(page 3 of 3)
As the stock fell Ackman leapt at the opportunity — though it may already have been too late — and started shorting millions of shares of Herbalife stock; he now owns more than 20 million shares, which amounts to more than 20% of the stock.
His attack culminated in a three-and-a-half-hour, 330-slide presentation in December 2012 at the annual Ira Sohn Investment Conference in front of 500 people with another 1,300 watching online, detailing why he thought Herbalife was a fraud. Ackman then pledge to donate all proceeds made from his short to charity.
Since then, the Ackman-Loeb battle has divided Wall street itself, with old Wall street wolves like Carl Icahn, another big-time Jewish investor, and Loeb taking up the long position opposite Ackman’s short — a sort of “screw you” in the face of what they perceive to be Ackman’s incredible chutzpah. Icahn and Loeb make up the majority of the long position against Ackman, and have been vocal about their desire to take Ackman down.
“I’ve really sort of had it with this guy Ackman,” Icahn told CNBC in January 2013, calling in while Ackman was a guest on the show. “He’s like the crybaby in the schoolyard. I went to a tough school in Queens, and they used to beat up the little Jewish boys. He was like one of these little Jewish boys, crying that the world was taking advantage of him.”
Ackman and Icahn already had a grudge over 2003 investment deal that went bad. Nowadays, Loeb and Ackman also “dislike each other profoundly,” a source told Vanity Fair. Part of this stems from their contrary positions over Herbalife stock, and part of it from a $200 million investment that Loeb’s Third Point LLC hedge fund made with Ackman’s Pershing Square Capital. Ackman had just made hundreds of millions in a long position on McDonald’s, but the investment into which he bought lost Loeb $175 million of his original $200 million. To this day, Ackman has been apologetic for that loss, and Loeb insists their current battle over Herbalife is not personal.
However, Loeb has been vicious toward Ackman. In July, Loeb edited his profile on Bloomberg Terminal to include a message that read, “New HLF [Herbalife] product: The Herbalife Enema, administered by Uncle Carl” in reference to Icahn’s assertion that Ackman will be the victim of “the mother of all squeezes,” Business Insider reported.
It’s estimated at this point that Ackman has lost millions on his position, but he remains steadfast in his conviction that he is in the right, something he has a reputation for doing. Meanwhile, since last December when the share price reached $26.06, stock of Herbalife (NYSE:HLF), has stayed on a fairly consistent upward trend. The bet is still on.