Bill Ackman Surrenders in His Five-Year War Against Herbalife(wsj.com)
wsj.com
Bill Ackman Surrenders in His Five-Year War Against Herbalife
https://www.wsj.com/articles/bill-ackman-surrenders-his-in-five-year-war-against-herbalife-1519854456
24 comments
I worked at a small MLM. Saw the actual numbers. The Company took 80% of the revenue. There's some BS about how you're only supposed to steal 42% or something maybe that's the payout, it was a while back.
Interesting short term job. GTFO as soon as I saw the real numbers.
Interesting short term job. GTFO as soon as I saw the real numbers.
It's interesting that Ackman seems to have been doing against Herbalife exactly what his opponents were doing when they were shorting Valeant. With Valeant, Ackman seemed pretty naive and/or delusional about its value and operations.
(That said, Valeant still exist today, despite its extremely immoral and shady past doings. I was dismayed to find recently that one of my favourite brands, CeraVe, is actually a Valeant company.)
(That said, Valeant still exist today, despite its extremely immoral and shady past doings. I was dismayed to find recently that one of my favourite brands, CeraVe, is actually a Valeant company.)
No need to worry then, Valeant sold CeraVe to L'Oreal last year.
Interesting, thanks. Apparently the deal was completed in March. I guess it takes a while to update the products.
Problem with Ackman is he thinks he's doing God's work by shorting Herbalife, but in reality if he wanted to "do good" himself he would have gone to law school and taken up the cases themselves (pro bono likely), or pay lawyers to take it on. Maybe the exploited customers would have even won a larger class action. Even though he showed a human side, Ackman failed at doing what he's supposed to do which is invest other people's money.
He might say he's shorting for a good cause, but we don't know if that's true. From what we know of his Valeant involvement, there's nothing indicating that his investment decisions are based on morality.
(Based on how much money he's lost, as mentioned elsewhere in this thread, it's hard to say exactly what else his investment decisions are based on.)
(Based on how much money he's lost, as mentioned elsewhere in this thread, it's hard to say exactly what else his investment decisions are based on.)
> Obligitory "the market can remain irrational longer than you can remain solvent" quote.
Investing in large financial scams isn't irrational in the current regulatory environment. The only danger to them is that they conflict or compete with some other, larger business that can lobby politicians. Ackman personally was actually the biggest threat to Herbalife, which is why we heard so much about this.
Investing in large financial scams isn't irrational in the current regulatory environment. The only danger to them is that they conflict or compete with some other, larger business that can lobby politicians. Ackman personally was actually the biggest threat to Herbalife, which is why we heard so much about this.
Also worth watching the Dirty Money episode (Netflix as well) on the pharmaceutical company Valeant. Ackerman was heavily involved here on the flip side (he was helping the wrongdoers rather than trying to short them and expose the fraud)
Ah, I didn't saw your comment.. +1
I can't imagine it is very difficult for anyone to come out looking good when compared to Herbalife.
I'd also advice "dirty money" on Netflix. It's very good ( but nothing to do with Herbalife though)
Note: that documentary is in support of Bill Ackman.
I recommend reading Bronte Capital's take on this. He regularly evaluates short opportunities mostly related to fraud.
He actually visited Herbalife clubs before making a decision on shorting. He's not a fan of Ackerman.
https://brontecapital.blogspot.com/search?q=herbalife
He actually visited Herbalife clubs before making a decision on shorting. He's not a fan of Ackerman.
https://brontecapital.blogspot.com/search?q=herbalife
the kill shot:
"What this has (deservedly) become is the story about how Bill Ackman can be so wrong. He spent (by his own admission) a year and a half analysing this company and his thesis can be falsified by visiting a few clubs in his home city. Bill Ackman's thesis is the most easily falsified bear-thesis I have seen from a major hedge fund ever.
You have to wonder how this happened. So I am going to tell you:
Bill Ackman a Harvard educated (magna cum laude) billionaire New York hedge fund manager bet over a billion dollars on a short position (imperilling his fund and his reputation) without checking the facts.
And he did not check the facts because he was so rigid with a misplaced silver spoon that he could not stoop to sit on a subway for thirty minutes and talk with poor people for ninety minutes."
"What this has (deservedly) become is the story about how Bill Ackman can be so wrong. He spent (by his own admission) a year and a half analysing this company and his thesis can be falsified by visiting a few clubs in his home city. Bill Ackman's thesis is the most easily falsified bear-thesis I have seen from a major hedge fund ever.
You have to wonder how this happened. So I am going to tell you:
Bill Ackman a Harvard educated (magna cum laude) billionaire New York hedge fund manager bet over a billion dollars on a short position (imperilling his fund and his reputation) without checking the facts.
And he did not check the facts because he was so rigid with a misplaced silver spoon that he could not stoop to sit on a subway for thirty minutes and talk with poor people for ninety minutes."
