Thursday, January 30, 2014

Ack to the Future, Part Trois(Menage That Is)

So on her Twitter feed Celarier is reporting that Representative Linda Sanchez held a hearing focusing on Herbalife yesterday. Thankfully she toned down that language in the article itself to refer to it as a "briefing" and "information session" that was full of staffers, and not lawmakers.
She also bragged last night that she'd have happily called Senator Markey's office had she not been in a closed door congressional briefing with Representative Sanchez.
You'll remember that Representative Sanchez is the Congresswoman that wrote the letter to the FTC that Bill Ackman was showing off at dinner before the FTC even received it. Apparently, Celarier was also the only journalist that was at this closed door hearing, I mean briefing, I mean information session. It takes a few hours to get to D.C. so she must have known about this meeting well in advance, and if she knew about it in enough time to boogie on down there for the meeting, then Pershing Square must have certainly known about it too. Considering just how much Pershing and Celarier share with each other it would be hard to believe they didn't know about it, so it makes me wonder if Pershing Square reps were also there? Maybe we'll find out.

A direct quote from Celarier's article says
Sen. Markey “certainly bumped up the profile” of the call for an Herbalife probe, Sanchez told The Post before the event.
I'll sure say so! To be a little more precise, in my opinion, Senator Markey's letters bumped up the profile of how information about Herbalife appears to be manipulated. And if I were the esteemed Senator, I would be very displeased with my staff right now. Unless unbeknownst to him his office recently had an intern named "" it would appear that someone on his staff had either a serious lapse in judgment or made serious clerical errors that have allowed Pershing Square to go back to the future.

Celarier is claiming that she inadvertently posted Pershing Square letters but that the January 22nd dates all match up. Unfortunately for our little love triangle that isn't the case.

There are two letters floating around for each of the recipients and there are inconsistencies in each case. 

The Markey letter to Chairwoman Ramirez was originally dated January 22nd, however the version currently available from Markey's staff is dated at January 23rd. is hosting the version dated a day earlier at January 22nd, that was last modified on Tuesday Jan 21 at 11:19:38 AM and Celarier's version is absolutely identical to that, except that it appears to be a scan of the pdf Pershing is hosting and provided to her by Pershing (""). The version currently hosted by Markey's staff was last modified Wednesday Jan 22nd, at 6:34:43 PM. In addition to having different dates on the letter itself and different time stamps associated with them you'll also note that the position of the signature in the current Markey version is different from the Pershing/Celarier version. 

The same pattern is also true for the letters Markey's office sent to Chairwoman White at the SEC. The Markey letter to Chairwoman White was originally dated January 22nd however the version currently available from Markey's staff is dated at January 23rd. is hosting the version dated a day earlier at January 22nd, that was last modified on Tuesday Jan 21 at 11:21:11 AM, and again Celarier's version is absolutely identical to that, except that it appears to be a scan of the pdf Pershing is hosting and provided to her by Pershing ("").The version currently hosted by Markey's staff was last modified Wednesday Jan 22nd, at 6:37:06 PM. In addition to having different dates on the letter itself and different time stamps associated with them you'll also note that the position of the signature in the current Markey version is different from the Pershing/Celarier version.

The same inconsistencies emerge when looking at the letter that was sent to Mr. Johnson. The Markey letter to Johnson that is currently available from Markey's staff is dated January 23rd and was last modified Wednesday Jan 22 at 6:36:10 PM, however the version available from the NY Post and Pershing Square is dated a day earlier at January 22nd.
The NY Post and Pershing have identical versions of the letter (both dated Jan 22nd), but in this case Pershing is also hosting a scan of the letter and not the original PDF, and yet again the Celarier/Pershing version also has an inconsistent signature.

All of this brings us back to the central question posited yesterday: if the Markey server is currently hosting letters that are all dated January 23rd, and were all last modified Thursday, January 23, 2014 at around 9:45 AM how did both Pershing Square and Celarier get letters from that same webpage but that were last modified two days prior and have different dates and signatures? Wouldn't that indicate that Celarier and Pershing had both received earlier letters and that they also received those letters sometime between Tuesday Jan 21 at 11:21:11 AM and Thursday Jan 23 at 9:45am? 

Ackman and Celarier seem to have an uncanny knack for time travel. The real question for Senator Markey to root out from this little three way is who precisely in his office is the other slice of bread in the Celarier sandwich.

Wednesday, January 29, 2014

I Wonder If She'll Sign Her Parole Application ""

Out of all the sections the NY Post has the one they seem to be most conspicuously missing is "LEGAL". It's a shame because it sure could have helped Bill Ackman, Michelle Celarier and Richard Wilner sort through some of the ramifications they will likely be dealing with, if they aren't already.

For all of the refutations Celarier has provided claiming that she downloaded her Senator Markey letters from Senator Markey's website, the data seems to be incongruous with her claims.

Let's just check off the list.

Senator Markey's servers are hosted in Cambridge, MA and the server time is set to -5GMT, or what we all know as Eastern Standard Time.

So when his server kicks back the info that the letters he was hosting on his website were last modified around 09:45am (before Reuters picked up the story) anyone that downloaded the letters from his website would have the same exact copies I just downloaded again. They were all last modified around 09:45am EST. I ran this query at 5:31:23 EST tonight and you can see, Markey servers kicked back 22:31:23 as their server time. And they're running Apache (I can hear webmasters everywhere groan).

So, if Celarier had in fact downloaded those letters from Markey's site they'd look exactly the same as the one you can download right this instance.

I'm of the opinion that John Hempton is not defaming Celarier in any way as it's obvious she didn't get her documents from the Markey website. Bill is going to be PISSED when he realizes the documents she posted to her NY Post article are clearly labeled with "" as the author. OOPS! I have to agree with John Hempton that Celarier must be mistaken with respect to her sources again.

Looks like they were so busy spinning their webs together that they may have to eat each other for lunch! I hope they serve Herbalife snacks in Sing Sing, which is a short drive for both of them.

Senator Markey Mark Feels the Vibrations

Quick update on the Senator Markey Mark, Pershing Square, and NYPost/Celarier imbroglio that cracked open after John Hempton brought forth the rhythm and the rhyme. Celarier is adamantly denying any sort of collusion and that she simply downloaded her Markey letter from his website after Reuters broke the news.
She's saying that any difference is attributable to Markey's team modifying the letter and the website after she'd downloaded it.

Ever being the pain in the ass, I did a little more digging. You can see in the chart below that up to around 9:51 on that Thursday morning everything was hunky dory in the stock, although it certainly looks like news was slipping out prior to that point. And then, you can see the catastrophic hit the stock took after the news broke. Close to 1M shares traded in a single three minute window from 10:00-10:03(with a low of $62.33/share). 

You can also clearly see below the timestamp on Celarier's story in the NY Post (11:51am). 

And again you can also clearly see the upload information for the letter she posted to Scribd. Although it doesn't timestamp the upload it was uploaded that same day(Posted by the NY Post on Jan 23).

Where we cross over to the wildside (sorry but I can't resist the Marky Mark refs) and gets really interesting for Celarier, Ackman and Senator Markey is that the page that Senator Markey posted his letter to was last modified on the morning of January 23rd at 09:45:27am, before the story broke and thus before Celarier would have downloaded it.

So, if Markey last updated the site before Reuters broke the story and Celarier got the letter from Markey's site after Reuters broke the story, they why is Celarier's and Ackman's identical letters any different from the letter we can all download from Senator Markey (which was last modified at 09:45:27am before the story broke)?

There you go, clear as the Klondike ice that her CCB reporting should be entombed in.

Tuesday, January 28, 2014

No Canada: Klondike Kat-lady Reporting Live from Fort Frazzle

Some interesting facts about our neighbors to the North. 

  1. Canada is the garter snake capital of the world.
  2. Someone stole $18 million of maple syrup from the Global Strategic Maple Syrup Reserve
  3. Canadian Competition Bureau inquiries typically begin at the Commissioner’s instance, but an inquiry also must be commenced when the federal Minister of Industry so directs, or on the sworn application of six Canadian residents.
Because Canadians are in fact the congenial and polite caricature we envision their entire nation to be, I was not surprised to learn that it only requires the sworn application of SIX Canadian residents to force an inquiry(0.00000017% of the country). Goodness gracious! Rob Ford has sucked heroin off of more crack-addled hookers in one night than you actually need to meet the legal requirement for opening an inquiry with the CCB.

