Thursday, September 17, 2015

Sympathy for Bill Ackman

Bill Ackman is a hedge fund manager, which does not endear himself to us. That said, I have held a great deal of admiration for his willingness to attempt to drive Herbalife International out of business (and make himself a great deal of money in the process) by publicly shorting the stock, i.e. betting the stock will fall to zero, and then doing everything he can to make the share price fall. This has included long presentations analyzing their multi-level marketing distribution and lobbying the government to take a hard look at them. Dirty pool? Probably.

Personally, I strongly suspect that Herbalife makes its money by duping folks into buying its expensive snake oil "nutrition products", so I have zero sympathy for them. Who should I root for when a cobra decides to take on an anaconda?

Here's a short version of the story, but for those of you who want the long version, here's a recently released Fortune article, titled "The Siege of Herbalife." 

8 comments:

  1. "Bill Ackman is a hedge fund manager, which does not endear himself to us"

    Now that's simply unkind. Guys like Ackman are trying to expose scams like HLF, you should root for them. It was hedge funds who noticed Enron scam, and in biotech they routinely point out companies that are scamming unsuspecting investors.

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    1. By "endear himself to us", I mean, "chemists do not tend to love the financial types." That said, yeah, I am rooting for Ackman to take down Herbalife. I hope it happens.

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    2. "chemists do not tend to love the financial types."

      That's probably true, and I did espouse the same idea before adopting a 'if you can't beat 'em...." stance. Nice ppl, once you get to know them.

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  2. I worry that eventually the same tactics used against Herbalife will be used against something less execrable.

    On the other hand, telling the Feds that they're a scam doesn't seem like a ridiculous tactic - it doesn't seem like a high-percentage strategy (if it worked, what would be left of the supplements industry?) but not dishonest. And multi-level marketing is the next best thing to a pyramid scheme, and so, well, no problem there. Maybe more like a rat taking on the Egyptian cobra your neighbor lost in his yard - you may not like rats, but the kids will be much safer without the cobra.

    I think there's a joke that fits Herbalife: "Q: You walk into a room with (evil historical figure 1), (evil historical figure 2), and Herbalife with a pistol and two bullets. What do you do? A: Shoot Herbalife twice."

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    1. Damn straight.

      There are hedge funds that are propping up Herbalife's share price, so presumably this is not a tactic that has no counter.

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  3. If it's a siege, perhaps Ackman could go with some plague-infested rats or smallpox victims' bodies. Old-school siege tactics.

    The tactics would be even better if Herbalife goes with their supplements as a immune-boosting strategy. Karma calling in 3, 2, 1....

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  4. http://www.vanityfair.com/news/2013/02/bill-ackman-daniel-loeb-bike-ride

    another take on Ackman.

    ICYMI, Dan Loeb letters to corporate management are epic: http://www.vanityfair.com/news/2013/10/dan-loeb-mean-letters

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  5. I mean, "chemists do not tend to love the financial types."

    Probably true, and I espoused similar views prior to taking my current 'if ya can't beat 'em..." stance. Nice ppl, once you get to know them.

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