This week Nu Skin (NYSE:NUS) and Herbalife (NYSE:HLF) investors were treated to yet another installment of Australian Hedge Fund Manager John Hempton's thoughts about MLMs here. John compared the working capital cycles of these two companies and concluded that Herbalife is healthier than Nu Skin. "Look at all that free cashflow!" John gushed. Of course, this exercise would be analagous to placing an elephant and a hippopotamus on a scale in order to point out that the hippo is less heavy.
Mr. Hempton blocked me on Twitter this week and called me a racist. This allegation strikes me as ironic for someone invested in a company that targets Latinos with the sale of a mathematical fallacy. Still, as any good psychotherapist will tell you - we must learn to forgive others for their own dissonance. John continues to cling to the notion that Herbalife sells lots of meals annually and offers a comforting and psychologically rewarding weight loss service to obese people around the world. Herbalife is "just like McDonalds" John argues. This might be true if only McDonalds committed franchise fraud too. Further.......READ MORE
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