Carl Icahn buys more Herbalife shares, flouting Bill Ackman
A long-running feud over Herbalife Ltd. between billionaire hedge fund managers Carl Icahn and Bill Ackman heated up Friday, with Ackman saying that Icahn was looking to sell his stake in the Los Angeles maker of nutritional supplements and Icahn saying that’s not the case.
Ackman, confirming an earlier report from the Wall Street Journal, told CNBC on Friday that investment bank Jefferies had approached him asking if he would buy out part of Icahn’s holdings in Herbalife.
But on Friday afternoon, Icahn said not only that he’s not looking to sell, but also that he had just bought 2.3 million additional Herbalife shares. Even before Friday’s purchase, Icahn was by far the company’s biggest shareholder.
Icanh said in a statement on his website that Ackman, who has called Herbalife a pyramid scheme and made a $1-billion bet that the company would be shut down, has become obsessed with the company.
“Obsessions concerning the value of stocks are the undoing of many investors because they often blind you to the facts,” Icahn said. “I have never given Jefferies an order to sell any of our Herbalife shares. … I continue to believe in Herbalife: It’s a great model that creates a great number of jobs for people.”
A month ago, the U.S. Federal Trade Commission closed its investigation of Herbalife and said it needs to rework the way in which it pays its salespeople. The FTC ruled that salespeople have to be paid for selling Herbalife products. Typically, Herbalife salespeople bought products and tried to get others to do the same.
The FTC did not label Herbalife a pyramid scheme, a victory for the company, but its description of its business model was essentially how a pyramid scheme operates. It ordered the company to put into place changes in its business model by May.
Ackman and Icahn have a history of publicly arguing about the company.
Three years ago, both called into CNBC, and Ackman called Icahn a bully; Icahn countered that Ackman reminded him of a little boy crying in a schoolyard.
On Friday, before Icahn released his statement, Ackman said on CNBC that a sale by Icahn could shake confidence in Herbalife. He said he believed Icahn wanted to sell his stake before the mandated changes take place in eight months.
“I think he knows that this thing is toast,” Ackman said.
Herbalife shares, which are up about 10% this year, fell 2.3% in Friday trading. They rose about 4% in after-hours trading after Icahn issued his statement.
The Associated Press was used in compiling this report.
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UPDATES:
2:35 p.m.: This article was updated with additional details.
This article was originally published at 2:10 p.m.
