The Herbalife battle
Multilevel marketing nutrition company Herbalife is in a battle but it is hardly embattled. They have an army of 3,1 million representatives stationed in 84 countries. One would presume it to be a healthy army since most of the soldiers buy the products for self-consumption.
Herbalife is facing the conflict on an embattled battlefield, the New York Stock Exchange, where a general of the latter is accusing the former of being an $8 billion pyramid structure resembling a ponzi scheme.
At the centre of the battle – as is for all battles – are not the products or the troops but the valuation of the shares. It’s about money.
Up on the hills, overlooking movements, Herbalife shareholders such as Carl Ichan and Daniel Loeb are following every move of the short-selling opponent, Bill Ackman (who’s been making the pyramid accusation).
This is a battle between heavies. Ichan is one of the world’s richest men, worth around $20 billion. Daniel Loeb’s New York-based hedge fund, Third Point LLC, has $11.6 billion in assets. Bill Ackman is the founder and CEO of Pershing Square Capital, a $10 billion hedge fund. The feud between Icahn and Ackman is already known as the “Battle of the Billionaires.”
The battle has been waging for a few month but even now, at this time of writing, Ackman bought keyword ads Google whenever people search for “Herbalife.” It is not known if Icahn or Loeb also took out keyword ads to link to sites stating their side of the story. This is known: the gloves are off. It’s a public battle.
The irony, of course, is that hedge funds themselves are a form of ponzi schemes. As TIME put it, “It is inherent to the model of the modern hedge fund.”
Is Herbalife a ponzi scheme? Is this just another share pump-and-dump scheme? Whichever, this obviously is a very stressful time for Herbalife representatives and shareholders and their family and friends… which probably means that they’ll consume more Herbalife products.
Video of the Icahn vs Ackman smackdown: