1. Herbalife Nutrition Ltd. (NYSE:HLF)
Number of Hedge Fund Holders: 33
Herbalife Nutrition Ltd. (NYSE:HLF) is a California-based company that offers health and wellness products in North America, Mexico, South and Central America, Europe, the Middle East, Africa, China, and the rest of Asia Pacific. On February 14, Herbalife Nutrition Ltd. (NYSE:HLF) reported a Q4 non-GAAP EPS of $0.53 and a revenue of $1.2 billion, outperforming Wall Street estimates by $0.19 and $70 million, respectively.
On February 3, Bank of America analyst Anna Lizzul began coverage of Herbalife Nutrition Ltd. (NYSE:HLF) with an Underperform rating and a price target of $14. The MLM business model of the company poses the biggest threat to its operations, according to BofA. They argue that it is harder to track the sales of direct sellers in the MLM model than it is for retail-based businesses. Furthermore, Herbalife Nutrition Ltd. (NYSE:HLF)’s exposure to emerging markets is another area of concern, as per the firm.
According to Insider Monkey’s fourth quarter database, 33 hedge funds were bullish on Herbalife Nutrition Ltd. (NYSE:HLF), compared to 24 funds in the prior quarter. William Duhamel’s Route One Investment Company is the biggest position holder in the company, with 10.8 million shares worth $161.3 million.
Here is what Bronte Capital has to say about Herbalife Nutrition Ltd. (NYSE:HLF) in its Q3 2021 investor letter:
“Herbalife is – as we have discussed many times before – a multi-level marketing scheme selling weight-loss shakes. The idea is simple. If I replaced six meals a week with low-calorie protein shakes and I walked an extra 15 km a week I would quickly lose 15-20kgs. It would be good for me. It is also well-nigh impossible to do.
One solution is to hire a personal trainer (usually of the opposite sex) and have them nag you. You will do tough stuff for an attractive member of the opposite sex. More realistically you could just have your friends nag you. And that is why this works so well as a multi-level marketing scheme. The person who sells you the shakes has an incentive to keep you on the diet.
We have looked at many distributors and we see a weight-loss program – implemented for (literally) millions of people – which works about as well as any weight-loss health program that ever existed. That still means it fails most of the time – but it works enough that we can be proud of owning this stock and the health benefits it provides. Herbalife, it turns out, grew well during COVID. This was initially a surprise to us – as we thought Herbalife depended on the personal touch to make the sale. But, instead, weight loss and associated social clubs moved online – and – in many cases were the main social outlet the customers had.”
Follow Herbalife Ltd. (NYSE:HLF)
Follow Herbalife Ltd. (NYSE:HLF)
Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily enewsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below. You can also check out 12 Most Profitable Mid-Cap Stocks Now and 16 High Growth Non-Tech Stocks That Are Profitable.
