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Billionaire investor Carl Icahn has something up his sleeve when it comes to Herbalife. And he really doesn't like Bill Ackman.
The most recent combatant to enter the fray in the battle over L.A.-headquartered diet and supplements maker Herbalife is billionaire investor Carl Icahn. He is apparently opposing hedge fund manager Bill Ackman, who — claiming that Herbalife is a pyramid scheme — has amassed a $1 billion-plus bet against the company's stock. Icahn might be allied with Dan Loeb, another hedge funder who has taken the other side of Ackman's bet, to the tune of hundreds of millions.
Icahn called Bloomberg TV Thursday and in no uncertain terms made it clear that he basically hates Bill Ackman's guts (the two have locked horns in the past), but he refused to confirm that he's joined Loeb in going long on Herbalife. Although you can read between the lines:
[I]t's no secret I don't like Ackman. I have no respect for him and I don't like him and that's not a secret. But that doesn’t mean that I'm going to go in and buy stock in a company necessarily just to get him. Frankly, I don't like the way he did this anyway. If you're short, you go short and hey, if it goes down, you make money. You don't go out and get a roomful of people to badmouth the company. If you want to be in that business, why don't you go out and join the SEC.
Icahn went on to accuse Ackman of trying to profit from any government investigation of Herbalife that might occur, either by the Federal Trade Commission or the Securities and Exchange Commission. Meanwhile, yet another hedge fund manager, James Chanos, made some comments last week that suggested he might be on Ackman's side when its comes to the "Herbalife is a pyramid scheme" argument. (It's been reported, or more accurately rumored, that Ackman has built his own short position on Herbalife.)
Apart from Icahn hating on Ackman, and Chanos kinda sorta backing Ackman up, there hasn't been a whole lot of action on Herbalife in the past few weeks. The stock is bumping along at just above $40 a share, and the company disappointed Wall Street by announcing it wouldn't immediately use nearly $1 billion at its disposal to buy back shares (which would boost the stock price and undermine Ackman's short position).
So it seems that, for now, there are lingering doubts about whether Herbalife is a legitimate business — at least among the investors who now own big chunks of the company.
UPDATE: Another hedgie, David Einhorn, succssfully shorted Herbalife at some point in 2012, the Wall Street Journal reports. Einhorn's short strategy was discussed at around the same time that Ackman revealed his position late last year.