Not being nearly as kind and trusting as our northern friends I poked around a little bit. Actually I called the Canadian Competition Bureau today and spoke to a real live person. He patiently and graciously explained that inquiries at the CCB are done privately, so they would not necessarily announce if they have opened a formal inquiry, although they occasionally do make such inquiries public. The representative I spoke with also noted the process that occurs if and when an inquiry is opened. He pointed out in a stilting Canadian accent bubbling with undertones of Savoire Faire that if a formal inquiry is opened that one of the very first steps in the process is that the CCB contacts the company in question. He went on to note that inquiries are data driven and involve information gathering and he also explained that because an inquiry is a procedural tool to gather information, most of them are closed without any actions taking place. The way he explained it was that if an inquiry is opened, the CCB then reaches out to the accused company to notify them of the inquiry and then they'll typically request that the company provide the CCB information relevant to the inquiry so they can decide if any complaints against the company in question have any merit. If they deem that further action is meritorious they can then either conclude the case through alternative resolution or they can submit an application to an entirely separate entity called the Competition Tribunal. The tribunal defines itself as 
a quasi-judicial body that hears and disposes of applications and any related matters under Part VII.1 (Deceptive Marketing Practices) and Part VIII (Reviewable Matters by the Tribunal) of the Competition Act. 
According to the Competition Tribunal
The Competition Tribunal should be distinguished from the Competition Bureau. The Competition Bureau investigates complaints and decides whether to proceed with the filing of an application to the Tribunal.
Because they are separate entities, I was careful to carve up my searches across both agencies. I looked through all of the penalties imposed by the courts as well as all of the alternative case resolutions that the CCB has published. I also used the Competition Tribunal's handy built in search tool that you can use to search their database of ongoing cases, and you can imagine my surprise(#sarcasm) when I was absolutely unable to find any legal actions, alternative case resolutions or Tribunal cases involving Herbalife at either agency. Furthermore the Tribunal currently has no upcoming hearings scheduled and there are only three ongoing cases currently still open before the Tribunal (none of which involve Herbalife). 

When questioned about the claims that the CCB was investigating them, Herbalife couldn't be any more clear in their responses either:
  1. The company takes it's disclosure requirements very seriously. We refer you to our public filings.
  2. We are unaware of any investigation and have not been contacted. Canadian sales represent less than 1 percent of sales.
Having been jaded by my experiences with others, I ventured it would be wise to double check the SEC EDGAR archives...and wouldn't you know it; not only did Herbalife NOT file an 8-K (no shit, otherwise it'd be all over the news) the word Canada does not even exist in any of the company's 2013 filings!!!  

So, if Herbalife is unaware of any investigation and have not been contacted, but the CCB would have contacted them as a matter of procedure, and there is nothing to disclose via 8-K's etc., then what the fuck is Celarier talking about?

After asking myself this over and over again, I then remembered her story back in June of 2013 in which she claimed the FTC was going to tighten the "ground rules on pyramid schemes". What tickled me about her "pyramid scheme" article was that she attributed the FTC's reluctance to pursue Herbalife to the expense of "going up against such a huge, well-financed company---especially given the ambiguity of the rules" as opposed to not going after them because they are not a pyramid. The other salient point of her story was received on the back end of a FOIA request that had nothing to do with Celarier. In internal FTC communication regarding Celarier's article, one FTC staff member replied
Almost sounds as if she inferred from somebody's letter to the ftc that we were reconsidering, based on the fact that the letter wants us to reconsider (see scribd doc below) 
So in the absence of any actual evidence to support her claims, and armed with two opposing statements issued by Herbalife I can only reasonably conclude that whatever tip her "sources" gave her are either without merit or that she is slicing and dicing an old story about a former distributor that Herbalife excommunicated for bad practices. Either that or after a night of raucous debauchery in Toronto, during which Rob Ford dared her to, she and five of her friends penned drunken, stoned letters to the CCB assailing Herbalife and then she asked the CCB to comment about it. It seems pretty clear to me that she is more focused on attempting to drive down the stock price than she is on reporting the facts.

If Celarier and the NY Post can't provide us the actual data to support her story's claim that Canada has opened a formal inquiry into Herbalife International then the Post should retract her story. 

Monday, January 27, 2014

The Chinks in Ackman's Armor

Last week's Herbalife dog pile seemed to be an oddly coordinated event. I think it's remarkable that someone would spend millions of dollars on a massive put strategy just days before a letter from Senator Markey hit the wire, followed by another dog pile(this one hot and steaming) by Michelle Celarier and her fallacious NY post article. Maybe fellatious would be a better term for her article as she is obviously trying to polish someone's financial knob with it. Don't think I'm being sexist here with my phallic reference it is just that her writing clearly demonstrates that she'll never be a cunning-linguist.

Anyhow much has been made about the Markey letter although he didn't say anything that Pershing hasn't said before. Maybe the irony was lost on Senator Markey and his staff, but I thought it was a bit premature to publicly accuse a publicly traded company of destroying a family's "entire 401(k)" without considering the ramifications on other families' 401(k)s. Understandably, as a representative of his constituents he wants to protect and serve them and I can't fault him for that. What I think is odd about Senator Markey's letters though is that his letters to Chairwomen White and Ramirez were finished within a few minutes of each other and sent off on Tuesday morning; a full 30 hours before he deigned to pen his letter to Michael Johnson and send it over to Herbalife on Wednesday evening. If he just wanted answers to the questions he posed to Mr. Johnson on pages four, five and six of his letter, why not just send Herbalife a letter privately before sending one to the SEC and the FTC? Senator Markey's letter ostensibly destroyed $1.3B sprinkled in 401(k)s throughout the US and I can't help but think that his constituents would have been better served had he kept his request for information from Herbalife between himself and Herbalife.

Markey has openly stated that his staff met with Pershing, but he may have unwittingly turned a trick for Pershing while trying to protect his constituents.  I think the information that Pershing fed him at their meeting with his staff was only part of the story they wanted him to hear. The part they probably failed to tell him was that they may have been using him in a coordinated activist attack on Herbalife without his knowledge.

Pershing's brand of "Ack-tivism" is unlike others. When I think of a real activist investor it conjures up images of an insightful individual that somehow manages to recapture some of the value that leaks out of companies in various forms. Inefficiency, poor management, cap structure etc. Last week really crystallized something for me that I didn't fully appreciate before; Ackman's brand of activism is not about adding value, its about strategic manipulation and I think he does the same with his investors. I don't think it's a coincidence the recent attacks against Herbalife come at a time they are in their blackout period and cannot financially defend themselves. When Pershing gets called out and someone tries to hold them accountable they dodge the question, hide behind semantics and obfuscate the issue as much as possible.

You'll remember it set off all sorts of alarms in Pershing when I said that Shane Dinneen had left Pershing and that Pershing was acutely sensitive to this claim. Needless to say, I still haven't heard back from my last email to Rubenstein, but they'll no doubt have a fluster of activity in the coming days when they have to answer the shit storm of reporters questions and investors questions once they finally confirm that Shane is in fact gone from Pershing and that Pershing has been denying this for at least a month. For all the energy they expended attempting to deny that Shane had disappeared from Pershing, it is my understanding that Friday January 24th was his last day.

Michelle Celarier, who so valiantly defended Shane on Twitter could never muster the intestinal fortitude to confirm or deny that Shane was on "hiatus" as I claimed. She towed the party line and would only go so far as to say that he was not "fired". She even reiterated that Shane was a partner at Pershing.

You don't have read many of her articles at the NY Post to quickly see that her journalistic integrity is questionable with respect to her Herbalife reporting. Horatio Gutierrez proved to us just how biased she is.

A perfect example is last week's ridiculous article that Herbalife was being targeted by the Chinese media as a pyramid scheme. Effectively Celarier attempted to infer that Chinese regulators and the media are going after Herbalife. Her support of this view is ONE SINGLE ARTICLE that is five months old and was overwhelmingly ignored in China(even by her own report). She fails to mention in her article that Herbalife shaped their operations in China to explicitly fit the Chinese regulations, and she also fails to inform her reader that the news regarding Herbalife in China is overwhelmingly positive.

In a well written VIC article about Herbalife (hat tip to Katana), there is some noteworthy commentary by rh121 in which he/she states:

I think the NY Post article which probably triggered the late Friday sell off is interesting. The title "Chinese media target Herbalife as pyramid scheme" implies ongoing Chinese media attention on Herbalife and possible investigation by government agencies.
I went on, the google in China, to search Herbalife related news published by Chinese media in last couple of weeks. The only news I can find is either related to NU Skin event or Markey letter. There is no news article targeting Herbalife directly at all. The NY Post article is based on something published by Chinese news media First Financial Daily last August, which according to NY Post, "received little attention when first published". Here is the original First Financial Daily article and a translation:
I then checked website of First Financial Daily, there is no new article targeting Herbalife. The First Financial Daily is simply reporting what everyone else is reporting: Markey letter and NU Skin.
So there is no evidence Chinese media is targeting Herbalife. I wonder why NY Post wrote the article in that particular way.
I also talked to someone who is close to Chinese media cycle about those two articles published by People's Daily targeting NU Skin. I don't know how accurate or reliable his information is so take it with a grain of salt.
He actually talked to the author of one of the articles. The reporter told him some government official assigned the topic (the reporter was not very clear about what the assigned topic was) and they simply picked NU Skin. The reporter also said the order did not come from the top, but somewhere in the middle. (Keep in mind People's Daily is the Party's mouth piece)
My contact did not believe what the reporter told him so he asked around, it turns out those two articles were originated from People Daily's regional office, not the central office. He heard NU Skin might have pissed someone off at the regional level but actually has a pretty good relationship with the central office or at least the sales department at the central office. As a matter of fact, NU Skin has been a client buying ad spaces from People's Daily. He said the central office is very angry at the regional office and nothing similar will happen again.
The Chinese New Year is coming up. The official holiday lasts seven days (01/31 - 02/06), but in traditional sense the holiday lasts fifteen days, all the way to 02/15, so nothing major gets done between 02/07 and 02/15 either. Herbalife will announce Q4 on 02/18. Not sure when Ackman will publish his Herbalife/China material. Feb is setting up to be very interesting for all parties involved.
I can't speak to the veracity of rh121's claims about the way the news cycle unfold in China, but I decided to try and synthesize rh121's experience and would urge everyone else to do the same. I just went to Baidu and started searching. At the top of the Baudi Herbalife news feed is actually a story about Herbalife's strategic partnership with Shenzhen Satellite to sponsor "'s Show" and their cooperation in the development of two other shows, "Freaky College and "spicy Mom College" (I'll be sure to DVR spicy Mom College). That is followed by a story about Cristiano Ronaldo's Ballon d'Or and another about Herbalife's donations endowing cochlear implants to needy children in China. Deeper in that feed is the report of Markey's letters that he sent last week. Counter to what Celarier would have everyone believe, it doesn't appear that Herbalife is being targeted in any way, except by her and Ackman. The Chinese media apparatus seems to be focused almost solely on all the great things Herbalife is doing in China and not the absurd claims that they're functioning illegally in that country.

One of the funnier anecdotes I'll share with you about my Baidu experience is that when I searched Michelle Celarier's name it poetically pulled up "Case Study in Corruption" by Celarier, Michelle. You can only imagine the completely over the top eyeroll and coffee-spitting guffaw I gave when I saw that. Suffice it to say that I don't place much weight in the opinion of Michelle Celarier when it comes to Herbalife or corruption. I'm not sure you could expect much from someone that considers links to EDGAR data to somehow constitute misinformation.

