Billionaires Get Nasty in Epic Icahn vs. Ackman Confrontation
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Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 1.8%
Revenue Growth %: +4.0%
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On a slow Friday afternoon, investors around the world paused their normal activities to listen in on what turned out to be one of the most intense, ruthless, and jaw-dropping interviews in Wall Street history.
CNBC invited Pershing Square's Bill Ackman on for an interview over multi-level marketing (MLM) company Herbalife (NYSE: HLF), a stock he thinks is worthless, as well as to clarify comments made earlier in the week about a debt owed by activist investor Carl Icahn. Coincidentally, Icahn was said to have taken a long position in Herbalife last week. Some bad blood came about this week over the position, though history between the two goes much further back.
The interview on CNBC was going relatively well, Ackman fielding questions like a pro while keeping his cool. He even got to taking about J.C. Penney (NYSE: JCP) at one point, buttering up the stock while he had some national TV time.
The host of the CNBC show then said that Icahn was on the other line and would Ackman like to speak with him? Once business partners, a Hallwood Partners bet which Ackman claims Icahn never paid on has since been a sticking point for Ackman. That event happened over a decade ago and he still is holding a grudge.
So, Icahn gets to talk on CNBC and this is where the fun starts.
During the interview, Icahn reiterated his view that Ackman is a liar who is using Herbalife as a piggy bank by scaring investors and ruining the stock in an effort to boost year-end profits. Icahn also said Ackman has a lousy investment strategy and takes "inordinate risks," which in the world of billionaire hedge fund managers might be the worst insult of all.
What would Ackman do if Herbalife receives a $100 per share tender offer, speculated Icahn, pointing out a well known risk with naked short positions.
Ackman fired back, saying Icahn was free to tender shares of Herbalife any time he wants. It was a bluff Ackman knows Icahn was unlikely to take.
For his part, Ackman accused Icahn of being a bully and a dishonest business man who thinks he can run over anyone he wants. He also said that if - like hedge fund manager Dan Loeb - Icahn is long the stock it is probably a short term trade that is not based on the type of significant research his firm puts in.
Icahn scoffed at these remarks and once again pointed out Ackman's flawed, risky, and ill advised investment thesis.
The animosity between the two investors is a decade old and relates to bad blood over a deal that eventually entered litigation. After today's interview, which resembled a reality TV show brawl of sorts, the bitterness has taken on new life and it is very clear the two men hate each other.
Lost in the drama is the stock that started the entire debate, Herbalife. Icahn unleashed a blitzkrieg of criticism on Ackman, but he stopped short of revealing a long position in Herbalife.
In previous revelations, Ackman laid out a compelling case against Herbalife. If he is right, the hedge fund could make a mint. On the other hand, Icahn says he is a liar, and even if he isn't wrong Ackman could still lose.
Besides Icahn, rumors say a number of hedge funds have taken the opposite side and they may attempt to organize a massive short squeeze against Ackman, a person Icahn likened to a school boy crying. For his part, schoolboy or not, Ackman may have a few more tricks up his sleeve.
. . . to be continued.
The video is embedded below:
CNBC invited Pershing Square's Bill Ackman on for an interview over multi-level marketing (MLM) company Herbalife (NYSE: HLF), a stock he thinks is worthless, as well as to clarify comments made earlier in the week about a debt owed by activist investor Carl Icahn. Coincidentally, Icahn was said to have taken a long position in Herbalife last week. Some bad blood came about this week over the position, though history between the two goes much further back.
The interview on CNBC was going relatively well, Ackman fielding questions like a pro while keeping his cool. He even got to taking about J.C. Penney (NYSE: JCP) at one point, buttering up the stock while he had some national TV time.
The host of the CNBC show then said that Icahn was on the other line and would Ackman like to speak with him? Once business partners, a Hallwood Partners bet which Ackman claims Icahn never paid on has since been a sticking point for Ackman. That event happened over a decade ago and he still is holding a grudge.
So, Icahn gets to talk on CNBC and this is where the fun starts.
During the interview, Icahn reiterated his view that Ackman is a liar who is using Herbalife as a piggy bank by scaring investors and ruining the stock in an effort to boost year-end profits. Icahn also said Ackman has a lousy investment strategy and takes "inordinate risks," which in the world of billionaire hedge fund managers might be the worst insult of all.
What would Ackman do if Herbalife receives a $100 per share tender offer, speculated Icahn, pointing out a well known risk with naked short positions.
Ackman fired back, saying Icahn was free to tender shares of Herbalife any time he wants. It was a bluff Ackman knows Icahn was unlikely to take.
For his part, Ackman accused Icahn of being a bully and a dishonest business man who thinks he can run over anyone he wants. He also said that if - like hedge fund manager Dan Loeb - Icahn is long the stock it is probably a short term trade that is not based on the type of significant research his firm puts in.
Icahn scoffed at these remarks and once again pointed out Ackman's flawed, risky, and ill advised investment thesis.
The animosity between the two investors is a decade old and relates to bad blood over a deal that eventually entered litigation. After today's interview, which resembled a reality TV show brawl of sorts, the bitterness has taken on new life and it is very clear the two men hate each other.
Lost in the drama is the stock that started the entire debate, Herbalife. Icahn unleashed a blitzkrieg of criticism on Ackman, but he stopped short of revealing a long position in Herbalife.
In previous revelations, Ackman laid out a compelling case against Herbalife. If he is right, the hedge fund could make a mint. On the other hand, Icahn says he is a liar, and even if he isn't wrong Ackman could still lose.
Besides Icahn, rumors say a number of hedge funds have taken the opposite side and they may attempt to organize a massive short squeeze against Ackman, a person Icahn likened to a school boy crying. For his part, schoolboy or not, Ackman may have a few more tricks up his sleeve.
. . . to be continued.
The video is embedded below:
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