Mediaboss Marketing

By Chris Burritt - Tue May 01 22:17:50 GMT 2012

Jonathan Fickies/Bloomberg

David Einhorn, president of Greenlight Capital Inc.

David Einhorn, president of Greenlight Capital Inc. Photographer: Jonathan Fickies/Bloomberg

Herbalife Ltd. (HLF), a maker of nutritional supplements, dropped 20 percent after hedge-fund manager David Einhorn asked why it has stopped providing information about distributors in filings.

Herbalife fell $14.02 to $56.30 at the close in New York, its biggest drop since Feb. 25, 2009. The company had gained 36 percent this year before today.

Einhorn, known for short-selling Lehman Brothers Holdings Inc. before the firm collapsed in 2008, has more recently put pressure on companies such as Green Mountain Coffee Roasters Inc. (GMCR), questioning its accounting disclosure in October. Today, he queried Herbalife executives about the companys distributors on a conference call with analysts and investors.

Chief Financial Officer John DeSimone told Einhorn on the call that when he took over as finance chief in January 2010 he decided to stop breaking out information on distributor groups as it isnt valuable information to the business or to the investors. Herbalife can easily provide the exact same breakout going forward, DeSimone told Einhorn.

That sort of follow-up would be helpful, Einhorn said on the call, which followed the companys report on its first-quarter results.

Einhorn, chairman of Greenlight Capital Re Ltd. (GLRE), asked for a breakdown of sales to Herbalifes distributors and to its consumers. He also asked for an explanation of financial incentives given to supervisors who sign up new distributors.

Excerpt from:
Herbalife Falls After Fund Manager Queries Disclosure