Jewish Tycoons William Ackman and Dan Loeb in Feud Over Herbalife

Friends Fall Out Over Opposing Bets on Nutrition Giant

Cash Feud: Investor William Ackman fell out with fellow Jewish money man Dan Loeb over their opposing positions on nutrition giant Herbalife.
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Cash Feud: Investor William Ackman fell out with fellow Jewish money man Dan Loeb over their opposing positions on nutrition giant Herbalife.

By Maya Shwayder

Published November 19, 2013.

(page 2 of 3)

In 2012, Ackman joined Bill Gates and Warren Buffett in “The Giving Pledge,” an initiative in which millionaires and billionaires pledge to give away to majority of their wealth to charity.

Loeb is a West Coast Jew who grew up in Santa Monica with “a soft spot for the Caribbean,” as he told the Jewish Enrichment Center in a 2009 talk. In that same talk, Loeb told the assembled audience of young Jews, new to the investment world, that investors also need to be “a little bit of a philosopher,” and citing his ancestors’ Holocaust stories, how one’s life experience needs to shape one’s business practices. “I think the fact that you’re interested in Judaism, in the Jewish community, and in Jewish philosophy,…[these] will help you in your journey, in life and in investing,” Loeb said.

According to New York Magazine, Loeb meets regularly with his rabbi. “Money isn’t everything,” Loeb told the reporter at the time. In fact, in 2009, when the Harlem Children Zone lost its funding when Lehman Brothers collapsed, Loeb decided to hold his hedge fund holiday party at the Harlem Children’s Zone to help bolster their ailing finances. “Community is important,” Loeb said about that decision. When New York State legalized same-sex marriage in 2011, Loeb was listed as one of the most prominent Jewish philanthropists who gave to marriage equality causes.

Whether Loeb and Ackman were ever actually friends, they were certainly once friendly. An extensive Vanity Fair profile of the two men from April 2013 details a bike trip, now passed into Wall Street lore, that Loeb, Ackman and a few other hedge fund friends took out on Long Island. Ackman, in his over-zealous style, simply took off on his bike with no warm-up and no real experience in long-distance riding. At first he was ahead of the pack, but soon fell behind faltering and in pain.

The origin of the current bet over Herbalife between Ackman and Loeb, detailed in Vanity Fair, stems from a May 2012 conference call on Herbalife’s quarterly earnings. Prior to this, Ackman and hedge fund manager David Einhorn, another former friend of Ackman, had been researching Herbalife’s company structure and earnings, and based on the recommendation of a third party financial research group — the Indago Group, nicknamed the Indago Girls — had begun to suspect that it was nothing more than a pyramid scheme.

According to Vanity Fair, during the earnings conference call, Einhorn began asking tough questions about whether Herbalife’s on-the-ground sales people — similar to the Mary Kay Cosmetics girls — were the bigger purchasers of Herbalife products, or whether the company’s profit was coming from actual costumers. Des Walsh, Herbalife’s president, was unable to directly answer the question, and by the end of the conference call Herbalife’s stock had dropped from $70 per share to $56 per share.



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