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
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Herbalife Longs Shouldn't Breathe Too Deeply:

NEW YORK (TheStreet) -- Herbalife (HLF - Get Report) long investors got some oxygen Monday. But they may be wise not to breathe too deeply, say investors on

$HLF going up which means a VIP did not get out safely. Sell on every pop. - nytrader60 (@nytrader60) Apr. 14 at 08:04 AM

Shares of the nutrition company rallied more than 6% after the company said it was not, to its knowledge, under investigation by either the FBI or Department of Justice. The Financial Times reported Friday, citing sources, that Herbalife was under investigation by the FBI, sparking a near 15% drop in shares.

"We have no knowledge of any ongoing investigation by the DOJ or the FBI, and we have not received any formal nor informal request for information from either agency. We take out public disclosure obligations very seriously. Herbalife does not intend to make any additional comments regarding this matter unless and until there are material developments." Despite the statement, cashtaggers noted that the FBI probably wouldn't announce that it was investigating a company for criminal actions until it filed charges. Advanced notice could spur a company to hide evidence of bad practices. Sentiment on the stock stood at 72% bearish, according to StockTwits' analytics.

$HLF Only a matter of time before the FBI and doj formally announce the investigations. - Unemployed College Grad (@win2betmore) Apr. 14 at 09:57 AM

$HLF Risk reward for today. New News can only take this down from here. No other way. lol. Short it at will. - Mike (@scottsdalem) Apr. 14 at 10:25 AM

Herbalife is facing a civil investigation by the Federal Trade Commission. The FTC is looking into claims by some Herbalife distributors and, most notably, short seller Bill Ackman that the company is, essentially, a pyramid scheme. Ackman argues that Herbalife makes money by selling marketing kits for its products to distributors who, primarily, sell those kits to other distributors with very little end consumption.

Herbalife maintains that it is a thriving company that relies on individual distributors to sell its diet products and nutritional shakes, much like Avon, $AVP, sells beauty products. Of course, some investors argue that the initial story in the Financial Times was based on bad information. They doubted that law enforcement had leaked news of an investigation and instead pointed the finger at Ackman and other shorts for spreading questionable information.

$HLF Just know that the news that came out about the investigation just gave short sellers a chance to cover and move on had no merit to it - BiopharmaPro (@BiopharmaPro) Apr. 14 at 11:44 AM

$HLF Sometimes where there's smoke there's just a charlatan blowing smoke.#Ackman - wolfgang von helsing (@vonHelsing) Apr. 14 at 11:40 AM

But most investors said that the FTC's civil investigation wasn't likely the only one. They waited for more news and the stock to trade down because of it.

$HLF Reality is very distant here. When you have FTC, DOJ, and FBI in ur house, one of em is going to find something. That's a fact Jack. - Mark S (@TechTrader17) Apr. 14 at 10:17 AM

At the time of publication the author had no position in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

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

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
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!
HLF $30.44 0.00%
AAPL $129.09 0.00%
FB $79.75 0.00%
GOOG $571.34 0.00%
TSLA $197.32 0.00%


DOW 18,288.63 +155.93 0.86%
S&P 500 2,117.39 +12.89 0.61%
NASDAQ 5,008.0960 +44.5690 0.90%

Partners Compare Online Brokers

Free Reports

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