Cramer: If Ackman Has You Smelling Blood...

Editor's Note: This article was originally published at 6:39 a.m. EDT on Real Money on August 12. To see Jim Cramer's latest commentary as it's published, sign up for a free trial of Real Money.

NEW YORK ( Real Money) -- Sharks smell blood. Hedge funds can be like sharks. It seems like yesterday when the sharks smelled my blood. I was flailing in the deep sea in October of 1998, a victim of an ill-timed opening to please one of our investors at a time when my numbers were quite poor. It was my worst year against the market, ever.

I had some big holdings, mostly banks, and it became obvious that the stocks were heavy, as we say, pretty much every day. I remember Karen Cramer coming to work and saying to me, "You know they are shooting against us." I said, "No, that's paranoia." She said, "In your dreams it's paranoia. Go speak to these traders off the desk."

Sure enough, she was right. Even though I had a stellar record, and even though I vowed to come back, and even though I plainly showed the flag by buying more of the positions, I would be wrong to say it wasn't touch and go. Fortunately, we got double-long at the right time and the market roared back. Those who had shot against me, betting that there would be a big run on my fund from disappointed investors, paid the price.

Right now a bunch of shark hedge funds are circling around Pershing Square, Bill Ackman's company, betting that he's in the same kind of partner-fleeing trouble that they thought I had been in. The vocal nature of his short position in Herbalife ( HLF), the direct-selling company, has given long-time adversary Carl Icahn a chance to run up the stock up -- aided, by the way, by a quarter with some nice growth at the company.

Then there are Ackman's antics involving J.C. Penney ( JCP). He pushed for Ron Johnson to become CEO, who promptly destroyed shopper loyalty to the place, and now he's embarked on an angry campaign against Mike Ullman, Johnson's replacement. All this has brought more opprobrium, this time by Howard Schultz, the CEO and founder of Starbucks ( SBUX) -- who, unlike Icahn, doesn't even have a dog in the hunt, unless you consider decency a dog.

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