The Evening Read

Another day in the books, another evening read.

• Four reasons Apple is the new Microsoft - WSJ
• Herbalife is not going to answer your questions, senator - Alphaville
• Bullish options activity on Facebook surges after deal - WSJ
• Europe's new battlefield - Economist

Here's a snapshot of today's action.

All major US indices finished the day stronger. The Dow finished up 92 points to 16,133; the S&P 500 tacked on 11 to close at 1,839; and the Nasdaq added 29 points to 4,267. We are still looking like a move to fresh highs over the near-term, and I am still trading that way (albeit lightly). I will still be looking to take profits into strength.

I have been talking a lot about over-hyped companies as of late.

It seems that 2013 was the year of the short squeeze. One of the most notable battles has been that over the legitimacy of Herbalife - in December 2012, Bill Ackman (of hedge fund Pershing Square) announced a massive short position in HLF. His thesis was not that of changing competitive landscapes or absurd valuation; his thesis was that Herbalife was an illegal business and should be shut down by the federal government.

To announce a position and then try to instigate regulators to virtually guarantee your profiting from it by calling on them to shut it down is a touch on the insane side. So insane that if he is wrong, one could argue that Mr. Ackman himself was operating in a legal "gray" area as well.

Carl Icahn - whom I believe deplores Ackman, anyway - soon thereafter announced a massive stake in HLF and has subsequently squeezed Pershing Square to death.

You probably know this part of the story. HLF shares doubled last year, and Pershing's losses on the trade mounted. However, the management of Herbalife has never been straightforward about their business, and seem to fail to answer the most basic of questions. For example, how much of their revenue comes from sales to purely retail customers (i.e. customers not part of the multi-level marketing "business")? To which, management offered that they do not have visibility to that granular a level of their operations.

Massachusetts' junior senator, Edward Markey recently asked Herbalife some very good questions. He and his team wanted an exhaustive response to each question, to remove any doubt of their business being involved in shoddy practices. In response, he received this letter.

Any serious management team, when faced with serious questions about the efficacy and legality of their business, would strive with dying breath to irrevocably destroy any shred of doubt. HLF management - it seems - has not.

I'm not sure how long Mr. Ackman can afford to be wrong before he is right, but I do believe the day he and his investors long for will come.