Ackman Renews His Vows Against HerbaLife Ltd. (NYSE:HLF)

by Sean Patterson | Wednesday, Mar 12, 2014 | 889 views

Boston, MA, 03/12/2014 – William Ackman renewed his battle against the HerbaLife Ltd. (NYSE:HLF)’s weight loss and nutrition drug in his Pershing Square Presentation, This time he was after the China business of the company. The billionaire hedge fund manager started his presentation by first addressing an, NYTimes’ front page article published in August last year which unveiled that he is lobbying against HerbaLife Ltd. (NYSE:HLF).

Ackman refused Political Ties

Ackman claims he began his efforts to lobby the congress through senator Markey, under the impression that the senator is interested in the “consumer protection”. Following that meeting Markey wrote three letters addressed to the chair of FTC, Chairman SEC, and CEO Michael Johnson were published on Jan 192014. Following that the stock prices dropped by 14% after that release. However he also said that he had never given any money to Markey despite being a long supporter of the Democratic Senatorial Campaign Committee. However, the fact that his sister donated $500 to Markey was unknown to him.

Klafter Questions China Sales Practice

Pershing’s legal counsel David Klafter, followed up on Ackman’s press speech as he discussed HerbaLife (NYSE:HLF)’s questionable sales practices in china. In the research synopsis presented by him, he said the company is in violation of the Chinese direct sales and pyramid sales structures. The company is paying multi level royalties and its total commission total up to 30% of its sales volume. Furthermore, its distributors receive incentives called consulting fees from building an infinite downline and even recruit other articipants. Pershing’s research was conducted through OTG research Group. According to Aaron Smith, an employee at the firm said their Chinese research group took data from over a dozen distributors in China.

Ackman also detailed that he had disclose his short position to Markey when he met him in October, 2013. In response to a question from one of the respondents of the conference, he said his efforts would push the FTC to consider a probe even when they are aware that he will benefit most from sing the company down.

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