MNNPI, Material Non-Non-Public Information

Christine Richards published a somewhat bizarre series of claims in Seeking alpha this morning under the title "Herbalife's Top Distributors Hold Warehouses Full Of Product In Mexico - Why?"

Christine Richards claimed that sell side analysts Tim Ramey (Pivotal Research) and Meredith Adler (Barclay's) have been recipients of selectively disseminated material non-public information. She claims, among other things that 

• "The existence of field sales and the company’s plans to crack down on them have been inadequately and selectively disclosed to investors."

She then attempts to bolster some of her other claims about inventory loading with the aid of the captioned image below, which shows Humberto Jaimes addressing a group of people with a large cluster of boxes behind him. MY GOD! This isn't just a garage full of Herbalife, it's virtually the cave of the Forty Thieves. Behold the Herbalife treasures! The audience appears to be in imminent danger of hundreds of boxes of inventory collapsing on top of them. 

"Herbalife Chairman's Club member Humberto Jaimes lectures at his training center in Tecamac, Mexico, which is filled with enormous volumes of Herbalife products"-caption and image from Seeking Alpha.

Unsurprisingly its another sleight of hand from someone that's been described as "Ackman's personal biographer".  Yes, there are boxes, but Tecamac is not filled with an enormous volume of Herbalife products. Richards likely wants you to believe that because that would make the optics of her channel stuffing arguments seem more valid and real, but if you dig just a little bit deeper, you find her characterization is entirely inaccurate. What Humberto is standing in front of is actually box after box of Oster blenders(probably for making Herbalife shakes) and water heaters(probably for aloe tea). I have no idea whether or not he is selling these or giving these away, but either way it would seem to indicate pretty significant demand for Herbalife products in the Tecamac region. In other pictures taken in the same training center in mid-November of 2014, you can actually the blenders much more easily, as well as the very conspicuous lack of 'enormous volumes' of Herbalife products. You can look out among the crowd to see for yourself it's more a vast warehouse which is full of people. Either they are all sitting on boxes of inventory or Richards is wrong again.

You can also easily pull Google satellite images for yourself to dispel any concerns that maybe this is just the front of some vast warehouse network hidden behind all those people. If you're lazy, you can just look at the ones I've included below to see that this training center seems to be no more than a training center full of people and not some vast underground network of illicitly stuffed inventory. In the street view its also easy to see the training center is a large building with ample parking, but doesn't seem to have warehousing capabilities.

And just for kicks, I threw in a video showing the kinds of nefarious goings on that typically occur in El CAT.

Esta increible tecamac
Posted by Centro De Apoyo Tecamac on Thursday, September 11, 2014

But what about Ms. Adler and Mr. Ramey you say? Well, turns out they did in fact have a heads up, as did about 600,000 other people in late October of 2014, when Herbalife announced its Sales and Marketing Plan enhancements, which the company also selectively discussed in it's November 3rd, 2014 earnings release and SEC filings.

It's somewhat comical to think that Ackman and his troupe have literally spent millions and millions in their short campaign against Herbalife, but have worse intelligence than any ordinary Herbalife member gets with their $60.00 IBP purchase. 

"May the best analyst win."