And also, what duration? is this going to drag on till summer 2013? Is it already too late to put a short position on after today? It was hard to get filled on the options today… had about 10 different orders but nobody was biting and the spreads were hellishly wide… Jan, Aprils…
The puts were so win today. I didn’t get any but have a friend who owned puts on this thing before the story hit. I would expect HLF will be driven on fear and will suffer a valuation penalty of guilty until proven innocent. This is the second famous hedge fund manager to bomb this stock. At some point there is going to be so much smoke that people just assume there’s a fire that hasn’t been revealed yet and the stock is going to bleed. The real fun would start if Black Rock or Fidelity decided they didn’t want to be long something with this much pressure on it. They own 23% of the stock collectively. It’s hard to say though – if HLF puts up some good numbers, that will help the stock tremendously despite all the noise. Look at QCOR – that company is an unmitigated fraud, but the stock is rebounding because “it looks so cheap” and lots of people have no idea what they actually own when they’re long the shares. The numerous articles on SeekingAlpha are comical (esp the comment sections). Anything can happen in the short run, but the truth always comes out over time. The way to be short HLF is to have a sense that the numbers are going to slow so that there is no longer any possibility of a growth stock case being made about this.
What makes you like it? Don’t you know that Ackman’s always right? Except for that whole thing about JCP. Other than that, always right.
Multi-Level Marketing company incorporated in the Cayman Islands. Seems scary. I haven’t looked at HLF for very long but spent the last few days looking at two Multi-level Marketing companies and they to are trading at very cheap levels (LFVN, USNA). I’d be worried about the business risk of foreign governments passing laws that restrict or hurt MLM sale distribution models. I think the stocks will never trade at high multiples because investors will view their growth as risky and unsustainable.
Trying to short 25/27.5 Feb call spread but impossible to get filled without paying up dearly… I might take a look at SODA again…
Einhorn shorted a while ago. Missed the boat.
“Herbalife has no retail customers” - i agree with that statement
ZH put out a decent article yesterday predicting more of a short squeeze - i would be careful w puts
^nice. I tried to scalp some puts on Wednesday, when the SEC inquiry hit the wires. Bought 10 Jan 32.5’s Weeklies, when HLF was around 40… in about 1 minute, it dumps to 36… and I had about a 75% return for about 25 seconds. But of course, I thought this would be a big one, so I held on to them and they expired worthless as of today. A Straddle at 40, say in FEB, might be expensive, but possibly the only reasonable play here.