Herbalife Skips a Knockout Blow

Updated to include Bill Ackman comments and late afternoon share prices.

NEW YORK (TheStreet) -- After weeks of anticipation, Herbalife(HLF) defended itself against claims made by hedge funder Bill Ackman that the direct seller of nutritional supplements is a pyramid scheme.

Herbalife fired back with data that put the figures and analysis behind Ackman's billion-dollar-plus short trade in question.

Still, while Herbalife presented a strong defense of its business, and in particular, Ackman's allegation that a majority of the company's sales don't involve bona fide retail sales, the company's presentation isn't likely to be a knockout blow.

In the background, on Wednesday an 8.24% stake disclosed by Dan Loeb-run Third Point puts two of Wall Street's most vocal hedge fund investors pitted against each over the Herbalife's shares and business model.

After an over two hour presentation by the company and a subsequent CNBC interview with chief executive Michael O. Johnson, Herbalife shares closed down 1.8% at $39.24 Thursday trading.

Highlights of Herbalife's presentation included a strong rebuttal to Ackman's assertions of a pyramid scheme by company president Desmond Walsh and chief financial officer John DeSimone.

Notably, both Walsh and DeSimone questioned Ackman's most damning allegations - that the bulk of the company's earnings come from signing up new distributors and not actual retail demand. "Zero fee is paid for recruiting," said DeSimone, of the difference between bona fide retail sales and what Ackman characterized as recruiting bonuses.

CFO DeSimone reiterated Herbalife's fourth quarter earnings forecast, and even hinted they could exceed estimates. According to Bloomberg data that compiles analyst estimates, Herbalife is expected to report $1 in earnings per share on revenue of $1 billion and net income of $113 million, in the fourth quarter. The data also shows Herbalife has beaten analyst estimates eight of the last eight quarters.