Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of personal-care and nutritional-products supplier Nu Skin Enterprises (NYSE: NUS ) are falling 11% today, a day after receiving a boost from comments not made by short-selling specialist David Einhorn.
So what: That's right, Nu Skin and multi-level marketing rival Herbalife (NYSE: HLF ) rallied yesterday on news that David Einhorn, in listing off his short-selling targets, mentioned Martin Marietta (NYSE: MLM ) , Dick's Sporting Goods (NYSE: DKS ) , and anything related to China but did not mention Nu Skin and Herbalife in his discussion. Herbalife was also upgraded by brokerage Caris & Co. this morning following the lack of comments by Einhorn on the sector.
Now what: Buying or selling a company based on analyst upgrades is never a smart move, and the wild vacillations we're seeing in the sector today are evidence of this. And gaining the ire of David Einhorn is never a great idea. But the biggest beef I have with multilevel marketing companies is that employee turnover is high while customer loyalty remains low, which is a formula that can send profits south in a heartbeat. I'm going to stay far away from this still-uncertain situation.
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