원문 보기
yes if we spent this time together and we didn't talk a little about herbalife herbalife for those of you who don't know and bill was going to explain more this is a direct selling scheme um which the day i came to see you in new york you were about to or that day you were launched your phd length report on all the various problems with herbalife you then had a substantial short position for those of you who don't know finance so that's basically setting a position such that you benefit with the stock goes down a very public and nasty battle with carl icahn and then the last few days i see restructuring your position from shorts and the put options forget about that for those of you don't worry about finance and one element of this deal which was extraordinarily novel i mean the whole thing was novel was your announcement that you would donate your profits from the trade to charity um can you explain what's going on at herbalife and in particular maybe focus on that last piece which will be a bridge to some things on philanthropy you know what were you trying to accomplish and and what was this announcement about donating profits from from the trade to charity and why did you do that okay so as you mentioned uh earlier so about uh 11 years ago i came out with a white paper called is mbia aaa where i questioned the aaa rating of a company called mbia i disclosed on page one of that report that i had shorted the stock and bought cds a kind of an insurance product betting on the company's credit deterioration and caused a bit of a stir with this paper uh the company did not like the paper uh and they as the largest guarantor of new york state and city bonds decided they wanted to get back at me and they called up elliot spitzer who was the then presiding attorney general in new york and said look there's an evil guy saying that we don't deserve our aaa rating and you know moody's and s p say we're triple a who's this guy and uh moody's in s p would later lose some credibility after this but the this was a 150 to one level company i was guaranteeing a whole sort of very risky subprime cdo cdo squared ceo cube and so on and so forth and it was insolvent uh based on the exposures and a a good analyst digging deeply could determine that um and i came public with this and i was largely ignored and i kept addicts i'm persistent guy and i made a series of presentations uh uh let's see if i remember some of the names of them but anyway so i made a series of presentations and no one was really paying attention the stock was 73 the the credit the insurance just kept getting cheaper and cheaper meaning no one believed that we were right and one day at my last presentation i said oh by the way no one ever believes me on this one they say well you're short so how can we believe you because you're going to profit if it declines so i said at a conference i said okay i hereby commit to give away 100 of any personal profit i make from this investment that was that day was the high for the stock and it went from 73 to 3 a share and the credit protection went from 13 basis points to 2500 we made a billion six or seven hundred million dollars i personally made 150 million dollars and 150 million dollars uh seated uh was really the maybe the second or third grand but the big grant that created the purging square foundation so the oxford uh program is a indirect beneficiary of the failure of mbia the failure of the financial system actually has a silver lining i love that so uh the problem with short selling is it's something that even though it's perfectly legal it's something that people have a degree of discomfort with you know it's almost perceived as un-american to bet against a company and we by the way only do it in very rare circumstances and generally only when we believe when it's good for america or good for the world for the company to disappear and so uh in this case you had a company that was assuming more and more credit risk and had only a tiny capital they had five billion of capital and a trillion dollars worth of obligations they were guaranteeing and because they were triple a rated uh banks and other institutions were not holding capital against these exposures because regularly say if it's triple a rated you don't need to hold capital so this was creating in fact in my testimony of the sec if you actually there's a book called confidence game which is about my battle with the company and if you go to the conference game website all of my transcripts of testimony to the sec and the attorney general actually online you can read them and in there and this is early 2003 time frame i said there's going to be a credit crisis if you don't shut this company down no one no one paid attention anyway so uh i came across a company anyway so the i think the giving away of the the profits uh made people say look maybe this guy actually believes what he's saying people paid a little more attention and i think that helped um it's probably gonna give the money away anyway so uh it's easy to give away when you don't have it after you receive 150 million then it's really oh okay um so the second time round of consequence is a company called herbalife and uh herbalife is a company that's reportedly in the nutrition business they sell protein powder shakes they sell vitamins they sell herbal tea they sell some nitric acid type things that supposedly are good for your heart these are all commodity products they're made by five six ten different manufacturers you can buy them at your local pharmacy you can buy them at your local gnc if they have that here you can buy them at your local supermarket but the price you pay at your supermarket is about a quarter to a third of the price you pay for the herbalife products so who in the right mind would buy this overpriced stuff uh and uh