NEW YORK (AP) — A feud between Wall Street titans is flaring up again over Herbalife Ltd. (NYSE:HLF) .
Carl Icahn has taken a 13 percent stake in Herbalife, a supplement company that Pershing Square Capital Management’s William Ackman shorted heavily, calling it a massive pyramid scheme.
Icahn’s investment, revealed in a filing with the Securities and Exchange Commission late Thursday, comes three weeks after a feud between the two men boiled over on live television, with each phoning in to CNBC and insulting each other.
The stock price of Herbalife was up $4.38, or 11 percent, to $42.65 Friday morning. It jumped more than 20 percent before the opening bell.
Icahn said in the regulatory filing that he plans to have discussions with Herbalife management about business and strategic alternatives to enhance shareholder value, including the possibility of going private.
That would be disastrous for investors that have shorted Herbalife, a tactic in which an investor “borrows” a share from a broker and sells it on the open market, anticipating the stock price will fall. Later, that share can be bought again later at a lower price, locking in a profit for the investor who shorts.
Short sellers could be forced to liquidate their positions to limit their losses, and with the shares rocketing early on Friday, many certainly will be doing just that.
Ackman on Friday remained firm in his beliefs on Herbalife .
“After 18 months of due diligence, we have concluded that it is a certainty that Herbalife is a pyramid scheme,” he said. “Our goal was to shine a spotlight on Herbalife. To the extent that Mr. Icahn is helping achieve this objective, we welcome his involvement.”
The feud between Icahn and Ackman began a decade ago over a real estate company deal that ended up in court. Icahn was forced to pay $4.5 billion to Ackman’s Gotham Partners, and he has never forgotten about it.
Icahn has said publicly that he neither likes nor respects Ackman and didn’t like how he had approached his short position in Herbalife. He has previously refused to comment on whether he held a position in Herbalife. Many have speculated that he would take a stake in the company to strike at Ackman.
In an emailed response, a spokeswoman for Herbalife said, “We welcome all parties who see the same value in Herbalife that we do.”