Betting on Zero Page #3

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whatever you want to.

The rags-to-riches story

that's there for everybody.

Herbalife has done a great job

reaching into

the hispanic market.

The lower-income immigrants

have these hopes to find

a successful life here

To set up a small business.

Herbalife says, "yeah,

and here's how

you're gonna do it."

Okay, so, we'll get

everybody on one side.

Julie contreras:

The beginning, for me,

was senor phillipe colon.

Him and his wife called me,

talked about herbalife.

I didn't know what it was,

or understand.

When I went to his home,

it was completely filled

with product.

He had it in his living room,

his kitchen...

He had it in his basement

and in his garage.

That's how much product he had

That he could never move.

But he continued

to pay into it

Because he was told

that he would make more money.

And he's a very ethical man.

So he said, "I notice

after this time, julie,

that this is a scam.

"and I want my money back,"

he said.

So I just said,

"you know what?

Let's do a press conference

"and looking to see

if there were any more

victims out there."

And of course

when we made that call out,

the victims responded.

Where did you want to meet?

In here?

They're gonna come here.

They're all gonna

come up here.

They'll be arriving soon.

Okay, so, this is an estimate,

but I'm gonna give you...

-Contreras:
Okay, that...

-This is unbelievable.

And they're just

regular people, right?

Contreras:
They're regular

people and all the receipts

and everything to support it.

Jay reyes:

You've got a real mess here.

Contreras:
A majority of

the group are undocumented.

So, they live

in that insecurity.

They are people

who worked very hard,

people who are paying taxes,

And people who were violated.

And they have a right to seek

what they call "justicia."

justice.

Contreras:

She has suffered a lot

Because her husband

continuously reminds her

About the $8,000

that she owes to them.

Contreras:

Many immigrants migrate here

for a better life,

And if people want to prey

on their lack of

knowledge and finances,

I find that despicable.

And no one is doing anything.

The federal trade commission,

the attorney general...

I mean, should we start

go making police reports?

Des walsh:
And another charge

is that we're actually going

after latino community

Because, in some way,

this is an impoverished,

uneducated group.

If a supermarket chain

opens up a new store

In an area

that is economically deprived,

They're cheered and applauded

Because they're bringing

good nutrition,

They're bringing jobs

to that community.

And yet when we support

the latino community,

In some way,

this is a company

going after people

Who aren't able

to make an educated decision

regarding their nutrition.

I mean, frankly,

it's insulting to us,

It's insulting

to our customers,

Insulting to

the entire latino community.

Ackman:
It's been happening

community by community.

Pyramid schemes are known for

the pop and drop phenomenon.

They need to find new victims.

And there's an initial boom

As a lot of people get excited

about the opportunity

Of being

herbalife distributor,

And as they run out

of people to recruit

And they find

they can't sell their product,

Uh, it busts.

Robert fitzpatrick:

80%, according to

their sec filing in 2005,

Of the people that had been

in the scheme quit,

and were replaced.

If you added all those up

in a five-year...

I mean, we're talking about

an absurd machine here,

Churning through

millions of people.

Promising them

this utopian unlimited income,

Delivering almost nothing.

Narrator:

Since its founding in 1980,

Herbalife has extended

operations around the globe.

Expanding across 10 countries

in their first decade

To a current reach

of 93 countries worldwide.

Johnson:
We've just opened up

vietnam this week,

which is fantastic.

Why does that matter?

Do people in vietnam...

They want supplements?

What do they know?

I mean,

I'm not denigrating vietnam,

But I'm saying,

how do you convince them

that this is right for them?

Well, the company's

success recently

Has been built

on daily consumption.

This is a meal.

Vitamins, great nutrition,

good minerals, carbohydrates,

Proteins, all that.

Everybody needs

a good meal in their life.

Vietnam has 87 million people.

40% of the population

is under 25 years old.

They're looking for jobs,

looking for income.

So, we have

this two-way street,

Health and wealth. Great meal,

great business opportunity.

Fitzpatrick:

If they can grow globally,

go to new markets...

China,

1.3 billion people there,

Latino immigrants

into the us...

These will keep the thing

sustained for a bit longer.

How long can they go?

Nobody really knows.

Is there anything we can do

for capacity?

We should be prepared

for a million people.

We are prepared

for a million people.

I'm doing everything I can.

We have all three servers

blazing right now.

William cohan:

Bill ackman is on a holy war.

Now, he may end up

being wrong about herbalife.

Have you ever tried

herbalife's products?

Ackman:
A sip.

I've actually heard

very negative things

About the manufacturing

process.

- I'm staying far away from it.

Cohan:
I mean, this is the guy

Who's one of

the more precocious,

uh, confident,

Some people would say

arrogant, activist investors

on wall street.

He's made himself

a lot of money,

He spends a lot of that money.

Private jets,

beautiful apartments,

houses in the hamptons.

He's a master exploiter

of the media.

People love to have him on,

he always makes good copy,

And he turns that copy

into riches for himself.

And it's, frankly,

a brilliant strategy.

Uh, look, p&g is

one of the great

companies of all time.

Richard:
I remember

just sitting at my desk,

After more than

a year of research,

Bill ackman was being

interviewed about something

completely different...

And I'm confident

they're gonna do

the right thing.

Real quick, you teased

in the sky investing

conference yesterday

-That you had

a short position.

-Yes.

-A secret short position.

-Yes.

Would you like to

share your secret with us?

Not yet.

I'm sure he knew once

you put this idea out there

Everyone would want to know,

"what is this short?"

-I can't say.

-We gotta go to a commercial.

I can't,

I'm happy to talk about it

When we're ready

to talk about it.

It's a good-for-america short.

What I mean by that is,

As soon as the company

goes out of business,

The country

would be better off.

Ackman:
Short selling.

Imagine for a moment that

a friend of yours

collects rare coins.

And you have the view that

those coins are gonna go

down in value.

So, the way you would

short those coins

Is you call up your friend

and say,

"can I borrow

a few of your coins?"

And he says, "sure."

And you borrow the coins,

You then sell them

for the $1,000 each

That they sell for in

the market at the time,

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