Will Herbalife End Up a Penny Stock?

NEW YORK (TheStreet) -- By now, if you haven't heard of Herbalife's (HLF) products, you've heard a lot about the stock as well-known hedge fund manager William Ackman recently shared his bearish views in great detail.

You can find the presentation and slides at factsaboutherbalife.com.

I read the presentation and listened to Mr. Ackman state his case. I wasn't convinced and finished with the impression that I just read a "hit piece" relying more on emotion than logic.

I understand why many people don't like network marketing. I am one of them. I can't tell you how many times I have been approached about a "business opportunity." I have even received a card from a young lady selling Amway products in Beijing (I kept that card).

But even though I have no desire to join a network marketing program, it's advantageous for some people to do so.

Also, the low success rate of Herbalife representatives that Mr. Ackman presents as damning evidence isn't that different from those in other fields.

For example, the percentage of insurance salespeople who make more than $100,000 a year is probably similar to the percentage of successful Herbalife representatives.

Most people know the odds are against a new insurance salesperson, but that doesn't stop companies from letting prospective agents know the "incredible income potential" available.

Usually a person must become licensed before selling insurance. To become licensed, they often must attend and pay for a week or more of classes. All things being equal, the cost to test an individual's entrepreneurial fortitude is much lower with Herbalife than it is with insurance sales.

Same holds true for another popular self-employed sales job, the real estate agent. For most new agents, the start-up costs are much greater than they are with Herbalife. I doubt that more than 1% of new agents go on to have other agents working for them and make more than $100,000 a year.

The odds of success in starting a small business are low, especially for people with limited financial resources. This is true for network marketing and most other businesses. Success in sales is not easy for most people, and the product is not nearly as significant as the salesperson's attitude.

I selected a few noteworthy slides that attempt to paint Herbalife and independent contractors in an unusual light relative to other businesses practices.