NEW YORK ( TheStreet) -- Lindsey Bell: Carl Ichan is now in the Herbalife ( HLF - Get Report) warzone. He's backing Daniel's Loeb's team by going long on the stock.

Jim Cramer:Right.

Lindsey Bell:

Jim, we've got preliminary earnings out of Herbalife this morning that were good. All this seems to be helping Herbalife's defense.

Jim Cramer:I'm focusing on some real money.

I think it's very important to recognize that Herbalife itself, until this morning, was not really a big part of the story. The story was you have a highly motivated short seller, Bill Ackman, who had set a price target of zero, has 20 million shares short, with the expectation that the government will come in, do a Congressional investigation, and shut down Herbalife. It may be an injunction from a U.S. attorney, an FTC move. That's been one side, and versus this is hapless Herbalife ... not hapless, more importantly they have Dan Loeb, who said, 'Look, I think the stock is cheap,' and then some other hedge fund guys said it is cheap.

Now, here's the issue. This morning the axis tilts a little bit toward Loeb, because Herbalife turns out to have a better-than-expected quarter. By the way, that was a pre-annoucement of a better-than-expected quarter. You may think, well that's not good enough, but I have followed Herbalife longer than any of the people who are involved in Herbalife, and I can tell you that this is just part of the consistent good earnings they have.

You would have expected, if you listened to Bill Ackman, that there'd been a dramatic decline in distributors. I think that would certainly be part of the equation of what he wants. You would expect that there's been a big hit to the selling of the product. Now, of course you can say, 'Well, no, Jim, it's just a big Ponzi scheme, you know, it's a pyramid thing.' But I come back and say now you have firepower because the cash flow is incredibly powerful.

Herbalife ... it used to be a private company, it became public, who says it can't be private again. I don't know whether Loeb's staying in or not. That's not irrelevant, I mean, obviously you need to get a short squeeze going, that's not what I'm trying to do. But if that's the motivation of people who are betting on it, then you finally got what I think is really important, which is that CEO Michael Johnson can stand underneath any buyer and just say, 'Listen, I'll take every share.' He's already shrunk the shares outstanding by some 30 million over a period of time. He's already gotten the cash flow up 50%. There's a remarkable amount of business being done in Asia. It's not just an American company. So I think that it's Loeb and Herbalife, OK?

Lindsey Bell:


Jim Cramer:

Now, my experience in these as a reporter, trying to get the government to investigate entities that I feel are corrupt, I think are better than Ackman trying to get them to investigate. What happens is that the government likes to look at the press and say, 'Wow, I've got to get on that because they've got to probe that.' A short seller isn't going to make them swing into action. He's got a terrific site about why Herbalife shouldn't be existing. He said over and over, he's got to protect people from Herbalife. The only issue to that is that the government is a feckless ally.

The government's not going to tell you what it's going to do. The government's not going to play ball with you. The government, whether it be the Justice Department, whether it be the FCC, whether it be the FDIC, are very reluctant to wipe out a company. We know that from Arthur Andersen. The federal government and Justice Department just wishes it had never closed Arthur Andersen, and I think that is the mode that the government operates under, which is don't do to Herbalife what we did to Arthur Andersen. So now it's advantage Herbalife. Does that mean I want to buy Herbalife? Look, I'm just saying it's a battleground, and I don't bet on the Ravens versus the Patriots, but there are various times when I think that there's an advantage and the Patriots, I think, have the advantage, but I'm just going to look at the game. I'm not going to bet, because I don't bet.

Lindsey Bell:

All right. Sounds good. Thanks, Jim.

Jim Cramer:

Thank you.