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(The Daily Record)   When regular people get pissed at each other, they go on Facebook or maybe get into a fist fight. When rich people get pissed at each other, they go on CNBC and start longing stocks that the other guy shorted   (dailyrecord.com) divider line 39
    More: Amusing, CNBC, Carl Icahn, Herbalife, William Ackman, short position, pyramid schemes, shareholder value, wealths  
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2607 clicks; posted to Business » on 15 Feb 2013 at 3:32 PM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2013-02-15 02:56:55 PM
I hate Icahn with a passion for what he did to TWA in the 1980s, but this is hilarious. I hope both farkers lose their ass.
 
2013-02-15 02:58:31 PM
Rich people problems
 
2013-02-15 03:06:51 PM

justtray: Rich people problems


Yes, this does seem to go well beyond first world problems.
 
2013-02-15 03:26:37 PM
i1079.photobucket.com
Go f*ck yourself...
 
2013-02-15 03:44:35 PM
TEAM ACKMAN
 
2013-02-15 03:47:34 PM
I wish there was a way for both of them to lose.
 
2013-02-15 03:50:30 PM
That's really bizarre.

On one hand, you have Pershing Square Capital Management's William Ackman stating that "After 18 months of due diligence, we have concluded that it is a certainty that Herbalife is a pyramid scheme."

On the other, Icahn picking up a 13% stake and talking about going private?

One of these 2 is going to lose a lot of money. If Herbalife goes private, shorts are going to get roasted badly, their loss potential is only limited by how high the stock goes. Hell, Ackman might already be down more money than he used to short, and might be getting a margin call.
 
2013-02-15 03:52:49 PM
Sir Larry Wildman approves approves of this tactic.
www.wearysloth.com
 
2013-02-15 03:52:53 PM
Old news is great.
 
2013-02-15 03:56:15 PM
I was not aware that "longing" could be used as an antonym of "shorting".  But I guess it's a perfectly cromulent word.
 
2013-02-15 04:08:57 PM
Does anyone actually use Herbalife? i haven't even seen their product since probably the mid-90s.

/soccer doesn't count
 
2013-02-15 04:12:47 PM
How rich people make money:

Step 1) Short a stock
Step 2) Go to the national media and badmouth the company as a pyramid scheme
Step 3) Watch as people start selling the stock thanks to your announcement
Step 4) Profit!

I think Herbalife is a pyramid scheme, but if Ackman thought so too he should have made the short and then STFU about it.  Going on television and screaming about how terrible the company is seems a little shady.
 
2013-02-15 04:37:56 PM
Really, Captain Herbalife?
 
2013-02-15 04:40:22 PM

rugman11: How rich people make money:

Step 1) Short a stock
Step 2) Go to the national media and badmouth the company as a pyramid scheme
Step 3) Watch as people start selling the stock thanks to your announcement
Step 4) Profit!

I think Herbalife is a pyramid scheme, but if Ackman thought so too he should have made the short and then STFU about it.  Going on television and screaming about how terrible the company is seems a little shady.


Well, if it's actually a scam, I'd say telling people about it is more than justifiable.
 
2013-02-15 04:53:04 PM

aaronx: I wish there was a way for both of them to lose.


Sounds like there might be! If I read it right, if the company goes private, it would fark over the guys who shorted. So if Icahn helps them take it private, it'll screw Ackman... then if the company really IS a pyramid scheme, hopefully Icahn gets taken for a ride as well!
 
2013-02-15 04:57:12 PM
Longing is not a thing. Shorting is.

learn the lingo.
 
2013-02-15 05:06:13 PM

exparrot: Longing is not a thing. Shorting is.

learn the lingo.


uhhhh.... know how i know you dont work in the industry?
 
2013-02-15 05:24:23 PM

poisonedpawn78: uhhhh.... know how i know you dont work in the industry?


Because he's a parrot, and parrots aren't allowed to take the Series-7?
 
2013-02-15 06:01:33 PM

FrancoFile: I was not aware that "longing" could be used as an antonym of "shorting".  But I guess it's a perfectly cromulent word.


Its awkward, but yeah... it is a perfectly fine way to describe going long on a security or derivitive.
 
2013-02-15 06:29:04 PM

rugman11: How rich people make money:

Step 1) Short a stock
Step 2) Go to the national media and badmouth the company as a pyramid scheme
Step 3) Watch as people start selling the stock thanks to your announcement
Step 4) Profit!

I think Herbalife is a pyramid scheme, but if Ackman thought so too he should have made the short and then STFU about it.  Going on television and screaming about how terrible the company is seems a little shady.


A guy i know is selling it and quit his other job to do it "full time" Shame because he has 3 kids and i dont think selling $2 shakes will feed them. Green Bay isnt a health conscious area
 
2013-02-15 07:08:52 PM

"Blue Horseshoe loves Herbalife. "


Jeebus, lookit all that acient computer equipment. It's like looking at cavemen's tools.


