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Tilson: Herbalife Has Been A Pyramid Scheme Of 'Epic Proportions' For A Long Time

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Herbalife LTD. NYSE:HLF - Tilson: Herbalife Has Been A Pyramid Scheme Of 'Epic Proportions' For A Long Time

Whitney Tilson, who manages hedge fund Kase Capital, has once again issued some scathing comments on Herbalife Ltd. HLF 0.64% and its business model following the release of documentary "Betting on Zero," which covers the entire Ackman versus Herbalife/Icahn saga.

"I've long been convinced that this is a pyramid scheme of epic, global proportions. But I think the average person, investor and regulator doesn't fully understand this, so I hope as many people as possible see this documentary," Tilson wrote in an email to clients after watching the documentary at Tribeca Film Festival.

Commenting on the documentary, Tilson said the film's "real power is its coverage of victims."

Answering on how Herbalife's "pyramid scheme" has not been shut down long ago, Tilson said:

1) "Herbalife is very complex and very clever"

2) It (and the MLM industry in general) is very powerful and well-connected"

3) "The laws and regulations governing this industry are unclear" and

4) "Until quite recently, we've been in a multi-decade era of deregulation and emasculated regulators."

"But I think the single biggest reason is that, while Herbalife is quite similar to outright frauds like Vemma and Burnlounge, it's not the same because there is a legitimate business within the Herbalife pyramid scheme," Tilson added.

Shares of Herbalife were down 0.98 percent to $57.79. The stock has gained about 7 percent this year.

DateFirmActionFromTo
Apr 2016BarclaysTerminatesOverweightOve
Aug 2015Pivotal ResearchMaintainsBuy
May 2015Canaccord GenuityMaintainsBuy

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