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Loeb Rumored to Short Nu Skin, Herbalife Rival
Posted by: Dianne Tordillo (IP Logged)
Date: January 22, 2013 05:17PM
After taking an 8 percent stake in Herbalife (HLF) earlier this month, a company that’s on several hedge fund managers’ shorting lists, including Pershing Square’s Bill Ackman, activist investor Daniel Loeb of Third Point has allegedly made a baffling decision to short Herbalife rival, Nu Skin Enterprises (NUS).
Nu Skin is a company that produces and sells anti-aging and nutrition products. And just like Herbalife, it operates through a multi-level marketing business model.
Although Herbalife has been labeled a pyramid scheme by multiple investors who have shorted the stock, Loeb has countered the claim saying he “believes Herbalife operates squarely within the FTC’s boundaries,” as originally quoted by the NY Post.
While some may be scratching their heads with Loeb’s latest move, the Post reports that Loeb’s decision to short Nu Skin has something to do with Nu Skin’s growth in China being hindered by the country’s prohibition of multi-level marketing firms.
In a report done by online stock reviews site, Citron Research, the company claimed that Nu Skin was operating its business illegally in China, and was in apparent violation of FDA and FTC regulatory laws in the U.S.
Loeb has allegedly been researching the company since 2011.
Nu Skin operates in 53 international markets, including America, Asia Pacific, Europe, Africa and the Middle East. It has more than 913,000 active independent contractors according to nuskin.com.
On Jan. 16, Nu Skin published an update in regards to its fourth quarter fiscal results. For the 2012 year, the company estimated revenue of $2.17 billion, a growth of more than 24 percent comparable to prior year. Earnings growth is expected to be 30 percent, while dividend payment is expected to increase by 50 percent.
The company’s dividend has increased in payment by 140 percent in the last three years.
According to its 10-Year Financials, Nu Skin has had a 10-year EBITDA growth rate of 10.9 percent and a 10-year revenue growth rate of 9.3 percent. The stock has a dividend yield of 1.8 percent, a P/E ratio of 12.4, a P/B ratio of 4.7 and a P/S ratio of 1.4.
In three years, Nu Skin’s market value has gained 72.88 percent. However, the news concerning Loeb has sent Nu Skin’s stock lower this afternoon, down 0.13 percent minutes before market close. Its stock price is currently $44.89.
Gurus with long positions in the stock include Chuck Royce, Joel Greenblatt, Paul Tudor Jones and Jim Simons (NUS: Guru Holding History).
Although GuruFocus does not report Loeb’s short positions, you view his current portfolio at Daniel Loeb’s Portfolio. Also view his undervalued stocks, high yield companies and top growth stocks.
To view related articles, visit the following GuruFocus articles and submissions:
Ackman’s ‘Pyramid Scheme’ Claim Continues to Suck the Life Out of Herbalife
Daniel Loeb Counters Bill Ackman by Taking 8 Percent Herbalife Stake
Talks of Carl Icahn Getting a Piece of Herbalife, Joining Loeb in Long Position
And the War Continues: Short Seller Jim Chanos Comments on Herbalife
Guru Discussed: Daniel Loeb: Current Portfolio, Stock Picks
Stocks Discussed: HLF, NUS,