EXCLUSIVE: Whitney Tilson Still Short Herbalife, Says New Video Is 'Damning'
After a near 2 percent decline in Tuesday's after-hours trading, Herbalife Ltd. (NYSE: HLF) shares are volatile on Wednesday morning amid a new note from hedge fund manager Whitney Tilson of Kase Capital.
In an email, Tilson explained what he views as new "damning" information against Herbalife. Tilson also separately confirmed to Benzinga he is still short the company's stock.
"Two big bombs just dropped on Herbalife," Tilson wrote. "First, Michelle Celarier, a reporter at the NY Post, found and posted on YouTube this incredible damning 1:30 video of Herbalife CEO Michael Johnson at Herbalife's 2005 Global Management Meeting." The video is below.
As Tilson's transcript of the video shows, Johnson said Herbalife "sometimes led people down a false road," adding that "recruiting…is the most vital part of our bloodstream…the company has built its whole reputation, its whole life, on recruiting."
These comments were made a decade ago, though at the time, Johnson was committed to maintaining this strategy. "So what happens today? Today what are we? Today, we're recruiting. We're still a recruiting company, and we've got to never not be this," he explained.
Shortly after the opening bell, Herbalife shares were down 1 percent at $52.80.
The second of the two "bombs," according to Tilson, is an investigative report from a Brooklyn-based Latino advocacy organization. "Included in their report is another damning video showing footage from hidden cameras of how Herbalife distributors make outrageous claims about income," Tilson added.
That video is accessible here.
Benzinga has contacted Herbalife and is awaiting comment.
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