Ackman Herbalife Presentation Fails To Impress

Jul 22 2014 | 2:30pm ET

William Ackman called it the “most important presentation” of his career. But the Pershing Square Capital Management founder’s latest attack on Herbalife did not prove the “deathblow” he had hoped.

The activist hedge fund manager today lambasted Herbalife’s nutrition clubs, alleging that they target economically disadvantaged people and minorities to prop up what he calls the nutritional supplements company’s pyramid scheme. The presentation was viewed by more than 10,000 people online, as well as several hundred in person at the AXA Equitable Center in New York.

Over 250 slides, Ackman sought to show that Herbalife’s customers are “phantom or fictitious.” But he had no bombshell to reveal after a two-year, $50 million investigation into more than 240 Herbalife clubs, and the markets responded by sending Herbalife shares up 15%—recouping the loss they suffered yesterday when Ackman promised a “deathblow” to the company he’s had a $1 billion short against for a year-and-a-half.

Ackman said that the nutritional clubs amount to free labor for Herbalife, ripping off people who “don’t realize they’re being defrauded.”

“It’s a tragedy,” he said, calling it “a fraud perpetrated by Herbalife’s senior management and members of its Founder’s Circle, Chairman’s Club and President’s Team conceived, designed and executed to exploit the poor.” He added that the clubs amount to “a violation of the labor laws.”

Christine Richard, a former Bloomberg News reporter now working with Ackman, said Herbalife is selling “smoke and mirrors” and turning “fake club traffic” into customers. She said that the company puts its trainees on “a treadmill” that costs them thousands of dollars to buy Herbalife products.

Ackman choked up when he said “you have a New York Stock Exchange company specifically targeting people and using the American Dream principles…. They sell the American dream. Its criminal.” He called Herbalife CEO Michael Johnson a “predator” and urged regulators to “shut it down,” which he said is taking “too long.”

Herbalife shot back that Ackman’s claims are “completely false and fabricated.”

In Depth

Financial Industry Blockchain Consortium R3 To Open-Source Platform Code

Oct 20 2016 | 9:03pm ET

Bitcoin's blockchain technology has spawned a flurry of activity among fintech startups...


U.S. Trust's Beard: The Rapid Growth of the Art Lending Industry

Oct 7 2016 | 10:55pm ET

Alternative investment managers have emerged as some of the most significant art...

Guest Contributor

Hedge Fund Marketing – Tips for Your Initial Sales Meeting

Sep 29 2016 | 5:46pm ET

There are two main goals a hedge fund should have for an initial in-person sales...