If you’d rather see the apocalypse happen than agree with Bill Ackman…

John Hempton of Bronte Capital has good news for you.

Hempton, an avowed Herbalife bull, is sceptical about whether any inventory loading happened at the company. When a firm requires its distributors to buy lots of inventory, it’s one sign of a pyramid scheme, which grows by recruiting distributors instead of actually selling products. Hempton says there probably wasn’t inventory loading because the company refunds distributors for unsold products.

A look at Herbalife’s website shows that they did offer refunds as of 2014, with one caveat found in a footnote of its pitchbook: “If requested within 90 days for the return of the HMP [Note: That’s the Herbalife Member Pack, a starter pack] and one year for the return of resalable inventory, upon leaving the business.” That’s a conditional refund, to be sure.

Still, Hempton has been hunting for the telltale distributors with tons of unsold Herbalife shakes in his or her basement, and has had trouble — but for one grim exception.

Continue reading: If you’d rather see the apocalypse happen than agree with Bill Ackman…

John Hempton of Bronte Capital has good news for you.

Hempton, an avowed Herbalife bull, is sceptical about whether any inventory loading happened at the company. When a firm requires its distributors to buy lots of inventory, it's one sign of a pyramid scheme, which grows by recruiting distributors instead of actually selling products. Hempton says there probably wasn't inventory loading because the company refunds distributors for unsold products.

A look at Herbalife's website shows that they did offer refunds as of 2014, with one caveat found in a footnote of its pitchbook: "If requested within 90 days for the return of the HMP [Note: That's the Herbalife Member Pack, a starter pack] and one year for the return of resalable inventory, upon leaving the business." That's a conditional refund, to be sure.

Still, Hempton has been hunting for the telltale distributors with tons of unsold Herbalife shakes in his or her basement, and has had trouble -- but for one grim exception.

Continue reading: If you’d rather see the apocalypse happen than agree with Bill Ackman…

Herbalife: avoiding the p-word

Herbalife, the nutritional shake multi-level marketing enterprise involved in a three-year battle over the legitimacy of its business model, has agreed to change the way it does business as part of a settlement with the Federal Trade Commission announc…

Herbalife, the nutritional shake multi-level marketing enterprise involved in a three-year battle over the legitimacy of its business model, has agreed to change the way it does business as part of a settlement with the Federal Trade Commission announced Friday.

The Los Angeles-based group also agreed to pay $200m compensation to customers to settle a complaint that it, among other things, caused substantial injury to customers through an unfair compensation scheme in which the only true way to profit was through recruitment.

There was no mention of the term pyramid scheme, but keep in mind that a multi-level marketing enterprise is at heart nothing more then a product and a compensation scheme. Messy legalities about what makes one operation legitimate and the other illegitimate have shifted for the benefit of those exploited.

Continue reading: Herbalife: avoiding the p-word