If you didn’t see the surprise heavyweight bout between Wall Street titans Carl Icahn and Bill Ackman recently on CNBC’s “Fast Money Halftime Report,” you missed one for the ages!
As a former floor trader for 25 years on the CBOE, CME, and CBOT, I am used to seeing major players square off. (As they say in mixed martial-arts fighting, “Two men enter, one man leaves.”) But on live television? This was the Wall Street equivalent of the “Thrilla in Manila!”
Never before have I seen such a confrontation, as my brother Pete and I sat stunned on the live set at the NYSE while it unfolded. And we weren’t the only ones, as evidenced by the repeated howls from the men and women witnessing the spectacle from the trading floor a few steps away from us.
You can still watch the segment by clicking here–but you might want to keep the volume down because the language used was not always appropriate for the whole family.
These two men clearly have a history, as was evident in their extraordinary interview with host Scott “The Judge” Wapner. And they do not like each other, which was even more apparent when they went beyond the original topic of the interview, which was Ackman’s controversial shorting of Herbalife.
Ackman started strong, disputing Icahn’s position that he released his 258-page slam of HLF to manipulate the stock. Ackman stayed on point, saying Icahn himself had shorted shares of various stocks before discussing them at Ira Sohn conferences in the early 2000s. “Carl did me a favor by picking on me yesterday,” he said, because it helped draw attention to Herbalife.
Then it was Icahn’s turn, which he took to dispute Ackman’s accounting of the facts–to put it mildly. “Ackman is a liar. He’s got one of the worst reputations on Wall Street,” Icahn said.
I must say that I found it strange that Ackman didn’t mention Herbalife at the Ira Sohn conference in May, where attendees paid the charity thousands of dollars to hear what a dozen or more of Wall Street’s best and brightest had to say about their top investment ideas. Instead, Ackman spoke of his love for J.C. Penney and CEO Ron Johnson.
Then last month, I was shocked to see a special Ira Sohn event at which Ackman would drop his bomb, a 258-page report delivered over three hours, which laid out in excruciating detail why he believes that Herbalife is a pyramid scheme. He was the only speaker at that event, where he committed to donate the first $25 million from his HLF short to charity.
HLF then tumbled from $43 to $24 in the next few sessions. I remember saying on “Fast Money” that the timing of Ackman’s release of his data, coming a day before December options expiration and just days before year end, seemed more than a mere coincidence. Apparently Icahn found that a bit odd as well, as he cited the timing and questioned whether Ackman might have been trying to provide a last-minute boost to his fund’s 2012 returns.
Whatever Ackman’s reasons for going after HLF so publicly at that time, he at least seemed to be violating the “Pig Principle” (pigs get fat, but hogs get slaughtered). Rather than take profits and move on, Ackman said he intended to ride his HLF short position until the stock hit zero.
But the Street sensed that there was blood in the water when it turned out that Ackman held nearly the entire short interest in HLF, and buyers began piling into the other side of the trade in a feeding frenzy normally reserved for takeovers or other major catalysts. That drove HLF back up through $44 as another huge market player, Dan Loeb, and perhaps Icahn himself joined in.
Time will tell which side will eventually win out, but when billionaires face off as they did recently, the investment world pays attention. And in the meantime, Herbalife will draw even more scrutiny as a long or a short play–not because of the pyramid-scheme questions, but because this is Wall Street bloodsport at its best.
Jon “DRJ” Najarian
Jon ‘DRJ’ Najarian is co-founder of optionMONSTER and co-lead analyst for the InsideOptions trade idea alert systems. He spent the first 29 years of his trading career trading in and around the pits of the Chicago exchanges.
“DRJ” is a frequent contributor to CNBC, the Wall Street Journal, as well as other prominent financial media organizations. Mr. Najarian also co-developed the patented trading algorithm the Heat Seeker, used to detect unusual trading activity.