the herbalife's number one product is called formula one you know no one's ever heard of formula one other than the race and it competes with a product called slimfast which i guess many people in the room may have heard of it's a product made by unilever slimfast sells 100 million 150 million a year herbalife ostensibly sells 2 billion of the same product now how is it that slim fast fails have been coming down every year and the herbalife product has been growing it sold what like what they call direct selling model and the way that works is your name is marianne so marianne comes to me and she says bill don't i look terrific i've been losing weight i've got this product i've been using and i said wow you look fantastic um and said would you like to try it sure a friend approaches me you know and said hey until you try it and then she says hey would you like to make a little money on the side and in this economy who wouldn't want to make a little money on the side and she convinces me to become an herbalife distributor and she tells me that if i sign up five friends and each of them sign up five friends pretty soon i'll be collecting royalties and i can retire rich or if i'm less ambitious i can make some little money on the side and as a unsophisticated unemployed low-income person which is the target audience for herbalife this kind of pitch from someone i trust sounds appealing and the unfortunate thing is that something an order of 99 of the people lose money uh there are about 50 that make five or 10 million a year they're about a thousand that make a few hundred thousand a year and the other 3.6 million lose you know anywhere between three hundred dollars and three eight ten twenty thirty thousand dollars and it's really a money transfer scheme it's a pyramid scheme it's like a chain letter when you got one when you're a kid you know send a dime to the following 11 people on the mailing list and then in three weeks you'll have a thousand dollars um if you think about what a ponzi scheme is it's a money transfer scheme without a product a pyramid scheme is a money transfer scheme with a product and they do smart things like put the herbalife logo on football jerseys of famous soccer stars and they back various teams that's very appealing to the hispanic community which is actually the target audience that they've been very successful with now unfortunately or fortunately pyramid schemes are illegal now here's a pyramid scheme it's got a 7 billion plus market cap it trades on the new york stock exchange it's been in existence for 33 years how is it possible that this company could be a payment scheme the answer is it is and in fact they've used their tenure as a public company and the new york stock exchange listing and the imprimatur of nobel and nobel laureate they paid 15 million dollars to to serve as representatives of the company and lacks regulatory regime in the u.s to allow this pyramid scheme to grow to an enormous size and the problem with pyramid schemes is they run out of victims and they inevitably collapse and uh i can actually prove to the audience very quickly this is a pyramid scheme and i'll do that by asking you a question so herbalife entered the uk in 1983 30 years ago okay um pepsi was been in the uk for a longer period of time but after 30 years pepsi had a good quarter last quarter and they grew their sales at three percent in the uk what do you think herbalife grew their sales last quarter in the uk at let's let's have a guess in the audience raise your hand there's no risk of being wrong yes one percent okay someone else 140 that's interesting okay 20 30 the answer is sales grew 92 last quarter and how is it possible that i mean maybe people are getting fat at an incredible rate here i mean but but absent that um the reason why i grew very quickly is they found the new immigrant population to go after and this is a product that where there's a boom as people get recruited and then when very quickly when the population gets saturated saturated it collapses right now they have you know the uk business grew enormously and then collapsed and now it's beginning to grow enormously i don't i i may be the vietnamese population um you know i was with one of my investors and said you know i think the women who work cleaning the office are herbalife distributors and i met with them and people are convinced to become of life distributors that you have to buy three thousand dollars worth of inventory in order to start getting these royalties and what it is is effectively an inventory loading uh type scheme so anyway the very so that's the what the business is um we did you know probably uh 18 months worth of work before we came public we hired one of the best law firms in the country sullivan and cromwell to do their own independent evaluation if i'm going to say publicly accomplish a pyramid scheme i certainly would like the legal backing of one of the top law firms in the country and both we and sullivan concluded it was a pyramid scheme and on december 20th i made a public presentation and there's a website called facts about herbalife you can watch the presentation there's lots of other data there and so far so good until carl icahn came along and bought 16 of the company said it was totally wrong and every it seems like every day he goes on cnbc and says what a great company it is and every time he says that the stock goes up another couple of dollars and in the meantime the company's reporting very good financial results but i'll make a prediction and i don't know if i'm back here in a year maybe it'll invite you back okay this business will be shut down okay this business will collapse i can't give you the precise date but we will have made progress to that in that direction within 12 months so that's my prediction for today you
댓글 0