In notes reiterating "buy" recommendations, analysts at Cannacord Genuity and R. Riley & Co. made a comparison between Ackman's short and a similar trade made by convicted fraudster and ponzi scheme artist Barry Minkow.

Meanwhile, D.A. Davidson analyst Timothy Ramey questioned whether Ackman understimates the demand for Herbalife products because of his residence in Chappaqua, N.Y., an upscale New York suburb that may be sheltered from the health concerns of the ordinary public.

Ramey of D.A. Davidson said in a Dec. 21 note to clients that he disagreed with Ackman's overall argument that Herbalife draws the bulk of its revenue from distributors involved in the company's multi-level marketing arrangement -- a revenue mix that could fall under "pyramid scheme" definitions detailed by the Federal Trade Commission -- and feels the majority of the company's sales count as bona fide retail demand.

On a more fundamental basis, Bank of America Merrill Lynch analyst Christopher Ferrara and Linda Bolton Weiser of R. Riley & Co. argued Herbalife had the financial flexibility to launch a large stock buyback, which might drive earnings per share growth. Ferrara, for instance, highlighted in a Dec. 21 note to clients that Herbalife is authorized to repurchase $1 billion in stock, or roughly 24% of the company's shares outstanding.

Monday's disclosure by Herbalife may dampen expectations of a large buyback to cut against Ackman's Herbalife short trade. Its hiring of Moelis & Co. may also raise new questions, as investors await a direct response to Ackman's allegations.

For more on the battle between Herbalife and Ackman, see why they're getting personal.

-- Written by Antoine Gara in New York

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