But they did all that in the run up to it. In my view, THM just compounded their problems, there were needing a CR then already in my judgement, and the acquisition made it so easy to disguise the need for a CR for their current business. I believe their business model does not work at all, and at any scale. HLF has accumulated $74m in losses over the years in its quest to become profitable (see Accumulated losses on page 5 of the report)
I am skeptical that CM of 50m is sufficient, the whole idea is to gain the benefits of scale. Last year, when scale of $59m was not enough, the acquisition of THM and their perceived profitability (not quite as forthcoming as later months showed) looked like a way to gain that elusive profitability. Now, HLF is on the way back.
It is a similar case with them taking up debt. The debt allowed them to turn a "bigger wheel". Now, the debt is too expensive and large, so HLF is reducing the debt (as they must), but that also means they go back to square one.
Currently - the way I see it - management is proposing nothing new, apart from selling parts or the whole ... going forward. Selling out is a phrase that comes to my mind.
Buying in now is like taking a chance that someone else buys in ... and the SP goes from 1.1c to 1.9c (or somewhere there); that would a good profit for a punt. A punt that is to risky for me.
HLF Price at posting:
1.1¢ Sentiment: Sell Disclosure: Not Held
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