So just for a recap (ha, get it?) Dinneen disappears for months and then suddenly reappears around the time there is increased PUT activity in Herbalife, while Herbalife is in a blackout period and can't support their shares with open market activity, which happens days before Markey publicly releases a series of letters against Herbalife(that went to Herbalife last) that is then capped off by Celarier's biased story about Herbalife China, and this all happens as Shane is packing up his belongings on his final day at Pershing Square, cumulatively contributing to the destruction of over $1B of value in investment accounts all across the country, just a couple of days before short interest is publicly reported.

I can't imagine it would look good if Ackman recently covered and/or restructured more Herbalife last week or that he used the weakness following Markey's letter to unwind a big chunk of his short. Pershing can say all they want to say about not capitulating in their Herbalife short, but the facts are that Pershing restructured a huge chunk of their short and the two lead Herbalife analysts are gone. Tonight's short interest update will only capture any reduction that took place as of January 15th, leaving eight recent trading days unaccounted for, but it will be interesting to note if Ackman still has as much skin in the game as he did on December 31st.

Nonetheless I think the situation may force Herbalife to respond in a way that Ackman may not enjoy and may have Loeb updating his Bloomberg tag again soon. I would not be surprised if Herbalife politely declines Senator Markey's invitation to Patomac Two-step and goes all Humpty Dance by pre-announcing earnings this week so they can get out of their blackout period and get back in the market buying shares. DeSimone has said time and again that share repo was a matter of economic feasibility. If the company was working a debt deal to repurchase $1.5-$2B worth of stock at $80/share, didn't that repo just become at least $1.5B more economically feasible? Even if Herbalife doesn't pre-announce and waits to report earnings as planned, that is still well ahead of Senator Markey's requested response date.

The only thing that seems to have any chance of derailing an Herbalife self-tender for 10-15% of their shares before their scheduled earnings release is Tim Ramey's recent departure from DA Davidson to go work for Bill Stiritz. Although neither Stiritz nor Ramey have indicated that there was any connection between Ramey's hiring and a possible deal for Herbalife, if you were going to launch a LBO that directly competes with Herbalife's planned partial tender, wouldn't you want the best Herbalife analyst on the street as part of your team? I would. And any potential bidder for Herbalife faces the same looming principal facing DeSimone: economic feasibility. For all the aggravation he's caused them, Icahn, Stiritz and DeSimone may all be sending Ackman and Celarier thank you cards for providing them with one hell of an economically feasible discount on a stock that is easily worth $120/share.

P.S. As a post-script, I did email Rubenstein today asking about Dinneen and Adamski, but I haven't heard back. Judging by the response Gasparino reported, I think it's safe to say that at the very minimum Pershing Square owes their investors an explanation. If Pershing was so willing to so vocally mislead the press they may also be misleading regulators, the market and their clients.

Tuesday, January 7, 2014

Alpha-lean 2-20

Today the FTC Director of the Bureau of Consumer Protection, Jessica Rich, held a press conference to address  the FTC's recent crackdown on deceptive marketing claims for weight loss products. The FTC even offered guidelines for advertising outlets that they should consider when reviewing ads for distribution.

As previously reported by numerous news agencies, the press conference had nothing to do with Herbalife, NuSkin, Usana or GNC. The FTC announced actions against Sensa, L'Occitane, HCG Diet Direct & Leanspa, totalling around $34 million (Sensa getting crushed with $26.5M of that).

There was a lot of speculation that today's conference would deal with MLM companies operating in the weight loss arena and shares sold off sharply last week, possibly on speculation that the FTC was gunning for the MLMs. The press conference must come as a double shocker to Ackman because not only did the FTC not discuss his massive short position, but it also seems to put in jeopardy the supply of Sensa and Almond slimming cream he's been sprinkling and slathering over his firm's accounts.

The press conference was streamed live and questions were open to journalists only (legitimate of course).There were some pretty good questions from various news agencies that were relevant to the presentation they'd all just watched. One particularly off topic question that actually led to something interesting was offered by Michelle Celarier (I have embedded the excerpt below).

Through the reverberating shrill (only partially attributable to feedback), Celarier stated that several public MLM's shares fell after the FTC announced their press conference last week. Given that the FTC actions and press conference about the announced actions deal with false claims made in mainstream advertising by marketers of the products specifically discussed, and given that the companies Celarier was referring to were neither mentioned in the actions nor patrons of those mainstream advertising outlets, the question seemed doubly off topic and transparent. She continued by asking whether the FTC was looking into those MLMs since they don't use mainstream media to advertise.

Celarier asks:
Hi, yes I have a question, last week when you announced uh that you were going to be having this press conference the stocks of several publicly traded multi-level marketing companies fell because the investors obviously felt that those companies may have some problems with their diet products and these are the companies that don’t advertise in the mainstream media, they are done through distributors or word of mouth and obvious, and often, and uh, communities that  aren’t reached by the mainstream media. I was wondering if you are looking into claims in those companies and if not, why not?

Director Rich responded as follows: 

I’m just going to wait because there is some feedback. Ok um, we read those stories too. Um, I, we’re aware of what you’re talking about. Um, we can’t comment on any companies uh, that we’re not, uh, that, you know, we either haven’t brought an action against in the past or we aren't um, announcing today, because our investigations are non-public um according to, to the rules that we that we follow here, so I just can’t comment on those other companies. We do have other investigations going on in the health area but I can’t identify the companies we are investigating.

What I found extremely interesting was Director Rich's intriguing Freudian slip (you know, when you're thinking about one thing and actually say something about a mother) when she paused right after "we are not". Did she really almost just say companies we are not investigating? She did not actually say that, but I can't help but think she almost said it. She also quickly followed the stutter step by stating that there were other investigations in the health area, seeming to infer that those other investigations were also not of the public MLMs. I am also rather amused at the smirks that Rich Cleland and Mary Engle offer in response to the questioning. Engle is much more subtle, but Cleland really appears quite amused. Make of it what you will.

You can watch the full video at the following link by sorting for the newest video titled Weight Loss Products Press Conference.

There are also some interesting kernels of FTC sentiment buried in the GUTCHECK quiz the FTC is hosting as part of today's announced initiative. The GUTCHECK guidelines are meant to help media outlets spot misleading claims about weight lost products. The answer guide notes whether you answered the question correctly and why. Some of the WHY's offered are below. 

  • By focusing on necessary dietary changes, the ad avoids a false promise of easy weight loss.
  • The science is clear: Substantial weight loss requires dietary changes.
  • But ads for reduced-calorie foods aren’t covered by the "gut check" standard for clearly false weight loss claims.
  • Maintaining weight loss requires a lifetime of lifestyle changes. No product can permanently change a user’s metabolism.
  • The ad doesn’t make a "gut check" claim. It suggests permanent weight loss, but ties it to long-term changes to diet.
Two caught my eye in particular. Questions three and six.
(I added the highlight box)

The quiz, when taken in aggregate illustrates some important points. The FTC likes money back guarantees and appreciates when weight loss claims are tied to long term changes in diet. Likewise reduced calorie foods don't meet the false advertising standards and weight loss requires a change of lifestyle.

Can you think of any companies that weren't targeted by the FTC that focus on reduced calorie foods, coupled with a healthy lifestyle change and a modified diet that also offer money back guarantees?  I bet Ackman can. 

As outrageous as some of his claims have been, it's lucky for Ackman that Pershing never offered a money back guaranty for their portfolio slimming products. Can't you just see the late night infomercials now..

Do you need to lose 10, 20 or 30 million dollars??? Well you can say goodbye to that sightly wallet bulge in three quarters or less with Pershing Square's patented Alpha-lean 2-20. In today's economy, we know how hard it can be to lose money (just ask David Tepper who despite his best efforts packed another $3B around his girded loins). That is why we help support your efforts with our clinically proven* 12.5% gate formulation. Because when the going gets tough, we won't let you get going. You're practically guaranteed to lose money!!! Take it from me, I've lost over 1 billion and two lead analysts myself! But, don't just take my word for it, we've sold over 24 million shares!**
*In a trial conducted over four funds and thirteen SPV's using redemptions and Alpha-lean our clients lost over $1B in three quarters.
**these statement have not been evaluated by the FDA, FTC or SEC