It sounds to me like Ackman has made the right bet, just ten years too late. I remember researching Herbalife a lot back in 2002, off the back of these excellent articles by Rob Cockerham [1], and it definitely appeared as immoral as the Amway businesses I'd researched at the time as well.
I don't fully 'believe' the figures presented by Herbalife in this report, about returns, purchasers from outside the network etc. BUT it certainly seems that the business model and culture has dramatically shifted under Michael Johnson.
Had Ackman shorted this in 2002 not 2012 [2], I suspect his accusations would have stuck and he may well have prompted the FTC to improve their MLM guidelines. He may ultimately do us all a disservice by making all anti-MLM activists appear to be arrogant and greedy.
[2] Which wasn't an option, because 1) it was privately held at that time (or thereabouts), and 2) Ackman was recovering from his previous fund's collapse.
He might have been 5 too late, instead. Herbalife's business model depends on getting new suckers into the mix. Herbalife is now branching out into essentially 3rd world countries, because the market is drying up for them in the developed world. Eventually (I hope) the whole thing will come crashing down, even without FTC intervention. Timing it is difficult, though, and even if Ackman is right, he can still lose money if he calls it too early.
I don't fully 'believe' the figures presented by Herbalife in this report, about returns, purchasers from outside the network etc. BUT it certainly seems that the business model and culture has dramatically shifted under Michael Johnson.
Had Ackman shorted this in 2002 not 2012 [2], I suspect his accusations would have stuck and he may well have prompted the FTC to improve their MLM guidelines. He may ultimately do us all a disservice by making all anti-MLM activists appear to be arrogant and greedy.
[1] http://www.cockeyed.com/workfromhome/workfromhome.html
[2] Which wasn't an option, because 1) it was privately held at that time (or thereabouts), and 2) Ackman was recovering from his previous fund's collapse.