- "Herbalife under Attack: A Case Study in Investor Activism," with Nicola Persico, Kellogg Case Study, in preparation.
- Teaching slides: part 1; part 2.
- Supplementary: key references; other documents.
- Abstract: It is common for regulators to investigate companies suspected of operating a pyramid scheme. If malfeasance is uncovered, such investigations sometimes result in drastic loss of value for the company. The drop in value can, if forecasted, represent a valuable arbitrage opportunity for short sellers. This case study is the story of some activist investors who suspected a pyramid scheme from a company called Herbalife and sold the stock short, and how other investors reacted. We show how all investors sought to influence the stock price in the shadow of a regulatory investigation. The case study can be used to teach corporate finance, non-market strategy, and regulatory policy.