Herbalife (NYSE:HLF) is about to reveal earnings results. Ponder this Bear Case Scenario
Management has been unable to lay to rest assertions that it is running a pyramid scheme.
Herbalife is loading up with over a billion dollars of debt mainly for financial engineering reasons. The covenant’s anticipate stratospheric debt to equity ratios. Not the way to create shareholder value.
Herbalife has been around for a long time. Why haven’t they attracted a red-hot take-over offer from someone who understands their markets.
China which looks like a huge market may turn out to be a major problem. All that glitters is not gold.
George Gutowski writes from a caveat emptor perspective.