Ira Sohn Ein-Sanity: Herbalife Lives!

  • Posted by on May 16th, 2012 at 4:49 pm
  • Comments: 0

For background of the David Einhorn – Herbalife situation/non-situation, please see my prior posts:

-On Einhorn and Herbalife

-Herbalife Highlights Lazy Trader Nation

So I’m writing this post for one reason:  When David Einhorn took the stage at the Ira Sohn conference to pitch his latest ideas, the info started erupting via Twitter.   Everyone was saying he was pitching a short in $MLM.   As in Martin Marietta.   But hold on a second – this is absolutely friggin’ nuts – could this be the greatest case of “Telephone” error ever – where info get lost in translation?  I wasn’t at the conference, but I immediately thought that Einhorn could have put up a slide about shorting MLMs – Multi-level-marketing companies – a segment in which $HLF is a head honcho!  That’s what everyone has been suspecting for the last two weeks.

It turned out that Einhorn was indeed shorting $MLM, not MLMs, but the irony of this trade was searing a hole in my brain.    Was Einhorn saving his $HLF MLM short for last?  Was he just demonstrating a sick sense of humor?  Was he going to say “Speaking of $MLM, I have another MLM that I am short…”   Was his entire call into the $HLF conference call a little treasure map for investors to decode:  $HLF –> multi-level-marketing questions –> MLM –? $MLM !!!!????

Here’s a 2 hour chart of $HLF during crunch time:

HLF in the Ein-zone

I actually managed to buy some $HLF as Einhorn finished his presentation ($47.80), which I sold 7 minutes later ($49.99) – I could have held it and made another $3, but hey – I feel like complaining about it would be like complaining that I won the lottery but didn’t win ENOUGH… I’ll take my $2+ per share and move on.  Why?  Well, because in this case I’m part of Lazy Trader Nation.  I have NOT researched Herbalife, and I don’t want to own it as a core position.   I haven’t nullified any potential MLM bear concerns with my own research into the company, and I don’t know that Einhorn won’t drop a bomb on the company at any moment with research that he may have done.   He presents his short theses more often than just at Ira Sohn…

Since I haven’t done the work on $HLF, and he’s been sniffing around, and this entire situation stinks to me, I’m gonna try not to get caught holding a grenade-sans-pin. (note:  I’m not saying that $HLF is a grenade or that David Einhorn is short it – pay attention here: I’m saying THAT I HAVE NO IDEA.  hence: no position!)

I had some fun with @richallenSF on Twitter, imagining the insanity if Einhorn came out for an encore short presentation at Ira Sohn.  After the MLM-$MLM situation, nothing would surprise me anymore:

-KD

at the time of this writing I have no positions in $HLF or $MLM