> with a misplaced silver spoon that he could not stoop to sit on a subway for thirty minutes and talk with poor people for ninety minutes."
I'm not an Ivy League alumni by any means (I'm a last-year CS drop-out from an Eastern-European country), but I got to see a Herbalife presentation in person 10 years ago and realized it was a scam 10 minutes into said presentation. As a matter of fact, I had a intense verbal fight with my ex-wife and my ex-MIL immediately after the presentation, as I was trying to explain to them that the money they had just spent on those Herbalife products was money thrown out of the window and that there were other ways to lose weight. I was right, those Herbalife products stood on top of one of our drawers for half a year, touched only once or twice, after which we threw them away. The gist was that we should have brought more of our acquaintances and friends into the scheme, but my ex-wife was a smart enough woman to realize that that was a no-go.
Long story short: companies like Herbalife deserve to die. They feed on people's insecurities, more than that, those people which Herbalife feeds on are not very well-off, quite the contrary (the money we spent on their products that one time was money taken from other necessity purchases). They're a despicable company, I'm genuinely let-down that Ackman failed.
I'm not an Ivy League alumni by any means (I'm a last-year CS drop-out from an Eastern-European country), but I got to see a Herbalife presentation in person 10 years ago and realized it was a scam 10 minutes into said presentation. As a matter of fact, I had a intense verbal fight with my ex-wife and my ex-MIL immediately after the presentation, as I was trying to explain to them that the money they had just spent on those Herbalife products was money thrown out of the window and that there were other ways to lose weight. I was right, those Herbalife products stood on top of one of our drawers for half a year, touched only once or twice, after which we threw them away. The gist was that we should have brought more of our acquaintances and friends into the scheme, but my ex-wife was a smart enough woman to realize that that was a no-go.
Long story short: companies like Herbalife deserve to die. They feed on people's insecurities, more than that, those people which Herbalife feeds on are not very well-off, quite the contrary (the money we spent on their products that one time was money taken from other necessity purchases). They're a despicable company, I'm genuinely let-down that Ackman failed.
I hate these type of companies as well. My father has been deep into the Nikken scam for over a decade now. I try not to think about how much money he has spent on their products or how many people he has tried to get to be resellers. Its pure poison.
> I'm genuinely let-down that Ackman failed.
But given that the two people you went with both spent their money on the scam, you shouldn’t be surprised at least.
But given that the two people you went with both spent their money on the scam, you shouldn’t be surprised at least.
How is Ackman's reputation not tainted by Valeant at this stage? This is just more of the same for me: a not really objective investor making mistakes due to his skewed perspective.
A lot of companies feed on people's insecurities, though. I don't think it's limited to Herbalife.
Car commercials feed on your insecurities but then sell you an actual vehicle you can get use out of. Pyramid schemes have the negative of a drastically overpriced product (all that investment is wasted) and the negatives of a crooked boss (you'll get that promotion in six months) rolled into one organization.
Terrific read, thanks for introducing me. Great example of how dangerous it is to think something is popular because others are more stupid or gullible than yourself. Keep looking until you see what they see, whether you end up agreeing or not.
The fact that these herbalife clubs cannot be sustained ultimately seems to prove Ackerman's point. Just google around for Herbalife shops in Queens today, it doesn't seem like any of them have survived.
It depends on whether there is equilibrium. If someone founds a club and breaks even for a while while losing weight until they meet their goal, then someone new does the time, the cycle can perpetuate until the rate of newly overweight people drops.
The continued existence of Herbalife doesn’t depend on whether anyone actually loses weight. Only on whether people continue to buy their product.
Wow, thank you for sharing this. It was an illimunitaing read and made change my opinion on Herbalife. Comparing it to AA makes a lot of sense.
AA = Alcoholics Anonymous in this context, in case you were wondering.
> illimunitaing
https://i.imgur.com/7rFgBB1.jpg
https://i.imgur.com/7rFgBB1.jpg
Great read.
I remember seeing plenty of Herbalife leaflets posted on the street when I was younger, and I always thought it was a scam and something exploitative (which in a way it is).
This helps putting things into context.
I remember seeing plenty of Herbalife leaflets posted on the street when I was younger, and I always thought it was a scam and something exploitative (which in a way it is).
This helps putting things into context.
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"Baby Buffett" Bill went long on Valeant, a company so evil that it makes diet smoothie MLM Herbalife look like the Salvation Army, yet people here apparently still think he's a good guy because of his sympathetic portrayal in Betting on Zero. Ackman not only is not a good guy, he's also, like most hedge fund managers, completely incompetent:
> The losses in each of the past three years — of 4, 13.5 and 20.5 percent — come against gains in the S&P 500 of 19.4 and 9.5 plus a 0.7 percent dip, respectively. The Pershing losses took its net assets to $9.3 billion from $18.3 billion.
https://nypost.com/2018/01/10/ackmans-pershing-square-fund-t...
PSCM can't even consistently beat the S&P 500, and Ackman's already on his second fund after having blown up his first (Gotham Partners)--why on earth would anyone give this guy their money? Because he's handsome and a smooth-talker, I suppose.
> The losses in each of the past three years — of 4, 13.5 and 20.5 percent — come against gains in the S&P 500 of 19.4 and 9.5 plus a 0.7 percent dip, respectively. The Pershing losses took its net assets to $9.3 billion from $18.3 billion.
https://nypost.com/2018/01/10/ackmans-pershing-square-fund-t...
PSCM can't even consistently beat the S&P 500, and Ackman's already on his second fund after having blown up his first (Gotham Partners)--why on earth would anyone give this guy their money? Because he's handsome and a smooth-talker, I suppose.
He sure deserves his lumps over Valeant but let’s not play pretend. There are plenty of monsters on Wall Street who will gladly destroy great companies for short term profits.
Eric Ries has the right idea with the long term stock exchange.
Eric Ries has the right idea with the long term stock exchange.
What is the LTSE? From their website it doesn't really seem like they do anything other than some apps for entrepreneurs?
Often the mechanism for destroying great companies is plundering one group of stakeholders to pay off equity and management. E.g. firing long-time employees, underfunding/changing pensions, over leveraging, or risky regulatory strategies that they won't be around to face the consequences for. I don't see how what stock exchange something is listed on has much effect on any of those.
Often the mechanism for destroying great companies is plundering one group of stakeholders to pay off equity and management. E.g. firing long-time employees, underfunding/changing pensions, over leveraging, or risky regulatory strategies that they won't be around to face the consequences for. I don't see how what stock exchange something is listed on has much effect on any of those.
What a shame. Herbalife is clearly an MLM, a modern form of a ponzi scheme. Their long term value is clearly zero, they just didn't manage to tank in the period Ackman projected.
Yes, it's an MLM but unfortunately, they have a business model that works. Amway is an MLM that survived a similar attack as Ackman vs Herbalife. Ackman did not bring anything new to the fight. I wished he would have won since many people lose money since they feel that Herbalife will sell itself. They're not ready to put up with the low pay and long hours until they reach the upper ranks. Most people just give up and lose their investment.
Most people can't reach the upper ranks of any MLM due to how they are structured. It's like a consulting shop you need more leaf nodes than managers.
You don't really climb or reach in an mlm. You just build lots of people under you to make money.
In most mlm compensation schemes, you would receive the same amount of money if you were at the very top of the pyramid or somewhere much lower, assuming you have the same size team built below you.
In most mlm compensation schemes, you would receive the same amount of money if you were at the very top of the pyramid or somewhere much lower, assuming you have the same size team built below you.
But the one at the top has a bigger pyramid than anyone below. The early adopters have also cleared the pool of most of the easy catches, so your chance of building the pyramid is reduced.
Sure, but that doesn't change the fact that you don't really "climb" or "reach the top" - if you aren't at the top, you can either fail or succeed by building underneath you, but you're not going to get to the top and the one above you will forever have a bigger pyramid than you do.
Leaf nodes quit, the specific people in the chain above you gain as you grow but just because someone get in at stage 2 does not mean anyone is still under them.
Yes, but the top nodes almost never quit. Once you have that sweet, sweet residual income trickling in, you have no reason to quit.
That being said, as I mentioned above, the top nodes don't necessarily make more money than those below them.
That being said, as I mentioned above, the top nodes don't necessarily make more money than those below them.
Yes and no. In most mlm compensation schemes, your override compensation is only calculated downward a finite number of generations.
So it is actually very common for someone at the top of the pyramid to have a smaller income than someone several levels below them. Because if you have a much larger team closer to you, you are getting a larger share of their revenue than the guy 5 levels up. In fact, he may be so far above you, that he doesn't get any share of your revenue.
In fact, I would say that your very earliest people usually earn substantially less than those below them who may still be actively working and building. (because the earliest may be retired or focusing on other things). The compensation schemes are built this way to keep people from simply resting on their laurels and not building anything of value after finding a few good men.
So it is actually very common for someone at the top of the pyramid to have a smaller income than someone several levels below them. Because if you have a much larger team closer to you, you are getting a larger share of their revenue than the guy 5 levels up. In fact, he may be so far above you, that he doesn't get any share of your revenue.
In fact, I would say that your very earliest people usually earn substantially less than those below them who may still be actively working and building. (because the earliest may be retired or focusing on other things). The compensation schemes are built this way to keep people from simply resting on their laurels and not building anything of value after finding a few good men.
You can't get closer to the top, but nodes die off as people quit. So someone can't move up the chain, but they can have a larger than average chunk of active people below them and receive a larger share of the pie.
The problem is if you share profits with N people then you are not creating extra profit and the average person is no better off.
The problem is if you share profits with N people then you are not creating extra profit and the average person is no better off.
That's a great point about the illusion of climbing which in reality is just adding nodes (rubes) beneath yourself.
Rank speculation-- at its core, every mlm depends on not paying people for their time. E.g., want to make a "home visit" by abusing my web of trust? FU pay me. Want me to "attend" a sales pitch? FU pay me. Want to invite me to dinner and use my social time to sell me on vitamins? FU pay me.
Am I right about this?
Rank speculation-- at its core, every mlm depends on not paying people for their time. E.g., want to make a "home visit" by abusing my web of trust? FU pay me. Want me to "attend" a sales pitch? FU pay me. Want to invite me to dinner and use my social time to sell me on vitamins? FU pay me.
Am I right about this?
I don't think they are all that way. Some actually sell decent products. (not usually great products, but comparable to what is being sold via 'normal' channels.)
As for not paying for people's time, yes, they don't, because most everyone in an MLM is considered a business owner. So you are basically franchising a business model rather than getting hired by a company.
As for not paying for people's time, yes, they don't, because most everyone in an MLM is considered a business owner. So you are basically franchising a business model rather than getting hired by a company.
I'm not talking about the business owners, but the customers.
If I choose to go and give the Cinnabon at the mall a five dollar bill, they give me some crap and my change. End of transaction.
With every MLM I've ever seen, the salesperson comes to me (or leverages a pre-existing friendship to sneak in to my space) without my permission, tries to pitch me on why I want some product, and then tries to pitch me on becoming part of the MLM. During that time I am not doing what I set out to do-- instead I'm listening to their sales pitch. That's my time and consequent opportunity cost.
I'm claiming that the only way any MLM makes money is if they don't pay their potential customers/underlings for the time it takes to pitch them on what they are selling.
Am I right? Can you think of an example of an MLM that violates my claim?
Example-- Mary Kay salesperson uses someone's residence for their showroom, but doesn't pay the resident for use of their real estate.
If I choose to go and give the Cinnabon at the mall a five dollar bill, they give me some crap and my change. End of transaction.
With every MLM I've ever seen, the salesperson comes to me (or leverages a pre-existing friendship to sneak in to my space) without my permission, tries to pitch me on why I want some product, and then tries to pitch me on becoming part of the MLM. During that time I am not doing what I set out to do-- instead I'm listening to their sales pitch. That's my time and consequent opportunity cost.
I'm claiming that the only way any MLM makes money is if they don't pay their potential customers/underlings for the time it takes to pitch them on what they are selling.
Am I right? Can you think of an example of an MLM that violates my claim?
Example-- Mary Kay salesperson uses someone's residence for their showroom, but doesn't pay the resident for use of their real estate.
yeah, herbalife is like a lot of the mlm schemes, taking advantage of the poor and disadvantaged. maybe now that he's given up on it, it will conveniently just die? just because you know something is doomed it doesn't mean you know when it dies.
Icann was proping up Herbalife to just f*ck with Bill Ackman for the fun of it. Herbalife is totally going to die now, and has been for a while.
No, I think Icann felt he had seen a similar attack on Amway and Amway won. Ackman put himself in a no-win situation. Icann does things to make a profit, not for spite.
https://en.wikipedia.org/wiki/Amway#Pyramid_scheme_accusatio...
https://en.wikipedia.org/wiki/Amway#Pyramid_scheme_accusatio...
“The market can stay irrational longer than you can stay solvent.”
-John Maynard Keynes
Looks like another case of this applying. Though it's sad, I am heartened to know that giants can succumb to this too. Lord knows it's hit me enough.
Looks like another case of this applying. Though it's sad, I am heartened to know that giants can succumb to this too. Lord knows it's hit me enough.
>“The market can stay irrational longer than you can stay solvent.” -John Maynard Keynes
There isn't much evidence that was said by Keynes:
>...In conclusion, this saying appeared in print by the 1990s and was closely associated with the financial analyst A. Gary Shilling. Based on current evidence it is possible that Shilling crafted of this apothegm. The journalist Jason Zweig believes he heard the phrase earlier and thinks it was in use by the late 1980s.
https://quoteinvestigator.com/2011/08/09/remain-solvent/
(I don't mean to derail your comment as I agree with the rest of it - just don't like to see misattributed quotes.)
There isn't much evidence that was said by Keynes:
>...In conclusion, this saying appeared in print by the 1990s and was closely associated with the financial analyst A. Gary Shilling. Based on current evidence it is possible that Shilling crafted of this apothegm. The journalist Jason Zweig believes he heard the phrase earlier and thinks it was in use by the late 1980s.
https://quoteinvestigator.com/2011/08/09/remain-solvent/
(I don't mean to derail your comment as I agree with the rest of it - just don't like to see misattributed quotes.)
Thanks opo!
