1:43 p.m. | Updated
Investors in Herbalife initially cheered the disclosure that Carl C. Icahn had taken a big stake in the company, sending the stock price higher on Friday morning.
But that enthusiasm appeared to fade a bit once Mr. Icahn had an opportunity to explain his reasons for investing in the nutritional supplements company.
The stock gave up some gains at midday on Friday, falling below $40 a share after initially rising as high as $45. It was trading around $41 in the afternoon, up about 7 percent from the previous closing price. Trading volume surged during the time that Mr. Icahn was being interviewed at midday Friday on CNBC.
Mr. Icahn on Thursday disclosed a stake in Herbalife of 12.98 percent. While the investment may very well be a bet on vitamins and protein shakes, it also puts Mr. Icahn squarely in opposition to a longtime rival, the hedge fund manager William A. Ackman, who revealed in December a big wager that Herbalife shares would fall.
The animosity between the two financial titans has its roots in a decade-old dispute.
“I’m not going to lie to you and say that if Ackman gets squeezed I’ll feel very sorry and cry and do penance,” Mr. Icahn said on CNBC on Friday. “But that’s not the reason I’m doing this.”
“This is not an ad hominem thing. It is really not a personal thing,” Mr. Icahn insisted. But he added: “The fact that I don’t like Ackman you could say is the strawberry on top of the ice cream.”
Mr. Icahn described Herbalife as a strong company that had growth potential, calling it “a quintessential example of a company that should be taken private.”
He added that he believed Herbalife sold high-quality products.
Mr. Ackman, the head of Pershing Square Capital Management, contends that Herbalife is an abusive pyramid scheme, an argument that he first outlined when he revealed his large short-selling position in December. That position hasn’t changed.
“Our conclusions are unaffected by who is on the other side of the investment,” Mr. Ackman said in a statement on Friday. “Our goal was to shine a spotlight on Herbalife. To the extent that Mr. Icahn is helping achieve this objective, we welcome his involvement.”
Mr. Icahn, who said he recently met with Herbalife’s chief executive, alluded to some possible plans for the company in a regulatory filing. These “strategic alternatives to enhance shareholder value” could include a “recapitalization or a going-private transaction,” the filing said.
Friday’s CNBC segment followed a drama-filled half-hour in late January, when Mr. Icahn and Mr. Ackman had a heated argument on the channel. Mr. Icahn owned a stake in Herbalife at that point, he revealed on Thursday, but he ramped up his purchases in the following weeks.
That investment appeared to be intended, at least in part, as a way to squeeze Mr. Ackman, the CNBC host suggested. Mr. Ichan denied that, but he didn’t disguise his distaste for his rival.
“If somebody wants to live by the sword,” Mr. Icahn said, “you die by the sword.”
DealBook: The Icahn Effect on Herbalife Shares
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DealBook: The Icahn Effect on Herbalife Shares
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DealBook: The Icahn Effect on Herbalife Shares
