Ackman and Icahn Battle Over Herbalife (HLF)

The ongoing Herbalife Ltd (HLF) saga continues. Since his 2013 shorting of the company for approximately $1 billion, investor Bill Ackman has maintained his conviction that the vitamin and nutritional supplement provider is "the best-managed pyramid scheme in the history of the world." Ackman, the leader of top hedge fund Pershing Square Capital Management, has been outspoken about his thoughts on Herbalife, making repeated statements to news organizations and in the press about his goals to help put the company under. Throughout the process, this activity has caused him to publicly butt heads with investor Carl Icahn, who recently announced that he had purchased another bulk load of Herbalife shares and had plans to continue to up his stakes in the company.

Both Icahn and Ackman have accused the other investor of being in a difficult position with their Herbalife stakes. Ackman has recently asserted that Icahn has changed his mind about the stability of the company and that he had decided to sell off a large portion of his stake, worth about $1 billion, to Ackman and a group of like-minded investors. Such an action would indicate that Icahn had given up hope on Herbalife's prospects and, perhaps, its legitimacy as a business.

In response, Icahn flatly rejected Ackman's attack. In an interview with CNBC last week, the leader of Icahn Capital flipped the story, saying that Ackman was the one who was panicked about his position in Herbalife. Citing that 20 to 25% of Herbalife's shares are closely held, Icahn stated that "Herbalife is not anywhere near [bankruptcy], and is in fact growing dramatically in countries such as China." To make his point even clearer, Icahn announced that he would also be significantly increasing his stake in Herbalife shares, rather than making an attempt to sell his position.

In late August, Icahn announced that he would in fact purchase about 2.3 million additional shares in Herbalife, following permission from the company to up his investment to a 35% stake in the company. He currently holds about 19.3 million shares, valued at approximately $1.7 billion. Criticizing Ackman's thoughts on the status of the company, Icahn speculated that his rival had developed what he termed "Herbalife obsession," focusing too heavily on the value of the company's stock and its practices, and thus getting caught up in a protracted and, at times, caustic battle with Icahn. Icahn also backed his response to Ackman's allegations by asserting that he has "never given Jefferies an order to sell any of our Herbalife shares." Jefferies confirmed this position indepently, indicating that Ackman's assertion that Icahn had planned to sell was overblown.