I tried to research the attribution a bit, but clearly fell short. I was pretty surprised that Keynes would be able to come up with that. I'll try to edit my comment appropriately
I tried to research the attribution a bit, but clearly fell short. I was pretty surprised that Keynes would be able to come up with that. I'll try to edit my comment appropriately
Whoops, too late to edit I guess.
> “The market can stay irrational longer than you can stay solvent.” -John Maynard Keynes
Or it can stay irrational as long as it has a wealthier billionaire backing it.
People forget that HLF was headed for collapse until Icahn and a few other billionaires backstopped HLF.
There is a reason why Ackman is worth $1 billion and Icahn is worth $16 billion.
Or it can stay irrational as long as it has a wealthier billionaire backing it.
People forget that HLF was headed for collapse until Icahn and a few other billionaires backstopped HLF.
There is a reason why Ackman is worth $1 billion and Icahn is worth $16 billion.
Interesting. Why did Icahn and the other deep pockets care to fight this battle?
Hmm, also seems like there is a big personal feud there:
http://fortune.com/carl-icahn-bill-ackman-feud/
Seems a little game of thrones-y.
Sometimes I wonder how much of our rational "systems" are mere fronts for powerful people no different from the chieftains of pre-history. Sigh.
Seems a little game of thrones-y.
Sometimes I wonder how much of our rational "systems" are mere fronts for powerful people no different from the chieftains of pre-history. Sigh.
They doubled their money in five years. The potential for that was probably sufficient reason for them.
It's an investment they think they'll see return on, and apparently don't have moral compunctions about.
Why is it god given inevitable that this is somehow a bad investment? Plenty of companies make their money deceiving the poor or defrauding their customers, lots of the consulting joints come to mind..
While it feels icky to root for a billionaire hedge fund manager who probably couldn't care less if I lived or died, I was kind of pulling for Ackman. Herbalife is a complete scam, and in a sane universe they wouldn't have any valuation at all. But no one ever went broke underestimating the intelligence of the American public. Sigh.
It goes way beyond the American public, they're global - in at least 95 countries. I guess that's how they're managing to keep the scheme going as long as they have.
Really does seem like a strong bet that they will go to zero.
Really does seem like a strong bet that they will go to zero.
Exactly, I was shocked to see Ackman betting against Herbalife, because I have seen Herbalife craze first hand in India. My office was in M.G Road, Bangalore, a premium spot of Bangalore, and Herbalife had a big distribution center right there (next to our office building). It was always crowded, people coming and going. My then roommate also got into the Herbalife cabal, and got his entire family involved. He claimed that his dad had lost significant weight after regularly having one of their shakes, and left no stone unturned in advertising the product, to the point that some people started avoiding him. But note, he never asked any of us overtly to buy Herbalife products and build a chain of Herbalife-peddling minions. I guess the point is, some people are attracted to the exclusivity factor, they think that wow these products are expensive, so they must be good, and praise about them to others. Some of these praise soaked people get interested enough to check it out, and the iteration continues.
The lifecycle of an MLM company: Utah, then the rest of the US, then the world
Why do you say Utah? Near as I can tell Herbalife came out of California.
Orrin Hatch
See: http://www.nytimes.com/2011/06/21/us/politics/21hatch.html
See: http://www.nytimes.com/2011/06/21/us/politics/21hatch.html
Orrin Hatch represents the herbal supplement industry, not the MLM industry. Herbalife happens to be in both.
Felt the same way. The documentary Betting On Zero was eye-opening, and I was surprised that he stuck to this bet for so long.
I suppose it isn't really a pyramid scheme in the sense of being unstable. It is perfectly stable at fleecing people who don't know any better.
I suppose it isn't really a pyramid scheme in the sense of being unstable. It is perfectly stable at fleecing people who don't know any better.
Interesting I have shares in Pershing Square brought as a discount ploy in my ISA
I hate MLMs so very much.
There is a good book called False Profits by Robert Fitpatrick about the MLM industry.
So much of our culture is some version of sucker capitalism.
There is a good book called False Profits by Robert Fitpatrick about the MLM industry.
So much of our culture is some version of sucker capitalism.
> So much of our culture is some version of sucker capitalism.
It's amazingly difficult to find examples of businesses considered "successful" that aren't somewhat pyramid-shaped.
And as soon as I find one, it turns out it relies on a larger ecosystem that itself is pyramid-shaped.
None of these enterprises can survive for the long run, but since in the long run we're all dead, maybe it only matters if you can ride the wave in the short run??
It's amazingly difficult to find examples of businesses considered "successful" that aren't somewhat pyramid-shaped.
And as soon as I find one, it turns out it relies on a larger ecosystem that itself is pyramid-shaped.
None of these enterprises can survive for the long run, but since in the long run we're all dead, maybe it only matters if you can ride the wave in the short run??
How is In-N-Out pyramid-shaped?
According to a cursory Google search, In-N-Out has stated it will never go public or issue franchises. So they are less "pyramid-shaped" than a lot of businesses.
However, nothing is forever and philosophies can change. Look at the saga of Chipotle, they were so very full of themselves, and now they have someone from Taco Bell to pick up the pieces of their shattered reputation.
Any "family business" undergoes instability as generations hand off to new ones.
Interestingly, someone has been selling fake In-N-Out franchises in California. So you could say that even if you don't want to be pyramid-shaped, the pyramid sellers will find you.
However, nothing is forever and philosophies can change. Look at the saga of Chipotle, they were so very full of themselves, and now they have someone from Taco Bell to pick up the pieces of their shattered reputation.
Any "family business" undergoes instability as generations hand off to new ones.
Interestingly, someone has been selling fake In-N-Out franchises in California. So you could say that even if you don't want to be pyramid-shaped, the pyramid sellers will find you.
They are not pyramid-shaped at all. Running a successful franchise does not depend on your ability to recruit other franchise owners and then collect rent from them.
You can interpret "pyramid-shaped" how you please. The way I interpreted it, was that businesses that are not pyramid schemes per se, nevertheless pay off early investors with later investors' money.
Having a successful public company involves recruiting investors, and being successful in franchising involves recruiting investors.
And, if you have a successful business that is just a family business, maybe you want to sell it at some point...
As I wrote, you can define "pyramid shaped" as you please, but if nothing can be "pyramid shaped" without literally being a "pyramid scheme", then the term "pyramid shaped" has no reason to exist - that violates normal assumptions about reasonable discourse.
Having a successful public company involves recruiting investors, and being successful in franchising involves recruiting investors.
And, if you have a successful business that is just a family business, maybe you want to sell it at some point...
As I wrote, you can define "pyramid shaped" as you please, but if nothing can be "pyramid shaped" without literally being a "pyramid scheme", then the term "pyramid shaped" has no reason to exist - that violates normal assumptions about reasonable discourse.
Pyramid shaped refers to crap like HLF where the only way to actually be successful is to get more people to do the exact same thing you did.
You can have a successful In-N-Out and your success absolutely does not depend on someone then buying a franchise on your referral that you skim off of.
You can have a successful In-N-Out and your success absolutely does not depend on someone then buying a franchise on your referral that you skim off of.
You are not the one who initially used the phrase "pyramid shaped", so I don't see why you would expect others to defer to your authority on what it means.
Given the cooperative* nature of normal conversation, one must assume (at least initially) that there is a reason for saying "pyramid shaped" rather than "pyramid scheme". The obvious interpretation (to me) is that there is a continuum between pyramid schemes and non-pyramid schemes.
Objecting to the placement of In-N-Out near the "non-pyramid scheme" end of things, on the basis that it is not at all a pyramid scheme seems like an aesthetic preference for binary categories - that's all right for you, but other people may generalize.
*https://en.wikipedia.org/wiki/Cooperative_principle
Given the cooperative* nature of normal conversation, one must assume (at least initially) that there is a reason for saying "pyramid shaped" rather than "pyramid scheme". The obvious interpretation (to me) is that there is a continuum between pyramid schemes and non-pyramid schemes.
Objecting to the placement of In-N-Out near the "non-pyramid scheme" end of things, on the basis that it is not at all a pyramid scheme seems like an aesthetic preference for binary categories - that's all right for you, but other people may generalize.
*https://en.wikipedia.org/wiki/Cooperative_principle
Tangential to your general point
> You can have a successful In-N-Out
Only if you are the owners that have all of them; In-N-Out is a private, (mostly?) family-owned business that doesn't franchise, and has stated that they won't ever do that or go public.
> You can have a successful In-N-Out
Only if you are the owners that have all of them; In-N-Out is a private, (mostly?) family-owned business that doesn't franchise, and has stated that they won't ever do that or go public.
The pyramid finds you. Always has, always will.
<insert eye of providence>
<insert eye of providence>
The problem with MLMs isn't just that they're pyramid-shaped. It's that they trick people into thinking they'll get rich when they'll probably just lose money. (If they succeed in making money, it will probably happen by scamming their friends and family. This is not how a business is supposed to operate.)
Higher Education is becoming more and more of an MLM.
The real untold story of guys like Ackman and most of Silicon Valley is their sales and fund raising ability. Because he sure as hell ain’t a good investor. Yet he still manages billions of dollars of investor funds. At this point he’s like a bizarro world Gartman.
Ackman's fund got to where it did, because he actually produced a string of great returns across a decade and a few monster hits (such as Canadian Pacific). Investors would have never given him that level of capital otherwise.
The fact is, Pershing stomped the S&P 500 across a decade, from Q1 2004 to Q1 2014 (without anything from Valeant contributing). Which very few fund managers ever manage to do. Most are lucky to beat the S&P 500 at any point. You can call it luck, which it could be obviously, across a decade that's quite an unusual string of luck.
2004: 42.6% return; 2005: 39.9% return; 2006: 22.5% return; 2007: 22% return; 2008: -13% return; 2009: 40.6% return; 2010: 29.7% return; 2011: -1.1% return; 2012: 13.3% return; 2013: 9.7% return; 2014: 36.9% return; 2015: down the ship goes with VRX
More likely, based on his actual track record over time (including spotting the mess with MBIA years before anybody else), Ackman is a decent investor. His seeming arrogance and stubbornness appears to be the culprit more than lack of skill. He refused to throw in his cards early when losing hands came up. It's what separates decent investors from great investors like a Buffett, who will typically cut an investment the moment he realizes the business is a dog (that his instigation thesis was wrong), rather than stubbornly fight the tide. Ackman likes to fight, and has an immense ego, that's what got him on VRX and Herbalife. Can he learn from those mistakes and become a better investor? He'll have to, or most of the money he'll be managing will be his own.
The fact is, Pershing stomped the S&P 500 across a decade, from Q1 2004 to Q1 2014 (without anything from Valeant contributing). Which very few fund managers ever manage to do. Most are lucky to beat the S&P 500 at any point. You can call it luck, which it could be obviously, across a decade that's quite an unusual string of luck.
2004: 42.6% return; 2005: 39.9% return; 2006: 22.5% return; 2007: 22% return; 2008: -13% return; 2009: 40.6% return; 2010: 29.7% return; 2011: -1.1% return; 2012: 13.3% return; 2013: 9.7% return; 2014: 36.9% return; 2015: down the ship goes with VRX
More likely, based on his actual track record over time (including spotting the mess with MBIA years before anybody else), Ackman is a decent investor. His seeming arrogance and stubbornness appears to be the culprit more than lack of skill. He refused to throw in his cards early when losing hands came up. It's what separates decent investors from great investors like a Buffett, who will typically cut an investment the moment he realizes the business is a dog (that his instigation thesis was wrong), rather than stubbornly fight the tide. Ackman likes to fight, and has an immense ego, that's what got him on VRX and Herbalife. Can he learn from those mistakes and become a better investor? He'll have to, or most of the money he'll be managing will be his own.
I think that's not exactly wrong, to refer to "a few monster hits", but you didn't mention his single best investment, which overshadows all others. General Growth Properties turned a few million into almost $2 billion.
My impression is that Ackman is simply a gambler who got really lucky once and that has allowed him to raise money and squander it on a scale that compensates for his successes.
Certain famous investors have talked about how it's not so hard to run across some big winners over time; what's really hard is to avoid big mistakes.
There's something particularly perverse about calling a fund that owns a small number of risky stocks a "hedge fund", I might add.
My impression is that Ackman is simply a gambler who got really lucky once and that has allowed him to raise money and squander it on a scale that compensates for his successes.
Certain famous investors have talked about how it's not so hard to run across some big winners over time; what's really hard is to avoid big mistakes.
There's something particularly perverse about calling a fund that owns a small number of risky stocks a "hedge fund", I might add.
I hadn't thought of it like that- it sure would be really interesting to find out exactly how and why people give him so much money.
This makes me sad. I don't care about Bill Ackman being right or wrong about Herbalife's business.
What I care about is that I truly believe that the world would be better off without MLM. If you have ever read sites like Pink Truth, it is gut wrenching how these business prey on people.
I had hoped that this would be a turning point...
What I care about is that I truly believe that the world would be better off without MLM. If you have ever read sites like Pink Truth, it is gut wrenching how these business prey on people.
I had hoped that this would be a turning point...
Imagine someone super rich shorts Herbalife like Ackman did, lobbies congress to make Herbalife's business model illegal, and then profits from the short position. Would this be conflict of interest legally, or is this just how crony capitalism works in the US nowadays?
What makes you think Ackman didn't lobby against MLMs? The trouble is/was, Herbalife outbid him by a large factor: https://www.theverge.com/2014/4/8/5590550/alleged-pyramid-sc...
That's roughly what Ackman did. https://www.nytimes.com/2014/03/10/business/staking-1-billio...
Imagine someone invents something currently illegal then lobbies to make it legal, in order to sell it. This is just capitalism and liberalism, and it's a good thing.
How is this a good thing?
What if it's illegal for a good societal reason, and lobbying is just throwing enough money at enough of the right people until they succumb and legalise it?
It's never going to be cut and dried 'a good thing'. In some instances it will be and some it won't.
What if it's illegal for a good societal reason, and lobbying is just throwing enough money at enough of the right people until they succumb and legalise it?
It's never going to be cut and dried 'a good thing'. In some instances it will be and some it won't.
It might be a good thing if you think the natural progression of a governmental system is one where entropy increases til' things can't change, and you think that governmental systems trend negative in aggregate.
I'm not yet convinced of the above, but my trajectory points that way.
I'm not yet convinced of the above, but my trajectory points that way.
A clear example is self driving cars.
What if that thing is dangerous?
I can't think of many historical examples where something was already illegal when it was invented for no good reason. Can you? Maybe pharma fits that category, but no rational person would argue drugs should be legal by default...
I can't think of many historical examples where something was already illegal when it was invented for no good reason. Can you? Maybe pharma fits that category, but no rational person would argue drugs should be legal by default...
> I can't think of many historical examples where something was already illegal when it was invented for no good reason. Can you?
"For no good reason" is carrying a lot of water here. But because the legality is in question, all the examples you are going to get are things that are debatably legal, rather than outright illegal, like Uber. Or things that were intended to be illegal but legal via loopholes, like FedEx.
> no rational person would argue drugs should be legal by default
Plenty of rational people would, in fact, argue that.
"For no good reason" is carrying a lot of water here. But because the legality is in question, all the examples you are going to get are things that are debatably legal, rather than outright illegal, like Uber. Or things that were intended to be illegal but legal via loopholes, like FedEx.
> no rational person would argue drugs should be legal by default
Plenty of rational people would, in fact, argue that.
By "drugs" I meant "pharmaceuticals marketed as treating illness," not recreational drugs.
Whatever someone feels about recreational drugs, there's a huge difference between freedom to put drugs in your body vs. freedom to advertise drugs for a medical purpose.
The former is (consistent with my argument) legal by default. The latter is not.
Whatever someone feels about recreational drugs, there's a huge difference between freedom to put drugs in your body vs. freedom to advertise drugs for a medical purpose.
The former is (consistent with my argument) legal by default. The latter is not.
I tend to think drugs should be legal.
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For a somewhat similar reverse case, you don't need to imagine, Betsy DeVos already has that on lock-down.
Read Amway vs (the world?) and you'll understand why Ackman
lost.
https://en.wikipedia.org/wiki/Amway#Pyramid_scheme_accusatio...
https://en.wikipedia.org/wiki/Amway#Pyramid_scheme_accusatio...
Come on, tell us more.
unpaywalled: https://outline.com/YPct
Similarly, David Einhorn and Greenlight continue to get squeezed by the price-insensitive investors of NFLX, AMZN, and TSLA.
He has yet to capitulate positions, but very well may do so soon, as he was forced to apologize to Greenlight investors for recent serious underperformance.
He has yet to capitulate positions, but very well may do so soon, as he was forced to apologize to Greenlight investors for recent serious underperformance.
I have no opinion on the future price/direction of these stocks.
From end of 2017 to today:
NFLX: 192 to 291 51% gain in two months AMZN: 1169 to 1512 29% gain in two months TSLA: 311 to 343 10% gain in two months
From end of 2017 to today:
NFLX: 192 to 291 51% gain in two months AMZN: 1169 to 1512 29% gain in two months TSLA: 311 to 343 10% gain in two months
Greenlight has crushed for a long time. A bad couple months is meaningless.
I still do not understand why these people choose to reveal their positions. In ackman's case, it actually made people a lot of money because other people who didn't like Ackman got together and said 'hey what if we take the other side of this because we think that there's another puff left to this cigar."
May be at that level they hope to play the market by revealing...more people could get behind the call
If anything, reading about it from the 13f attracts more attention. ( i.e Buffet), but for Bill and Mr.Dalio, does not seem to be working out.
Ackman has purchased put options, which, in my understanding, is not surrender.
That was a while ago. Today he said he closed all positions in Herbalife (stock and options).
Exactly, all the did was changing the tool. He learned that the market wouldn't move as fast as he wished and now he has a position that he can actually maintain in the long run.
> Mr. Ackman first alleged in December 2012 that Herbalife, which sells through a network of distributors, was an illegal pyramid scheme and would be shut down by the government. He had personally pledged to take his campaign “to the end of the earth,” though he added that Pershing Square would abandon the bet if it got too risky.
Who surrendered ? Bill Ackman or Pershing Square ? Both ?
Who surrendered ? Bill Ackman or Pershing Square ? Both ?
[deleted]
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Ackman pays about $100 million annually to maintain his short position
https://en.wikipedia.org/wiki/Bill_Ackman
I can't view the article behind paywall, but there was a recent documentary about this short position.
Worth a watch: http://bettingonzeromovie.com/
Worth a watch: http://bettingonzeromovie.com/
aj7(3)
Probably means it's a good time for a short-term short.
That said, Ackman looks a lot less good in episode 3 of "Dirty Money" regarding Valeant (also on Netflix).
Obligitory "the market can remain irrational longer than you can remain solvent" quote.
EDIT: Just noticed Herbalife owns bettingonzero.com. They put up a "FAQ" saying Ackman secretly funded the doc and they're promoting the link with ads on Google.