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Herbalife battle: Does Bill Ackman have the Girl Scouts on his side?

Responding to an executive's comparison of Herbalife to the Girl Scouts, hedge fund manager Bill Ackman counters that the scouts' cookie sale isn't a pyramid scheme.
Responding to an executive's comparison of Herbalife to the Girl Scouts, hedge fund manager Bill Ackman counters that the scouts' cookie sale isn't a pyramid scheme. Jackie Lund/Flickr/Creative Commons

Hedge fund manager Bill Ackman has made a $1 billion-plus bet against Herbalife, the L.A.-headquartered nutritional supplements maker. He claims the company is a pyramid scheme. Other investors have countered his "big short" by buying up the company's shares, betting that Ackman is wrong.

Harsh words have been exchanged. The Federal Trade Commission may be looking into Herbalife's business. And now Ackman is arguing that the Girl Scouts are on his side.

Yes, the Girl Scouts.

After a January 10 presentation by Herbalife executives seeking to refute Ackman's claims, CEO Michael Johnson compared Herbalife's direct-selling business model with how the Girl Scouts sell cookies.

Today, Ackman's firm, Pershing Square Capital Management, released a 40-page list of questions in response to Herbalife's counterattack. Ackman has opened a new front, related to a 1986 legal judgement against the company. But I'll get to that in a later post. 

Ackman is none too pleased about Johnson's "Girl Scout Defense," posing this list of challenges:

•When Girl Scouts sell cookies, do eleven levels of “upline” Girl Scouts receive sales
commissions?

•Do the top 1% of Girl Scouts receive 88% of the award badges?

•How many former Girl Scouts have sued the Girl Scouts’ organization and accused it
of running a pyramid scheme?

•How many foreign regulators have declared the Girl Scouts a pyramid scheme?

•How many Girl Scouts have lost tens of thousands of dollars selling cookies?

•How many Girl Scouts run side businesses selling names and contact information for
other Girl Scouts for $130 per lead?

Never let it be said that hedge fund guys don't have a wicked sense of humor!

Follow Matthew DeBord and the DeBord Report on Twitter. And ask Matt questions at Quora.

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