Why Nu Skin Enterprises Shares Were "Einhorned"

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.

Craving more input? Start by adding Nu Skin Enterprises to your free and personalized Watchlist so you can keep up on the latest news with the company.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. The Motley Fool owns shares of Dick's Sporting Goods. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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