Nu Skin Falls as China Newspaper Calls It a Pyramid Scheme

January 17, 2014 Leave a comment

Nu Skin Falls as China Newspaper Calls It a Pyramid Scheme

Nu Skin Enterprises Inc. (NUS), a maker of skin-care and nutritional products, fell the most in more than nine years after a Chinese government newspaper called it a “suspected illegal pyramid scheme.”The shares plunged 16 percent to $115.23 at the close in New York, the largest decline since October 2004. The stock more than tripled last year.

Nu Skin brainwashes its trainees and sells 104 products in China, 20 more than the government allows, People’s Daily said in a report today. The Provo, Utah-based company said the article “contains inaccuracies and exaggerations that are not representative of our business in China.”

The company has a direct-sales license in China, the newspaper said. In 2012, 20 percent of its sales came from China and Hong Kong.

Network marketers such as Nu Skin “have always been questioned,” causing “outsized share price movements” in both directions, Olivia Tong, an analyst at Bank of America Corp., wrote in a note today. “There does not seem to be tangible evidence to validate negative claims targeted at the company thus far.”

Tong, based in New York, recommends buying the shares, citing strong cash flow.

To contact the reporter on this story: Lauren Coleman-Lochner in New York at llochner@bloomberg.net

Filed under Macro Trends

Unknown's avatarAbout bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

Leave a comment