Icahn Joins Sharks in Cry for Ackman Blood

January 16, 2013 3:50 PM EST
Last week rumors said Carl Icahn had taken a stake in Herbalife (NYSE: HLF), a company targeted by hedge-fund manager William Ackman. Ackman called the company a ponzi scheme and announced a massive short position on the stock. A number of hedge funds, including Third Point's Dan Loeb, have taken the other side of the trade. Now it seems Icahn may have in fact entered the fray.

According to reports in the WSJ today, Icahn told investors about a long position in Herbalife. Considering Icahn and Ackman's contentious history, most don't find the rumors too hard to believe. The dispute began years ago after disagreements on various deals soured the relationship.

Last year Ackman, speaking at conference, said he had "no respect" for Icahn.

Icahn responded by saying "any criticism from Bill Ackman I consider a compliment".

Ackman is not known as a popular figure on Wall Street and some speculate that hedge funds are teaming up to take him down. The idea sounds slightly preposterous considering many of the people involved are extremely rational investors with keen business senses. The idea that they can be motivated by anything besides sound business decisions is contrary to what many believe is their nature.

However, as last year's London Whale story illustrates, normally analytic hedge funds managers can quickly turn into sharks when they smell blood in the water, and at the moment the seas are no doubt red with Ackman's. Icahn probably sees an opportunity to kill two birds with one stone – humble a competitor and make a fist full of cash.

Wall Street by definition is not a game of emotion, but at its core it is very far from a friendly game of chess.

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