Usana: An Arresting Story

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Over the course of its publishing history, Citron has seen more than its share of high short interest stocks.  Sometimes its a shady insider, sometimes a suspect business model, and sometimes its sloppy research….and most often a combination.  But this is the first time we've seen a high short interest because the company's sales people are … getting arrested!

Today Citron reveals the dark underbelly of operations of another MLM business overly dependent on pyramid sales in China to bolster its growth. 

While Usana (NASDAQ:USNA) doesn't push the legal envelope of dubious marketing claims like Nu Skin, it stands on even shakier ground because it lacks even a "direct sales" license for its dietary supplement products in the PRC. 

You simply won't believe how Usana is establishing and maintaining huge numbers of "sales associates" in mainland China. 

It is Citron's opinion that the premise of unlimited growth by pushing MLM sales among China's growing middle class is simply not a sustainable business.   Since the arrests have already begun, it might be wise for investors to avoid "arrested development" in their portfolios.  

For the full USNA story, including the photos you won't find anywhere else, click here.