24.media.tumblr.com

 
2013-02-15 07:09:16 PM

aaronx: I wish there was a way for both of them to lose.


There is.

Icahn buys enough HLF to squeeze Ackman out of his position, or he buys the company outright. Ackman buys back his short at a tremendous loss, driving the price higher, forcing Ackman to eat a massive loss. A few weeks later, suppose it turns out that Ackman's underlying thesis (that HLF is a pyramid scheme) was right all along. In that scenario, Ackman's toast because he covered his short before being able to profit from it, and Icahn's just as toasted because he's holding the bag.

Both of these guys are playing a dangerous game. It's tremendously exciting and entertaining to watch from the sidelines. The winner, if there is one, will be the one who was not only correct on the thesis, but who has enough capital to stick to that thesis until it plays out.

When the Tyrannosaurs and the Stegosaurs of the world decide to duke it out, the right move for the small mammals is to find a niche in the rocks, and only emerge after the shaking has stopped. Every once in a while, the fight is called on account of asteroid, and all combatants lose.
 
2013-02-15 07:17:30 PM

exparrot: Longing is not a thing.


farm6.staticflickr.com
 
2013-02-15 07:42:42 PM

YixilTesiphon: rugman11: How rich people make money:

Step 1) Short a stock
Step 2) Go to the national media and badmouth the company as a pyramid scheme
Step 3) Watch as people start selling the stock thanks to your announcement
Step 4) Profit!

I think Herbalife is a pyramid scheme, but if Ackman thought so too he should have made the short and then STFU about it.  Going on television and screaming about how terrible the company is seems a little shady.

Well, if it's actually a scam, I'd say telling people about it is more than justifiable.


And he began his announcement by saying he was shorting the stock.  He was open about it.
 
2013-02-15 08:23:45 PM

TheRealist: Does anyone actually use Herbalife? i haven't even seen their product since probably the mid-90s.


There's an independent Herbalife-pushing 'health club' in almost every Mexican-oriented strip mall in my area.  The 'clubs' are a recent thing, they aren't allowed to use Herbalife or the HLF logo on their storefronts, but they're usually all painted that pale green and have HLF stuff you can see from the window.  They're still the favorite MLM bullshiat among the middle-aged hispanics, but if you don't speak Spanish, you might never notice it.

Ackman's presentation was interesting.  They burn through new markets fast. Chile or Uruguay... OMG Herbalife!... then, 6 months later, wtf were were we thinking?    They're down to trying to sign up suckers in Papua New Guinea and Malawi at this point, which was a core point of Ackman's thesis.  India is burned out already (though plenty of idiots to fall for the next MLM).  Basically all MLMs have been banned in China since the first wave of them started riots in the 90s.  So, they're near the natural end of any pyramid.
 
2013-02-15 08:38:00 PM

poisonedpawn78: exparrot: Longing is not a thing. Shorting is.

learn the lingo.

uhhhh.... know how i know you dont work in the industry?


I've never heard of it called "longing", and I've passed the Series 6, 7, 9, 10, 63, and 65... But then again, "longing" being the opposite of "shorting" does sound logical. Hmmm... I learned something new today?
 
2013-02-15 08:47:00 PM
You can "short" a stock, but no one says "I'm longing a stock". You can "be long".
 
2013-02-15 08:48:58 PM

poisonedpawn78: exparrot: Longing is not a thing. Shorting is.

learn the lingo.

uhhhh.... know how i know you dont work in the industry?


You clearly don't. Being long is a thing. "Longing" isn't.
 
2013-02-15 09:04:39 PM
Icahn has Ackman by the balls. At this point it doesnt matter if the company is legit or not. Icahn and Loeb can just keep buying.

a stocks price is infinite theoretically.
 
2013-02-15 09:33:10 PM

SacriliciousBeerSwiller: poisonedpawn78: exparrot: Longing is not a thing. Shorting is.

learn the lingo.

uhhhh.... know how i know you dont work in the industry?

You clearly don't. Being long is a thing. "Longing" isn't.


*checks pants* yep, long.

*looks at picture of chocolate ice cream* yep, longing.
 
2013-02-15 09:45:05 PM

TheRealist: Does anyone actually use Herbalife? i haven't even seen their product since probably the mid-90s.

/soccer doesn't count


Herbalife doesn't sell herbs anymore as much as they sell 'memberships' and 'how to sell' videos, hence the accusations of being a pyramid scheme.
 
2013-02-15 10:19:46 PM

Lawnchair: TheRealist: Does anyone actually use Herbalife? i haven't even seen their product since probably the mid-90s.

There's an independent Herbalife-pushing 'health club' in almost every Mexican-oriented strip mall in my area.  The 'clubs' are a recent thing, they aren't allowed to use Herbalife or the HLF logo on their storefronts, but they're usually all painted that pale green and have HLF stuff you can see from the window.  They're still the favorite MLM bullshiat among the middle-aged hispanics, but if you don't speak Spanish, you might never notice it.

Ackman's presentation was interesting.  They burn through new markets fast. Chile or Uruguay... OMG Herbalife!... then, 6 months later, wtf were were we thinking?    They're down to trying to sign up suckers in Papua New Guinea and Malawi at this point, which was a core point of Ackman's thesis.  India is burned out already (though plenty of idiots to fall for the next MLM).  Basically all MLMs have been banned in China since the first wave of them started riots in the 90s.  So, they're near the natural end of any pyramid.


Incorrect. In China MLMs had to go to store-based distribution for a while but that law was rescinded a few years ago and they are now legal there. Last report I read (several years ago in school) China was the biggest market for Amway, for example, with both dedicated stores and traditional MLM distribution occuring. Not too surprising as the Amway corporate folks were some of the first US businessmen to do a lot of business in China and taught most of the others how to set up manufacturing and network locally. Apparently all they make in China is stuff for the Chinese market, which is a lesson that they didn't impart to the other companies. But yeah, MLMs (carefully regulated) are a thing in China.

/read some studies on MLMs back in school
//several business school textbooks I read were very favorable on the business model for efficient marketing and distribution
///they provide very good profits for the manufacturers, which is a low-profit business in general
 
2013-02-15 10:20:29 PM

TheRealist: Does anyone actually use Herbalife? i haven't even seen their product since probably the mid-90s.

/soccer doesn't count


Good question. Their products received tremendous bad press multiple times and their distributorships of the past were compared to pyramid schemes. Common sense would tell one interested in this type of thing to go with Amway.
 
2013-02-15 11:02:46 PM

TheRealist: Does anyone actually use Herbalife? i haven't even seen their product since probably the mid-90s.

/soccer doesn't count


That was actually a big part of Ackerman's argument, that the vast majority of Herbalife users are Herbalife distributors.  Any MLM company can only succeed when its distributors are selling to non-distributors and he doesn't think there are very many non-distributors buying this stuff.
 
2013-02-16 07:18:07 AM
Did I read this right?  You can "borrow" a stock and sell it, hoping it will go down and then buying it back for a lower price and then pay the broker the original price that you "borrowed" it for?  Is this legal?  That's some scary shiat.

Oh, and I'm not a financial wizard, obviously.
 
2013-02-16 10:11:36 AM
These 1%-ers are getting truculent!
 
2013-02-16 11:25:57 AM

Bigdogdaddy: Did I read this right?  You can "borrow" a stock and sell it, hoping it will go down and then buying it back for a lower price and then pay the broker the original price that you "borrowed" it for?  Is this legal?  That's some scary shiat.

Oh, and I'm not a financial wizard, obviously.


Sort of. Say if I have 100 shares of X; I loan out the 100 shares to you and then, tomorrow, you give me back 101 shares. You're assuming the price will go down in the meantime and the 101 shares will be cheaper than the 100 shares. Since I'm following the long haul, for me it's just a free share.

Does that sound simpler? It's basically a loan of shares instead of money.
 
2013-02-16 12:27:16 PM

Sim Tree: Bigdogdaddy: Did I read this right?  You can "borrow" a stock and sell it, hoping it will go down and then buying it back for a lower price and then pay the broker the original price that you "borrowed" it for?  Is this legal?  That's some scary shiat.

Oh, and I'm not a financial wizard, obviously.

Sort of. Say if I have 100 shares of X; I loan out the 100 shares to you and then, tomorrow, you give me back 101 shares. You're assuming the price will go down in the meantime and the 101 shares will be cheaper than the 100 shares. Since I'm following the long haul, for me it's just a free share.

Does that sound simpler? It's basically a loan of shares instead of money.


What you said, with a couple of caveats.

You pay back 100 shares, not 101 shares. You don't even pay interest on the "loan." If you sell short 100 shares of XYZ at $20, you have $2000 cash in your account, and back when interest rates weren't zero, you could even earn interest on that cash. (This was balanced by the fact that if XYZ paid a dividend, you had to pay out the dividend as part of the loan.)

"He who sells what isn't his'n, Must buy it back or go to prison."

The scary part comes in because you owe your broker, not $2000, but 100 shares of XYZ. If you wake up the next morning to discover XYZ has bounced back to $25, spiked up to $35 on takeover rumors next week, and was finally bought out at $40, you still owe your broker 100 shares. Whether those 100 shares cost $2500, $3500, or $4000 depends on when you're willing to admit you were wrong.
 
2013-02-17 10:28:41 AM

Bigdogdaddy: Did I read this right?  You can "borrow" a stock and sell it, hoping it will go down and then buying it back for a lower price and then pay the broker the original price that you "borrowed" it for?  Is this legal?  That's some scary shiat.

Oh, and I'm not a financial wizard, obviously.


the amount of risk one takes on in shorting is scary. without leverage, your gain is limited to 100%, but losses are unlimited. to juice returns you have to add lots of leverage, but the risk for huge losses also multiplies.

there is a much less risky way to profit from declines in stock prices: put options.
 
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