Herbalife Ltd. (HLF): Buy or Sell?

NuSkin Multilevel Marketer with Strong Stock Performance

NuSkin is another multilevel marketing company. NuSkin develops and distributes anti-aging personal care and nutritional products. It has a similar ROA but mush less debt. There has been short interest in this for similar reasons as Herbalife. However, the stock has done extremely well over recent years until a stumble early in 2013 from which the price has largely recovered. Its stock price is up 36% in the last year.

Conclusion

Herbalife is a tough stock to call. With the large short position of Ackman, it is hard to imitate a short position for the near-term at these levels. While Ackman makes a case to hold it as a long term short, it is hard to see the company stumbling significantly over the next 12-18 months to make shorting the stock worthwhile. An FTC investigation would certainly act as a catalyst for shorts, but it does not appear imminent either. With a lot of the hedge funds that went long and drove the shares up over the past month likely taking profits, it is probably best to stay on the sidelines at this time.

Mike Thiessen 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 Herbalife: Buy or Sell? originally appeared on Fool.com and is written by Mike Thiessen.

Mike 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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