Herbalife Under Attack By Short Seller David Einhorn
by Ted Nuyten on May 1, 2012
Herbalife Ltd. (HLF), the maker of nutritional supplements and weight-management products, fell the most in more than three years after hedge-fund manager David Einhorn asked executives why it has stopped providing information tracking certain groups of its distributors in its filings.
Herbalife tumbled 24 percent to $53.35 at 2:33 p.m. in New York, its biggest drop since Nov. 4, 2008.
Einhorn, chairman of Cayman Islands-based reinsurer Greenlight Capital Re Ltd. (GLRE) spoke to the company’s executives on a conference call today following publication of Herbalife’s first-quarter results yesterday. Net income in the period increased 23 percent to $108.2 million as revenue advanced 21 percent to $964.2 million, the company reported.
Chief Financial Officer John DeSimone told Einhorn on the call that when he took over as finance chief in January 2010 he decided to stop breaking out information on distributor groups as it isn’t “valuable information to the business or to the investors.” Herbalife “can easily provide the exact same breakout going forward,” DeSimone told Einhorn.
“That sort of follow up” would be “helpful,” Einhorn said on the call.
Jonathan Gasthalter, a spokesman for Cayman Islands-based Greenlight, declined to comment on Einhorn’s remarks or comment on whether whether Einhorn is a Herbalife investor.
Barbara Henderson, a spokeswoman for Herbalife, didn’t immediately reply to a telephone message.
The company reported earnings per share of 88 cents compared with 70 cents, a year earlier and raised its full-year guidance to a range of $3.58 to $3.74 from an earlier forecast of $3.40 to $3.60.
Herbalife Responds to Stock Drop Today
LOS ANGELES Herbalife Ltd. (NYSE: HLF): Today, on Herbalife's earnings call the company announced record results — its best quarter financial results in 32 years.
The fact that recognized short seller David Einhorn asked questions on the call put pressure on Herbalife's stock price.
To be clear: Mr. Einhorn's questions raised no new subjects or concerns. They were elementary questions usually asked by investors new to our industry. These are issues that have been thoroughly addressed before. Analysts and investors can review the specific answers to his questions on our website later today at www.herbalife.com.
Our business fundamentals are very strong and we are confident in our financials, our disclosures, and our network marketing business method.
We believe the drop in Herbalife's stock price today is a buying opportunity given the strong business fundamentals and our outlook for ongoing success. We currently have $428 million in repurchase authorization.
About Herbalife Ltd.
Herbalife Ltd. (NYSE:HLF) is a global nutrition company that sells weight-management, nutrition, and personal care products intended to support a healthy lifestyle. Herbalife products are sold in 81 countries through a network of independent distributors. The company supports the Herbalife Family Foundation and its Casa Herbalife program to help bring good nutrition to children. Herbalife's website contains information about Herbalife, including financial and other information for investors at http://ir.Herbalife.com. The company encourages investors to visit its website from time to time, as information is updated and new information is posted.