Direct Selling Companies Represent Value

 

Seeking Alpha is a platform for investment research, with broad coverage of stocks, asset classes, ETFs and investment strategy. In contrast to other equity research platforms, insight is provided by investors and industry experts rather than sell-side analysts, their summary about Direct Selling:

The Nu Skin China reaction is overdone. Shares are likely to rebound with next earnings report. Herbalife is winning the war with Ackman/Pershing Square. 30% upside is likely. Usana Health Sciences has been painted with the NUS/HLF brush. An upside bounce is in the offing. CVSL is poised to benefit from improved operations of existing holdings and planned acquisitions.

The investing sentiment pendulum periodically swings to the positive side beyond reasonable optimism. When this occurs, a bear or short opportunity exists in the equities impacted by this overly positive pendulum swing, once described by former Fed Chairman Alan Greenspan as irrational exuberance.

Conversely, when the sentiment pendulum for equities as an asset class, for a market segment or for a particular stock, swings too far to the negative side, buying opportunities are created. The pendulum has swung too far to the negative side in the case of several well constructed and well managed businesses in the direct selling or multi-level marketing industry.

While an industry that is never far removed from controversies, the onslaught wrought by a noted short seller against Herbalife (HLF) beginning at the Sondheim Conference in late 2012 has resulted in a significant piling on by various regulators and commentators, some seemingly in the pockets of the short sellers themselves.

It was not long after Senator Markey from Massachusetts called for an investigation into Herbalife that questions arose about the timing of his announcement vs. the timing of Pershing Square/Ackman describing that announcement.

Source: SeekingAlpha.com