A documentary that takes a look at an investor’s crusade against a major corporation. Is it a righteous fight for justice, or a sinister ploy for profit?
Director: Theodore Braun/2016
Street Date: August 15, 2017/Kino Lorber
While a film like The Big Short highlighted the reason for the housing market collapse that influenced the 2008 financial meltdown, Betting on Zero is a documentary film that follows hedge fund investor Bill Ackman, who in 2012 went public that his firm was shorting the stock of the mega-corporation Herbalife headed by C.E.O. William Johnson.
Those who are unfamiliar with what shorting a stock is, or taking a short bet on a stock, will be given very easy to follow examples by Bill Ackman as he is interviewed for this film. Theodore Braun does a great job of approaching this film from the perspective of Bill Ackman before he goes before the cameras with a giant announcement, and then turns the narrative upon itself to question the very motives of Mr. Ackman’s crusade against Herbalife.
Betting on Zero is a powerful documentary film, and it is a fascinating look at the investment system of the United States, the entrepreneurial spirit of capitalism, and the dangers of corporate power being leveled against the average person who lack the means to fight for justice against such well-designed schemes.
The basic charge against Herbalife is that they are a giant pyramid scheme, benefiting a few at the top, but duping all of those who sign on to be sales reps for the company. Ackman’s research has shown him that no one in the company is making money actually selling the products Herbalife produces. Instead, they only make money if they can sign people up to be sales-reps which requires them to buy sometimes thousands, or ten thousands worth of product at a time.
The only way to offset the cost isn’t to sell the product quickly-especially since it has a short shelf life due to the ingredients it contains for its smoothies and such-but to sell enough people on the idea that they should sell it too. This will require them to buy the thousands of dollars worth of product. A commission on these subsequent purchases, from the people you recruit then flows upwards to the people who recruited them and on up to the people who started the company. Ackman believes the product is just a giant ruse to distract from the actual business model Herbalife follows.
Even more egregious is the charge that William Johnson, as CEO, is directing his company to target specifically lower income-earning Hispanics in urban centers to do this. We see the heartbreaking tale of many who have traded in the money they earned from owning their own construction businesses, or personal holdings, to earn money through Herbalife after being shown testimonials or “evidence” that the minimum they would earn eventually would be six-figured paychecks annually. When they lost everything, many had no where to turn for relief as they lacked the financial assets to take a giant corporation to court to fight this, or they didn’t always have documentation to prove their immigration status which meant they couldn’t participate in trying to find justice without jeopardizing their status to remain in the country.
Bill Ackman actually had no knowledge of the Hispanic aspect of Herbalife’s dealings, but it serves as a touching angle when he is introduced to an advocate for this community in Chicago, which only adds to his thirst for justice in bringing Herbalife’s stock to its knees so that it is forced to close its doors forever.
As far as Mr. Ackman’s motives, Betting on Zero creates some powerful tension in asking the question through its editing of the interviews, and footage, of whether Mr. Ackman is sincere or not in his crusade against Herbalife. As a business-show celebrity of sorts, a man who appears on all of the cable news shows and who is known for his good looks and charm, many have claimed that Ackman is using this short bet to further his own brand at his investment firm. The fact that his firm has taken billions of dollars of their investment client’s money and betted it against Herbalife’s stock collapse is evidence, the critics say, of how Ackman is going public so that people will react by dumping Herbalife stock, thus helping his firm collect on the short bet and making tons of cash.
Ackman responds in the film that he went public because sometimes you find a company that is a hazard to the people of the nation and you seek to do your part in bringing about its fall by bringing the illegality of Herbalife’s business model to the attention of the government so that they can investigate and (in his hope) indict the company, which would then crash the stock. He supports the bet of his investors’ money by citing that it is based on their own detailed analysis that concluded that the pyramid scheme Herbalife is alleged to be using demonstrates that this company is built on a very detailed lie and is not sustainable. This lack of sustainability would prove that they are right about the stock and how it is going to fall eventually, which is why they decided to short it.
To alleviate anyone’s cynical fears that they went public with Herbalife’s questionable business practices simply to gain a profit, Ackman announces that his firm will donate all profits that they earn as a company from the short bet to charity. When investment titan Carl Icahn enters the fray to possibly go after Ackman by proxy, the narrative shifts again, creating a moving story, filled with tension, that is enhanced even more by the fact that this all happened.
Betting on Zero is a powerful documentary film, and it is a fascinating look at the investment system of the United States, the entrepreneurial spirit of capitalism, and the dangers of corporate power being leveled against the average person who lack the means to fight for justice against such well-designed schemes. It also seeks to provide balance in evaluating the motives of both Bill Ackman, as well as that of William Johnson and Herbalife’s defense of their company. It also explores the growing drama as the U.S. government enters the case. The outcome may be known to many who follow such things, but to those that don’t, there will be enough closure in the outcome of this case to bring about some closure.
Kino Lorber has produced the DVD release of this documentary and it is presented in English, with some Spanish (containing English subtitles). It is in a 16×9 format with a ratio of 1.78:1. It is presented in color and has sound options of 2.0 stereo or 5.1 surround sound. There is optional Spanish subtitles, and the DVD features the trailer for the film, as well as 6 additional interview segments that did not make the final cut of the film but prove to be interesting additions to provide more complex to the subject matter and the arguments of the film as to the merits of both Ackman and Johnson.
The images in this review are not representative of the actual DVD’s image quality, and are included only to represent the film itself.