Nu Skin (NUS) is on our Hedgeye Consumer Staples Best Ideas list as a SHORT.
THOUGHT LEADER CALL
Next Tuesday, November 24th, at 11:00AM ET we will be hosting a thought leader call with Jarrel Price of The Capital Forum. Jarrel has been deeply engrained in the controversy surrounding Nu Skin and he has some differentiated views that will shed additional light on the issues at hand.
BACKGROUND ON THE CALL
The Justice Department, along with federal partners brought the hammer down on the dietary supplement industry in a news conference on November 17th (link to the release can be found HERE). As part of a year-long process, government agencies pursued civil and criminal cases against more than 100 makers and marketers of dietary supplements. “In each case, the department or one of its federal partners allege the sale of supplements that contain ingredients other than those listed on the product label or the sale of the products that make health or disease claims that are unsupported by adequate scientific evidence.”
The primary case that the DOJ announced was a criminal case charging USPlabs LLC and several of its corporate officers. The report went on to say, “the USPlabs case and others brought as part of this sweep illustrate alarming practices the department found – practices that must be brought to the public’s attention so consumers know the serious health risks of untested products.” In addition to the allegations against USPlabs, there were a number of civil cases that are going after different companies for their attempts to defraud the consumer, making false claims about products and deceptive advertising, among others.
Given the DOJ’s actions, NUS is on notice about potentially deceptive advertising practices. Jarrell has uncovered incremental evidence that Nu Skin distributors may have marketed VitaMeal in a way to deceive consumers. This would be in violation of the Unfair Deceptive Acts and Practices (UDAAP) act, which is exactly what these governmental agencies are attempting to prevent.
The walls are clearly closing in on Nu Skin. Now, on top of the current SEC investigation looking into their charitable giving’s in China; multiple governmental agencies are poking around the nutritional supplement category for deception and misrepresentation. We believe that it is only a matter of time until their name comes across one of these agencies desks and it catches their eye.
JARREL PRICE BIO
Jarrel "JP" Price helps lead The Capitol Forum's coverage of consumer finance and consumer protection issues. Prior to The Capitol Forum, Mr. Price led a team of analysts at the U.S. Department of Defense’s Task Force for Business and Stability Operations (TFBSO), focused on facilitating foreign direct investment in Afghanistan’s energy sector. Prior to TFBSO, Mr. Price was a Partner at Height Analytics, a Washington, DC-based investment research firm, where he covered a variety of consumer protection issues.
Mr. Price is a Founding Partner of The Park Advisors Group, which helps public and private sector clients manage investment risks in frontier and post-conflict markets. Mr. Price also serves as the President of the Young Professionals in Foreign Policy (YPFP). Mr. Price is a frequent contributor to a variety of national media outlets including CNBC, The Wall Street Journal, Bloomberg News, and NPR.
Confirmation Number: 13625346
Materials: To be provided in a follow up invite
Please call or e-mail with any questions.