“Good evening and hope everything is fine around there. My question is about HLF: I have held the stock for more than one year. It is (or was?) a good stock, that showed a steady rise, then a range consolidation and a breakup. The company released very strong profits and gave healthy signals for the future. But apparently a famous short seller hedge fund guy made a few accounting questions in the Conference Call and the stock crashed with very huge volume. What should an investor do in these cases? Follow the money? The company is telling us that the figures are ok and the questions seemed to be irrelevant but the market reacted based on the fame of this manager who, by the way, did not disclose if he was short. Thank you for your thoughts.

Eoin Treacy's view Thank you for this informative email. I included Herbalife in my first review of Autonomies because it is a global share with sizeable Asian interests. I agree that until recently the share exhibited a reasonably consistent uptrend but this has now changed.

I last commented on Herbalife on March 28th when it had become overextended relative to the 200-day MA and was susceptible to a reversion towards the mean. It has now experienced significant trend deterioration with a considerably larger pullback than seen previously and failure to find support in the region of the MA. A short-term oversold condition is now evident as is tests the lower side of the underlying trading range and the round $50.

Where it goes from here will depend on whether Einhorn is correct in his suspicions or whether the firm can restore confidence quickly. This article from the Wall Street Journal suggests Herbalife is talking about boosting its share buyback program. When we compare Herbalife with NuSkin Enterprises and Mead Johnson Nutrition what seems clear is that sellers are focusing on the company's sales strategy rather than its products.