This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Herbalife: Ackman Bitten in Big Dog Game

NEW YORK ( TheStreet) -- Last summer hedge fund heavyweight Bill Ackman reportedly bonked -- dehydrated and wracked with cramps, in cycling parlance -- while trying to bury rival traders on a Long Island bike ride.

Maybe it was a message. If it was, he didn't heed it. And now he may pay with his fortune, along with those of his investors.

New York has always had big dogs, traders who felt they knew better than the common herd and were anxious to let the world know it. They attack or defend big companies like they're cards in a poker game, and make the media part of the play. They're the lion tamers in the market circus, the bullfighters in the market bull ring. They're the market's high-wire acts.

And sometimes they fall.

Today's vehicle of choice is the hedge fund. Privately held, it's not subject to the rules that governed brokerages or conglomerates back in the day. Most hedge funds are quiet, taking the pennies that fall out of any quick market move, counting nickels and dimes a million times. Others are more active.

Ackman's Pershing Square Capital Management is an example of a more active fund. It makes big public bets, for and against big companies. When it's right, as with McDonald's (MCD - Get Report) or General Growth Properties (GGP - Get Report) it wins big. When it's wrong, as with Borders or Target (TGT - Get Report), it loses big.

Trouble is, of course, that the know-it-all, I'm better-than-you attitude makes enemies. Wall Street nature is red in tooth and claw, so weakness in a big dog is seen by the rest of the pack as a cue to attack.

And that's what is happening to Ackman today. His bad bet on J.C. Penney (JCP - Get Report), which included the hiring of former CEO Ron Johnson, has weakened him. But while that bet was failing, he bet bigger with a short of Herbalife (HLF - Get Report), announcing it in December through a three-hour presentation whose highlights were then posted to a Web site.

Ackman claims to be shocked that other big dogs, like Dan Loeb of Third Point LLC, another hedge fund, and investor Carl Icahn, are taking the other side of the trade, aiming to squeeze him dry.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
GGP $27.24 0.00%
HLF $54.65 0.00%
JCP $9.71 0.00%
MCD $103.24 0.00%
TGT $79.21 0.00%


Chart of I:DJI
DOW 17,131.86 +47.37 0.28%
S&P 500 2,014.89 +15.91 0.80%
NASDAQ 4,838.6430 +8.1730 0.17%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs