How Bill Ackman Misfired With His Herbalife Lecture

Did Bill Ackman just deal a deathblow to Herbalife, or pay $50 million to prove that a sucker is born every minute? In a presentation on Tuesday that he dubbed “the most important of his career,” the hedge fund manager lobbed a fresh round of missiles at the company he has bet $1 billion against. His main target: the shake maker’s lucrative “Club 100″ training program, which Ackman described as a Bernie Madoff-style scheme that dupes participants with false hopes, misleading claims, and high costs. For added measure he threw in references to the Nazis, Enron, the mafia, drug cartels, and assorted celebrities like David Beckham and Madeleine Albright. He also called Herbalife Chief Executive Michael Johnson a criminal more than once.

And yet Ackman’s latest attack seems to have missed the mark. By the end of his three-and-a-half-hour presentation, Herbalife’s stock was up 16 percent—more than recovering its 11 percent drop a day earlier, when he’d promised revelations that would make the company collapse. Instead, Ackman and his team described tactics that sounded a little sleazy, too familiar, and hardly unique to Herbalife. Rather than reinforcing his premise that Herbalife is a pyramid scheme, he may have raised the bar higher in proving his case. Here’s what Ackman didn’t do: