Looks like Ackman has lost this battle

With Icahn revealing a nearly 13% stake in Herbalife, he and Loeb are re-legitimizing the company before our very eyes.

By Jim Cramer Feb 15, 2013 10:18AM

thestreet logoOK, let's say you are the U.S. government. You are the Federal Trade Commission. You are the Securities and Exchange Commission. You are the Justice Department. Are you going to, based on a hedge fund manager's say-so, shut down a company because this person says it is a criminal enterprise? Or are you going to take a look at the records of Dan Loeb and Carl Icahn and say, "You know what? They've done a lot of work. Let's just let the market decide whether Herbalife (HLF) lives or dies. It ain't dead yet, and these two investors say Herbalife is fine, and everyone recognizes these investors as being shrewd, with staffs that far exceed the ken of the government, and they own about 20% of the darned thing. So who are we to put it out of business?"

Does anyone really want an Arthur Andersen on their hands, that infamous Justice Department case in which a stroke of a pen wiped out tens of thousands of jobs?


Furthermore, is Bill Ackman a good stand-in for the government? Is it worth backing a hedge fund manager who has decided to wipe out a company? Is that a stand for the ages? Does that get you votes?


Arrow Up Photodisc SuperStockHence, the odd state of a company that someone needs out of business, while two others just need to sit down and talk about how $5 billion can be found to take the company private.


And all it has to be is talk.

Icahn and Loeb know two things. One: Herbalife has a pristine balance sheet that has been very successful at generating worldwide profit. If it wanted to do so, it could move offshore -- move to Mexico -- and become a huge player in a growth economy. Two: The issue with shorting is that stocks can go to infinity. They stop at zero but they can go to infinity.


So we have a situation in which a company can now be bought because of two managers who are very smart are buying it, and are legitimizing it, or re-legitimizing it, right before our eyes.


Plus, we now know why Icahn was cruel to Judge Scott Wapner, the terrific host of "Fast Money's Halftime Report" on CNBC. Icahn couldn't talk about it because he was accumulating it.

Now, I am sure there are plenty of people who love Bill Ackman. I am sure that 100% that his partners will back him no matter what. I am certain that he believes the Nobel Prize for Economics awaits him and that President Obama is itching to give him the Medal of Freedom.


In the interim, as Stalin once asked of the Pope, how many divisions does he have? 'Cause I can tell you, Icahn and Loeb? They've got a lot of divisions. In this game, he who has the most divisions wins.




Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust and has no positions in stocks mentioned.



More from TheStreet.com

Feb 15, 2013 10:51AM
One side says Herbalife is a legit company.  The other side says they are essentially operating a pyramid scheme.  The truth always comes out, I guess we'll eventually find out who was right.

In the meantime, I'm looking for a half-cent move in the Euro today.  God Bless America!!

Feb 15, 2013 5:46PM
Scumbags left today once again not too pleased....They gave it a heck of a try but fortunately the good guys kept them in check...We take a day like today any time, it could have and was almost a lot worse....Never forget, cheaters will never go away nor give up, and we have plenty of them on and off the floor....Have a great long weekend all.
Feb 15, 2013 1:08PM

Arthur Andersen put itself out of business by making horrible business decision that led to a Federal investigation. The good people of Arthur Andersen should have fought harder for the integrity of their company. Honesty,Equity,Assurance,Responsibility,Trust —all of this really is Wall Street baggage that simply will not be tolerated, isn’t it Mr. Cramer.


As for Herbalife, I’ve read this book, the Whale wins. I’ll let you figure out who’s Ahab, Ishmael and the Whale.

Feb 15, 2013 10:49AM
More BULL"S" from Cramer=These are Criminal Enterprises that violate every ethical rule of investment. So that they can line the top managers pockets  with profits and SCREW their other investors ! LIE ,CHEAT AND STEAL is the motto of these hedge funds and investment firms !  ( HERBALIFE  PRIME EXAMPLE OF SCREW THE PUBLIC )      TAKE YOUR MONEY AND RUN !    Before you lose it !
Feb 15, 2013 1:00PM
If cramer is endorsing icahn you can bet your last dollar another scam to fleece the investing public is being set up .....icahn (leopold) and loeb are most likely buying to spike the price and squeeze ackman then they will start dumping shares through shell companies etc etc ...also buying puts... ..it's $45 today ....I would bet it will be in the 20s in a year .....buying puts in a couple of months as this one is "in play" .........
Feb 19, 2013 12:10PM
We opened up a bit and were doing ok until the village idiot once again opened his mouth and spewed hate and lies as usual; now we are retreating a bit....It is unreal, lies, lies and more lies and like we always say, the socialist bastard may fool the people, he doesn't fool Wall Street. More later.
Feb 15, 2013 12:20PM
herbal life has always skirted the line of ponzi scheme and legit.  people can build an empire while standing on that legal fence.  but it's always a weak foundation and one can easily fall from it
Feb 15, 2013 12:46PM
Anybody ever hear of Amway or Mary Kay?
Feb 15, 2013 12:23PM
So all the global finance ministers meet and the markets go up? THEY are the ones who ruined us. What are you betting on? More Kool Aid? Sorry, all the sugar is gone... Central Banks and Wall Street are just a dark stain on the world now.
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