Ackman Isn’t Backing Down From His Herbalife Ltd. (HLF) Bet

Like Herbalife, both Nu Skin Enterprises, Inc. (NYSE:NUS) and USANA Health Sciences, Inc. (NYSE:USNA) use multi-level marketing to sell their products. And although Ackman has not targeted them, if he were to be right, the legitimacy of their businesses could be thrown into doubt.

Citron Research has targeted both Nu Skin and USANA in the past, arguing that the companies are running pyramid schemes in China. Unlike the US, Chinese law forbids multi-level marketing companies entirely.

Along with being a Herbalife bull, DA Davidson’s Ramey is also bullish on Nu Skin and USANA. In a note released last month, Ramey reiterated his $80 price target on USANA and his $78 price target on Nu Skin.

Multi-level marketing stocks in focus

At any rate, all three of the major multi-level marketing stocks should remain volatile in the coming months. Releases from Pershing Square and Herbalife’s management could continue to shift the stocks from session to session, but the larger, long-term question centers around the FTC.

If Ackman is to be right, the FTC will have to launch an investigation into Herbalife and subsequently move to shut the company down. However, If the investigation never comes, shares could continue to slowly drift higher.

Joe Kurtz has no position in any stocks mentioned. The Motley Fool has the following options: Long Jan 2014 $50 Calls on Herbalife Ltd. (NYSE:HLF).

The article Bill Ackman Isn’t Backing Down From His Herbalife Bet originally appeared on Fool.com and is written by Salvatore “Sam” Mattera.

Salvatore “Sam” is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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