A Billion-Dollar Bet Against Weight-Loss Shakes

This blog post is about “A Billion-Dollar Bet Against Weight-Loss Shakes.” This podcast appeared in the January 18, 2013.

       The Episode 431: A Billion-Dollar Bet against Weight-Loss Shakes is about Herbalife, a company that sells weight loss shakes, such as vitamins and other similar products what are worth a billion dollars. The company has been around for more than 30 years and is also traded on the New York Stock Exchange. This article talks about Herbalife Company and Bill Ackman who has a hedge fund with Herbalife stock and made a billion dollars bet against the company. The Herbalife Company has been around for many years and has become very successful in selling weight loss shakes, vitamins and other products which are worth billions of dollars.

                Bill Ackman has bet a billion dollars against Herbalife Company, stating that the company will fall just like everything else. Ackman states that Herbalife Company has the best pyramid scheme in the history, and that the company misleads investors and everyday people. In the year Ackman studies the business of Herbalife Company he discovered that Herbalife has been paying most of their money to their HR managers to attract new employees rather than spend their money on the actual sales of their product. Bill Ackman paced a bet which then caused the stock prices of Herbalife Company decrease by 21% in just two days.

                It is hard to say who is right and who is wrong because Herbalife is a Company who is trying to sell their products and will do anything to get people attention, but Ackman believes that Herbalife Company is faces with an ethical dilemma. Michael Jonson the Chairman of Herbalife said that “this is an attempt to manipulate the market. A group of people just want to make money that our company’s sticks will fall. Herbalife is not a “pyramid,” we have millions of customers around the world. We are working for 23 years. –Bill Ackman said that the U.S would be better if Herbalife Company will decline. I think that for America would be much better if there will be no Bill Ackman.” Michael Jonson is very upset with Bill because he is trying to ruin their business.

                There is a battle between a company and a business man who things he is doing the right thing by speaking up. Bill was in the wrong when he said Herbalife Company has be a fraud for 30 years. I think that company goes through dilemmas because they are trying to sell a product and they have someone like Bill in their way enabling them to do their jobs. I also think that Bill Ackman is a intelligent individual I just don’t understand why he wants to target this company. There are many other companies about there that are doing worse things he should go and make a business plan for them as well.