Earlier this week, Bill Ackman said he would give "the most important presentation" of his career, promising to deliver a "death blow" to health systems company Herbalife. Well, the presentation has come and gone, and while some tears were shed, Herbalife is still standing. In fact, their stock had a nice increase after Ackman's presentation.
Ackman, head of Pershing Square Capital Management and self proclaimed activist-investor, put together a 250-ish slide deck about Herbalife. Pershing Square spent $50 million on the investigation, infiltrating 240 of Herbalife's health clubs. His investigation and presentation set about proving Herbalife is running a pyramid scheme with no real customers, only "phantom, fictitious customers."
While Ackman heavily attacked the Herbalife clubs, where representatives attempt to sell their products, and in turn, sign up more representatives. His attack went after this process, which he said required the reps to sign up for classes before distributing products, spending much of their own money without being able to earn anything for a long time. He said their recruitment process "creates this tendency to want to stay, because you're almost going to make it."