This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Will Herbalife End Up a Penny Stock?

Stocks in this article: HLF NKE DIS AAPL RIMM

NEW YORK ( TheStreet) -- By now, if you haven't heard of Herbalife's (HLF) products, you've heard a lot about the stock as well-known hedge fund manager William Ackman recently shared his bearish views in great detail.

You can find the presentation and slides at

I read the presentation and listened to Mr. Ackman state his case. I wasn't convinced and finished with the impression that I just read a "hit piece" relying more on emotion than logic.

I understand why many people don't like network marketing. I am one of them. I can't tell you how many times I have been approached about a "business opportunity." I have even received a card from a young lady selling Amway products in Beijing (I kept that card).

But even though I have no desire to join a network marketing program, it's advantageous for some people to do so.

Also, the low success rate of Herbalife representatives that Mr. Ackman presents as damning evidence isn't that different from those in other fields.

For example, the percentage of insurance salespeople who make more than $100,000 a year is probably similar to the percentage of successful Herbalife representatives.

Most people know the odds are against a new insurance salesperson, but that doesn't stop companies from letting prospective agents know the "incredible income potential" available.

Usually a person must become licensed before selling insurance. To become licensed, they often must attend and pay for a week or more of classes. All things being equal, the cost to test an individual's entrepreneurial fortitude is much lower with Herbalife than it is with insurance sales.

Same holds true for another popular self-employed sales job, the real estate agent. For most new agents, the start-up costs are much greater than they are with Herbalife. I doubt that more than 1% of new agents go on to have other agents working for them and make more than $100,000 a year.

The odds of success in starting a small business are low, especially for people with limited financial resources. This is true for network marketing and most other businesses. Success in sales is not easy for most people, and the product is not nearly as significant as the salesperson's attitude.

1 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs