Billionaire investor Carl Icahn, saying he doesn’t “like” or “respect” fellow hedge-fund manager William Ackman, criticized the way Ackman publicized a bet that shares of Herbalife Ltd. would decline.
“You don’t go out and get a room full of people to badmouth the company,” Icahn said in an interview with Trish Regan on Bloomberg Television’s “Street Smart.” “If you want to be in that business, why don’t you join the SEC,” Icahn added, referring to the U.S. Securities and Exchange Commission.
Ackman said in a telephone interview he would wait to comment until he sees Icahn’s interview himself. He said he would “absolutely want to respond to that kind of thing,” based on what he’d been told.
Pershing Square Capital Management LP, Ackman’s New York- based hedge-fund adviser, sold short more than 20 million shares of Herbalife common stock, the money manager said at the Sohn Investment Conference on Dec. 20. Ackman’s short position in the maker of weight-loss and nutritional supplements would have had a market value of about $747 million, based on Herbalife’s closing share price on Dec. 19, the day before he disclosed the position.
During the conference, Ackman said he had turned over more than a year’s worth of research to the U.S. Federal Trade Commission that supports his contention that Herbalife is a pyramid scheme. Ackman also said he would give any profits from the short sale to charity, an announcement Icahn questioned in the TV interview.
“Is he giving the money he makes for all his limited partners to charity?” Icahn said. If his investors profit, Icahn added, Ackman “becomes famous” and “gets more money in” for new hedge funds.
Icahn, like Ackman, shorts stocks he deems overvalued, including previous bets against wallboard manufacturer USG Corp. and insurer Conseco Inc. In a short sale, an investor sells borrowed shares in anticipation the price will drop, providing a profit when the trade is closed out.
Icahn and Ackman also are both activist investors who take stakes in companies they deem underperforming and then push for changes designed to boost the targets’ share price.
The two spent seven years in court fighting over $4.5 million tied to a company called Hallwood Realty Partners LP, the New York Times reported in November 2011.
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