Icahn vs. Ackman: Investors take squabble to TV

Pawel Dwulit/Shiho Fukada/AP

(MoneyWatch) At one end of the table near the cranberry relish: The boyish Bill Ackman of Pershing Square Capital. He is the noted hedge fund investor who has shorted the stock of Herbalife (HLF), the maker of vitamins and weight loss products. Ackman made some early gains on his short position -- a trade in which an investor borrows shares in the hopes that the stock will plunge and he can pocket the difference -- after publicly calling it a pyramid scheme and other unkind names.

Hunched over and brooding by the turkey stuffing: Carl Icahn. Like Ackman, Icahn is a self-styled "activist investor" who takes positions in companies with the hope of forcing management change, an outright sale or some kind of financial engineering that will create a big payday. Some news reports said he is "long" Herbalife, betting that the company's profits are for real. Icahn hasn't confirmed that, but he has taken issue with Ackman over Ackman's position.

The two men are known not to like each other, and they took their feud public today on CNBC. The snarling tenor of the fight makes one wonder if Icahn has even looked at the books of Herbalife or if he simply hates Ackman so much that he would merrily toss a few million dollars into the stock just to make the younger man squirm. The brawl was conducted via telephone, perhaps preventing fisticuffs between Icahn, 76, and Ackman, who is in his late 40s.

"I've really had it with this guy Ackman, you know," began Icahn. It went downhill from there.

Each man rehashed a lot of past history, which moderator Scott Wapner was unable to moderate, including a deal gone bad that ended up in the courts. "I went to a tough school in Queens where they used to beat up the little Jewish boys," Icahn said, recounting one of their earlier dealings. "He was like one of these little Jewish boys crying that the world was taking advantage of him."

The sparring continued in this vein before they ever got around to discussing Herbalife, which has strenuously denied Ackman's claims that the company is a pyramid scheme. Each called the other a liar. Ackman called Icahn a bully. Icahn called Wapner a bully -- just for trying to steer the conversation to Herbalife and ask him if he's actually long the stock.

All he would say was that Ackman is going to lose, and lose big.

"One day, Herbalife could be the mother of all short squeezes," Icahn said, predicting that someone might buy the company at a premium. That would cause Ackman to lose huge amounts of money as he would be forced to cover the difference between the price at which he borrowed the shares and the price at which they would be selling the day the company is sold.

"What will you do if somebody makes a tender offer for Herbalife?" Icahn asked Ackman.

"You're free to bid for the company, Carl," responded Ackman.

"Don't tell me what I'm free to do," responded Icahn, whose reputation as a corporate raider goes back decades.

Traders on the floor of the New York Stock Exchange, from where the CNBC show broadcasts, hooted during the exchange, although it was not always clear against whom. But investors seemed to side with Icahn -- at least for awhile, sending Herbalife shares up more than 3 percent. By the end of the day, they had given back some of those gains to close up 34 cents at $43.48, suggesting the whole affair may have a short shelf life.

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