hedge on Herbalife, the stock plummeted 35%. But, within the last couple weeks, the stock has come roaring back and is only down 14%, to date. What does this mean? Does it mean Wall Street believes that Ackman is wrong and that Herbalife's products really do work?

Or, does it simply mean, it doesn't matter if weight loss products work. The only thing that matters is what people (for whatever reasons) are willing to buy.
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