It was just a little over two years ago that Herbalife (HLF 4.36%) tanked, falling to $47 a share from just over $70 a few days earlier after Bill Ackman announced that he had placed a $1 billion short bet against the company. The plummet stalled for several months, and then Herbalife went under $30 a share in December of 2012. Since then, Herbalife has climbed upward on the back of hedge fund manager Carl Icahn, soaring upward by over 160% and trading at $83 a share for a time. 

Now the plot continues to thicken, as Bill Ackman has renewed his attacks on Herbalife by releasing a documentary in an attempt to prove that Herbalife is a pyramid scheme. Carl Icahn and Herbalife shareholders beg to differ, particularly because Herbalife has been operating since 1980, which is substantially longer than most pyramid schemes last. 

A pyramid scheme?!?
For those who are just beginning to follow the Herbalife saga, here is a brief recap. Bill Ackman placed an enormous short bet against Herbalife back in 2012 and publicly attacked the company, accusing the Cayman Islands-based multi-level marketer of being a pyramid scheme. Carl Icahn then made a large bullish bet on Herbalife and was joined by Dan Loeb for roughly a year, as both of them bet that Herbalife is and will continue to be a legitimate company. 

The point of contest comes down to the multi-level marketing business model of Herbalife. Some say MLMs are scams, others see MLMs as companies marred by past scams. While Bill Ackman may have mustered plenty of negative PR around Herbalife, its 34-year operating history makes it hard to believe that this company is entirely a fraud. On top of operating for decades, Herbalife continues to grow its active sales leader count, which was up 11% year-over-year. Even if certain aspects of Herbalife make shareholders twitch, this is still a company that generated $190.6 million in cash flow last quarter for an increase of 39% year-over-year.

Last quarter Herbalife posted adjusted earnings per share of $1.50, which significantly smashed expectations. While Herbalife did have to write down its cash balance in Venezuela due to foreign exchange issues, with that factored out it grew its adjusted EPS by 18% versus the same quarter last year. To further solidify Herbalife's bottom-line growth, unit volume grew by 9% over that same time-frame. Looking ahead, Herbalife has raised its full-year EPS guidance to $6.10-$6.30, a blow to shorts looking to see Herbalife's growth story cut short by bad publicity.

Foolish conclusion
Herbalife is going nuclear with its share buy-back program, and it has even gone as far as canceling its dividend so it can keep purchasing more shares. This will provide a rock-solid floor for the company that will shield it from almost anything Ackman can do to lower Herbalife's stock price.

The big question: Do you believe in the very promising growth story that is Herbalife, or do you think Herbalife is just one big scam and that Bill Ackman was right all along?

With an operating history of over three decades in the United States, it's hard to believe that this entire company is one big sham. Certain aspects of all multi-level marketing companies are similar to those of pyramid schemes, but their defining difference is the end consumer. As long as real demand exists for Herbalife's products, then this is a real company that is severely undervalued.