Thursday, February 14, 2013

Short-selling FTC enforcement decisions

Bill Ackman is betting that the FTC will act to shut down Herbalife, a seller of fitness and weight-loss supplements, as a pyramid scheme.  To convince the FTC, he hired a prominent law firm to "gift wrap" a case for the them.  His plan is to embarrass the agency into action.  A columnist at Forbes is sympathetic:

The business of distributing Herbalife products is all too often a losing proposition, and only those able to perpetuate recruitment chains have a shot at the rich rewards the company dangles before the gullible. The odds of success are lower than Herbalife represents.

Check out Ackman's three-hour PowerPointpresentation.  Search on the term "FTC" and it becomes pretty clear who his primary audience is.

Should the rest of us short the stock as well? It is still a long way above zero.

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