Icahn thanks Ackman for success of Herbalife investment
Billionaire investor Carl Icahn said he’s had a change of heart about hedge fund manager Bill Ackman, with whom he’s engaged in a widely publicized rift about the merits of Los Angeles nutritional products company Herbalife Ltd.
“I like Ackman. Anybody that makes me a quarter million dollars I like,” Icahn said Wednesday during an investing conference broadcast live on CNBC television. “I never would have been looking at Herbalife if Ackman hadn’t come out with that report.”
Ackman did not immediately respond to a request for comment.
Ackman issued a report in December that accused Herbalife of operating a pyramid scheme and said he had bet $1 billion against the company’s stock, saying he expected regulators to shut the company down and drive its shares to zero.
Icahn disagreed, buying a huge amount of Herbalife’s stock earlier this year. Since that time, Herbalife’s shares have soared, creating what Icahn said was a $250-million gain. After dipping below $25 in December, shares of Herbalife closed Wednesday at $52.16. The company’s stock is up nearly 60% this year.
Icahn and Ackman engaged in a heated discussion on live television about Herbalife earlier this year. Ackman declined CNBC’s invitation to participate in Wednesday’s discussion.
Ackman has said that Herbalife improperly pays its independent distributors commissions from the sales of other distributors they recruit into the business. Most Herbalife distributors make little or no money, he said, while a few at the top of the chain get rich from commissions based on sales made by those they recruited.
The company and Icahn say Ackman is wrong. They contend that most Herbalife distributors do not intend to get rich, only to get a discount on products they personally consume.
Regardless, several consumer groups have urged the Federal Trade Commission to investigate Ackman’s claims. The New York Post reported Tuesday that the FTC had met with representatives of those groups. The FTC and Herbalife declined to comment.
Headquartered in downtown Los Angeles, Herbalife sells a line of diet shake mixes, vitamins and health and beauty products in dozens of countries around the world. Its products are not available in retail stores and can be purchased only by independent distributors who operate from their homes or storefront nutrition clubs.
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