Thursday, March 13, 2014

The Herbalife Torpedo:

A clip from CNBC yesterday - The Federal Trade Commission has opened a formal investigation into Herbalife (HLF)'s operations Wednesday, pushing shares of the nutrition and weight loss company sharply lower. The shares of Herbalife plunged as much as 15 percent after being temporarily halted but gradually recovered from lows and the company said it will fully cooperate with the FTC, saying it "welcomes the inquiry given the tremendous amount of misinformation in the marketplace."

The real gun fight is between hedge fund manager Bill Ackman who accused Herbalife of breaking direct-selling laws in China, its fastest-growing market - and back in December 2012, Ackman raised allegations that Herbalife was a pyramid scheme and made a bet the stock would fall by selling the shares short. Billionaire investor Carl Icahn on Monday said he believes Herbalife is undervalued and said he is satisfied with the company's re-audited results.

I thought we should look at a Herbalife chart in order to see which one of these in-for-a-fast-buck bullies is correct and a P&F (thanks to displays a broken stock – I guess Icahn does not do any point & figure work.

No comments: