Why is Third Point shorting Nu Skin?
After supporting the much-maligned Herbalife, activist investor Dan Loeb bets against a similar multi-level marketer.
Activist investor Dan Loeb, who runs the Third Point hedge fund, has taken a short position in Nu Skin (NUS), a multi-level marketing company that sells anti-aging products, reports the New York Post.
It's a bit of an about-face for Third Point, which was revealed earlier this month to have taken a stake in Herbalife (HLF), a company targeted by well-known short-seller Bill Ackman as a "pyramid scheme."
It appears that Loeb is "playing both sides of the mutilevel-marketing field," the Post writes. Both Nu Skin and Herbalife sell their products in a similar way, with distributors profiting by recruiting more people.
Third Point reportedly took a "sizable" short position in Nu Skin, with its research into the company stemming back to 2011. Loeb is said to have a "dim view" of Nu Skin, although a representative for the hedge fund declined to comment to the Post.
At the heart of the issue is concerns about Nu Skin's expansion to China, which bans multi-level marketing plans.
Those concerns are similar to ones aired by Citron Research last summer in a report that alleged Nu Skin was operating multi-level "and/or pyramid sales activity in China, both expressly forbidden by law in that country."
According to Citron, one of its contacts attended a Nu Skin conference in the Chinese city of Hefei, where the company's speaker explained its structure as "like a pyramid." Its report also flagged alleged "flimsy and unsubstantiated medical claims."
After Citron released the report in August, its shares took a beating, although they have since recovered. Since the start of 2013, its stock is up 21%.
Loeb's Third Point was revealed to have bought 8.9 million shares of Herbalife earlier this month, while Ackman's Pershing Square has a short position of more than 20 million shares.
More on moneyNOW
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
- Gold and silver futures were just modestly lower in overnight/early morning trade, but dropped sharply following the jobs report.
- Apr gold is now -1.4% at $1333.30/oz and May silver is -3.2% at $20.88/oz
- Copper futures, on the other hand, have been sliding lower since the overnight session and just hit a new session low of $3.11/lb.
- Since China is the largest importer of copper in the world, news that China saw its "first" corporate bond default, ... More
More Market News
Intel's shareholders are excited that Intel will ship four times more tablet microprocessors than last year because it may mean a higher dividend is coming.
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'