News of the Markey Letters Triggered
$1.6 Billion in Losses for HLF Shareholders
$75

400,000

Jan 22 Close = $73.53

$70

$65

300,000
January 23, 9:56 am:
News that Senator Ed Markey urged
the SEC and FTC to investigate
Herbalife as a pyramid scheme.
(The Hill.com)

250,000
Jan 24 Close = $60.06

200,000
$60

$55

150,000

Loss in Shareholder Value
Surrounding Markey News =

(

$73.53
closing price
day before

$60.06
‒ closing price
day after

)

x

121,233,694
shares owned*

=

$1,633,017,858

100,000

50,000

$50

Shares owned = 101,010,427 shares outstanding + 20,223,267 short interest
Source: Price, volume, and short interest data from Bloomberg. Shares outstanding as of December 11, 2013 from Herbalife 10-Q/A for 3Q13.
1 Volume-weighted average price.

0

HLF Minute-by-Minute Trading Volume

HLF Minute-by-Minute Stock Price1

350,000

 HLF Puts Were Extraordinarily Active on Jan 9, 10, and 17, 2014,
In Advance of the Markey News
Daily Volume in All But Weekly and Next-to-Expire Contracts:
January 2014 v. 2013 Relative-Day Average

50,000
45,000

Markey
News

40,000

Put Volume (Contracts)

35,000
30,000
25,000

Average 2013
Put Volume on
Relative Expiration Day

20,000
15,000
10,000
5,000
0

Trade Day Relative to
Expiration Saturday
Date in Jan. 2014

-12

-11

-10

-9

-8

-7

-6

-5

-4

-3

-2

-1

+1

+2

+3

2

3

6

7

8

9

10

13

14

15

16

17

21

22

23

Source: Data from iVolatility
Data exclude weekly (non-standard) and next-to-expire contracts.
Through Jan. 17, 2014, volume is for February 2014 and later expiries. Beginning Jan. 21, 2014, it is for March 2014 and later expiries.

 The Unusual Put Volume on Jan 9, 10, and 17 was in
Four Super-Size Trades, All in Year-Ahead Contracts
Put Trades of at Least 10,000 Contracts in January 2014:
Size and Expiration Month

30,000

Before Markey News

After Markey News

1/17/2015 Expiration

Put Volume (Contracts)

25,000

20,000

25K size
$50 strike

20K size
$50 strike

15,000

10K size
$65 strike

10K size
$65 strike

10,000

10K size
$60 strike

5,000

0

2

3

6

7

8

9

10

13

14

15

16

10K size
$60 strike

17

21

22

23

Date in January 2014 (Trading Days Only)
Source: Data from iVolatility

24

27

28

10K size
$65 strike

29

30

31

 The Four Super-Size Put Purchases on Jan 9, 10, & 17 2014
Were Collectively Up 35.3% After the Jan 23 Markey News

January 2014 Put Trades of at Least 10,000 Contracts Before the Markey News
Date
Time
Size
Expiration Strike
Price
Cost
(1)
(2)
(3)
(4)
(5)
(6)
(7)
=100*(3)*(6)

January 24, 2014
1
Value
Price
(8)
(9)
=100*(3)*(8)

Gain
Dollar
(10)
=(9)-(7)

Percent
(11)
=(10)/(7)

1/9/2014

2:49:38 p.m

25,000

1/17/2015

$50.00

$7.25

$18,125,000

$11.30

$28,242,770

$10,117,770

55.8%

1/10/2014

2:46:13 p.m.

20,000

1/17/2015

$50.00

$7.10

$14,200,000

$11.30

$22,594,216

$8,394,216

59.1%

1/17/2014

2:50:22 p.m.

10,000

1/17/2015

$60.00

$14.30

$14,300,000

$16.02

$16,019,041

$1,719,041

12.0%

1/17/2014

2:50:22 p.m.

10,000

1/17/2015

$65.00

$16.70

$16,700,000

$18.81

$18,814,265

$2,114,265

12.7%

$85,670,293

$22,345,293

35.3%

Total
Total Underlying Shares

65,000
6,500,000

Source: Data from iVolatility and Tick Data
1 Volume-Weighted

Average

$63,325,000