Late Thursday, a filing with the Securities and Exchange Commission shows Icahn has bought more than 14 million shares of Herbalife (NYSE:HLF), the nutritional supplement marketer that Ackman believes is a pyramid scheme. Through common shares and options, Icahn has a 13 percent stake in the company. After extensive research, he believes Herbalife has a legitimate business model with favorable long-term opportunities for growth. Ackman is short more than 20 million shares.
In response to Icahn’s position, Ackman explains in a statement, “We invest based on a careful analysis of the facts. After 18 months of due diligence, we have concluded that it is a certainty that Herbalife is a pyramid scheme. Our conclusions are unaffected by who is on the other side of the investment. Our goal was to shine a spotlight on Herbalife. To the extent Mr. Icahn is helping achieve this objective, we welcome his involvement.”
Icahn’s disclosure comes just a few weeks after the two battled it out on CNBC over a past business deal. Icahn related Ackman to a little Jewish boy getting beat up in Queens, while Ackman simply said Icahn was not used to anyone standing up to him. Icahn provided some foreshadowing in the interview by claiming, “I will tell you one day, I think Herbalife will be the mother of all short squeezes.”
Interestingly, Icahn accumulated the majority of his position after the interview…