NEW YORK (AP) -- Herbalife (NYSE:HLF) came out swinging Thursday against claims made by hedge fund manager William Ackman that the business amounts to a pyramid scheme.
But Ackman didn't back down, saying in a statement that Herbalife "distorted, mischaracterized, and outright ignored large portions" of Pershing Square Capital Management's December presentation.
A series of Herbalife's executives looked to refute Ackman's allegations during an analyst and investor meeting earlier in the day, laying out everything from how the business operates to who its customers are.
Critics have questioned the company's business model, which uses a network of distributors to sell its nutritional supplements and weight-loss products in more than 80 countries.
The defense put forth Thursday comes a few weeks after Ackman alleged Herbalife was a pyramid scheme and that he was shorting the stock. Short-sellers make money when the shares they're betting against decline.
Under a pyramid scheme, a company makes most of its money by recruiting new salespeople, rather than on the products that they sell. Aside from Ackman, Greenlight Capital's David Einhorn had also raised concerns about Herbalife's business in May.
Herbalife President Desmond Walsh said Thursday that over its 32-year history, only one court has ruled that the company runs an illegal pyramid scheme. The ruling, which occurred in Belgium, is being appealed.
Walsh said that ruling has not hurt Herbalife's business in the country. He also balked at Ackman's claims that Herbalife uses a "pop-and-drop" approach to the markets it serves -- entering a market, making money as fast as it can and then pulling out and moving on to new markets. Walsh said this is not true and that much of Herbalife's growth is coming from markets it has served for more than 10 years.
Herbalife Chief Operating Officer Richard Goudis looked to debunk Ackman's claim that Herbalife is not a product company. The executive said that the Herbalife invested $44 million into research and development, technical infrastructure and other areas to support its products last year.
Goudis also said Ackman's claim that Herbalife's shakes are more expensive than its rivals was caused by the hedge fund manager using a price-per-serving measurement that the company does not feel is accurate, and argued that Herbalife's shakes are competitively priced against rivals such as GNC (NYSE:GNC).
In defense against claims that Herbalife has few customers outside its distributor network, Walsh said the company has functioned primarily as a business-to-business seller and had not tracked its retail customer base.
To dispel Ackman's claims, Herbalife hired Lieberman Research to study its customers. A representative of the firm said that two of the studies, which were conducted among a sample of 2,000 adults over the age of 18, found that more than 5 million households purchased Herbalife products in the past three months.
Walsh added that 31 percent of Herbalife's orders in the U.S. were directly sent to non-distributor customers in 2012.
Herbalife, which is incorporated in the Cayman Islands and based in Los Angeles, also maintained that it complies with the appropriate Federal Trade Commission standards and that its financial disclosures meet guidelines of the Securities and Exchange Commission.
Ackman said Thursday that Pershing will respond to every issue Herbalife raised during its analyst and investor meeting, but did not disclose when its next presentation would be.
He also said that Pershing has been contacted by "numerous interested parties" over the past three weeks that have given additional insight into Herbalife's business practices and that those new issues will be addressed when it gives an updated presentation.
Herbalife's meeting Thursday comes one day after Herbalife announced that well-known investor Dan Loeb's Third Point LLC purchased 8.9 million shares in the company. This amounts to an 8.2 percent stake.
Third Point's stake in Herbalife, a vote of confidence the business, was disclosed in a regulatory filing Wednesday.
The Wall Street Journal also reported Wednesday that the Securities and Exchange Commission opened an inquiry into Herbalife. The Journal cited an unidentified person familiar with the matter. Representatives for the SEC and Herbalife both declined to comment.
Herbalife's stock hit a low of $24.24 in late December as a result of Ackman's allegations, their lowest point since July 2010. Shares have lost close to half their value since the end of April.
The company's stock fell $1.84, or 4.4 percent, to $38.11 in afternoon trading Thursday.
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