Flat growth in North America and a decline in Latin America has not deterred Bronte Capital Management’s CIO, John Hempton, from holding a ‘Long’ position on Herbalife Ltd. (NYSE:HLF)’s stock who recently has discussed the stock on CNBC. The company has been the subject of accusations of illegal dealings by billionaire investor Bill Ackman allegations that have considerably tainted the company’s image in Wall Street.
Declining business in Latin America also continues to be a major concern although Mr. Hempton believes the company is trying to pull out of Venezuela because of unfavorable trading regulations, especially on repatriation of earnings and profits. Hempton also remains bullish on Herbalife upside being worth $200 a share as opposed to the proposed $100, as a result of the company maintaining a consistent growth pattern.
Herbalife Ltd. (NYSE:HLF) has managed to remain in front of the pack, as a result of inducing a good number customers to its products, who end up being long-term consumers. Huge consumption of the company’s products has overtime allowed it to maintain an upside mark in the market. Despite the rate of growth in North America slowing by -1, Hempton remains optimistic on the company changing the same to the positive one, going forward.
“The amount of products consumed is enormous, a rough calculation, this company feeds about 10% of the number of people that McDonalds feeds. Growth rate has slowed in North America from flat to minus one last quarter, but it would probably be plus one next quarter,” said Mr. Hempton.
Brazil going down by 1% according to Mr. Hempton was largely expected as people in the country were in a party mood and never thought of going for diet plans that Herbalife offers during the world cup event. The growth prospects for the company also remain high considering its volumes have been improving by between 7 and 8%.
Herbalife Ltd. (NYSE:HLF) has also been enjoying a pickup in Asian markets despite being on a downward trend over as more customers continue to come back to the company after being ‘hijacked’ by one of the company’s senior distributor, to a competitor.
“[…] Asia declined for the first-time ever, last quarter. It turns out that the senior distributor in Malaysia took the entire client list and went to a competitor, and that has not been widely discussed. We’ve tracked down the distributor and confirmed the story. They will start lapping those numbers, and Asia will; regrow again,” said Mr. Hempton.