Cafeteria Fight Club: When Billionaires Act Like 7th Graders

What do you get when two Wall Street titans turn a financial feud into a public spectacle? An activist-investing meltdown that plays out like middle school drama—with $1 billion on the line. In this episode, we dive into the infamous slugfest between Carl Icahn and Bill Ackman over Herbalife, the company Ackman called a pyramid scheme—and Icahn called a golden opportunity to make him squirm.

Expect:

• CNBC’s live on-air slap fight that left moderators speechless
• A 330-slide presentation that feels more like a cry for help
• Carl’s refusal to be bullied—and his parting shots, delivered with the enthusiasm of a 12-year-old.
• And the moment this grudge stopped being about Herbalife and started being about ego

This is not just finance—it’s personal. And petty. And perfect.

This episode was researched and written by Cherise Lloyd. Some music was created by using UDO. You can find show notes, transcripts, and sources at www.overleveragedoverconfident.com. Follow us on Instagram at Overleveraged Overconfident. Support the show on Patreon and help us keep deep-diving into those spectacular financial fails.. Overleveraged Overconfident is part of Seven Seven Spider, which specializes in deep dive research and financial storytelling. All research uses publicly available sources, so no confidential or regulatory information, just my keen sense of spotting nonsense.

Transcript

Cherise 2 0:00

Be warned. While some of this was broadcasted on CNBC, there is swearing. And not all of it by me.

Scott Wapner 0:09

All right. Welcome back to the halftime report live today from the New York Stock Exchange. We've been speaking with hedge fund investor, bill Ackman. Now it's time to hear what Carl Icahn thinks of our conversation. He joins us live on the phone. Gentlemen, lemme just make sure I have both of you with us, uh, just for technical purposes. Carl, are you there? Bill there? Yeah, I'm here. I'm here as well. Um, you know, Carl, we've been speaking with Bill, uh, for the last several minutes, uh, following the, the accusations that you made yesterday. And he's essentially saying that you're a hypocrite. Uh, Carl, in your argument that you've laid out short positions yourself publicly, how do you respond?

Cherise 2 0:42

On January 25th, 2013, two billionaires dialed into CNBC's halftime report where Anchor Scott Wapner tried to referee what was supposed to be a debate about Herbalife, a company accused of being a pyramid scheme preying on poor Americans chasing the American dream. What we got instead was 25 minutes of two grown men yelling Oh yeah, at each other with bonus swearing, personal jabs, and decades of unresolved Wall Street beef. It was riveting television and delighted Wall Street traders. It was finances, version of middle school. And it became a cottage industry. Wapner turned the saga into a book deal. CNBC. Now commemorates the throw down like it's a federal holiday. And somewhere Bill Ackman is still explaining why shorting a cult stock on live TV was a good idea. Welcome to Cafeteria Fight Club. This is the story of two billionaires with Ivy League educations and with combined wealth that could buy several small countries acting like they're fighting over who gets to sit at the cool kids' table and plans to meet by the swings at recess to really hash this out in the red corner wearing his main character Energy, bill Ackman smart kid, a plus student, the type who raises his hand to remind the teacher about homework. Years ago, he got into it with the class bully over some$9 million lunch money situation and thought like most well-meaning nerds do that. Winning the argument meant it was over in the blue corner with the patience of someone who has been planning your social destruction since homeroom. Carl Icahn and Carl Icahn doesn't forget ever. We're talking elephant level memory with the patients of a crocodile, just like some slighted kid on a playground. The lesson here isn't complicated. Never underestimate someone who has more resources than you, and the emotional maturity of a 12-year-old bully with a trust fund. Because the most dangerous enemy isn't the one that hates you. It's the one who remembers exactly why they hate you, and has been waiting for the perfect moment to prove that patience plus capital equals the ultimate comeback.

anchor 3:21

The telecom giant that once employed over thousands of workers, has officially filed for Chapter 11 bankruptcy protection.

Cherise 2 3:27

Company cited mounting debt and declining revenues as primary factors likely see their investments wiped out entirely while bond holders may recover only premium investors.

anchor 3:36

This marks the end of what was once considered a blue chip. Look at the timeline. They were still issuing rosy guidance to investors. Full sense of this, was this primarily a case? Of being over leveraged or was this more about overconfidence? I would say overleveraged. It feels like the whole market is overconfident, neither. It's a perfect hedge. Just hang on.

Cherise 2 3:56

Welcome to Over Leveraged Overconfident, the podcast where spectacular risk meets more spectacular ego. This is where the hedge fund tightens. The FinTech darlings and the CDO Cowboys swagger into risks like they own the term sheet. But all of these stories will end with subpoenas, sell offs, and sob stories. Hi, I am Cherise. I've spent the last 15 years with a front row seat to some of the most incredible financial meltdowns from my time at the Federal Reserve to the area of optimistic leverage finance. And I've seen some very smart people do some very dumb things with extremely large sums of money. This is where we will look at investors who talk their book, bankers Who Believe the model, and speculators who go home empty handed. These are the stories where conviction replaces confirmation, and everyone believes in fast money. Since the risk of failure may seem extremely unlike. Even if it's highly reoccurring. Look, I need to level with you about something my first encounter with Herbalife wasn't through some fancy financial analysis. It was sitting in suburban basements in the Midwest, watching moms and dads with type budgets get pitched on a dream of easy money over store bought cookies and juice boxes. These weren't sophisticated investors. These were regular people hoping to supplement their income with something that sounded simple and quick. Even as a kid, I couldn't wrap my head around how people selling protein shakes to their neighbors was supposedly a better business model than just putting it on target shelves. But there I was basement after basement, watching the same hopeful pitch, play out like some weird Midwestern Groundhog Day. Growing up in Minnesota, I also knew something about activist investors, though back in the eighties, we called them corporate Raiders. Irwin Jacobs was one of our local boogeymen, the guy, the Minneapolis papers, loved to hate for buying companies and selling them off piece by piece, putting hundreds of people outta work, reducing pension plans everywhere. Carl Icahn was another classic corporate Raider. In 1985, he bought transworld Airlines and stripped off the assets to pay back the debt, which left him with a profit of over 470 million in TWA with half a billion dollars in debt. But Bill Ackman, I only discovered him through his Herbalife crusade. And let me tell you it was like watching a child desperate for adult attention. throw a temper tantrum at a cocktail party, i'm sure as investors wish it had been more profitable than it was entertaining. Let's meet the finance world's. Answer to the question. What happens when you give a Harvard degree, a Twitter account, an unchecked self-confidence to the same person? This is a guy who calls his followers, his posse, hands out his nutritionist number mid meeting if he thinks you've packed on a few and once told a nonprofit exec that She'd be more persuasive if she dressed better. Bill Ackman is that kid who started going gray at the age of nine, which honestly explains everything about his personality with other kids losing teeth. Bill was apparently already stressed out about market inefficiency and poorly managed companies. There was a stretch that Ackman was on CNBC. So often they thought they'd have to put him on the payroll. Ackman coming in at an imposing six three with extreme blue eyes is a dedicated tennis player who wins every game against his analysts because, well, they work for him. Eye candy for the media with an appearance in a wardrobe of expensive, perfectly tailored suits, speaking uninterrupted in his MidAtlantic accent and relaxed supreme confidence. His clean shaven, manicured face. Personifying what the New York Times calls Wall Street's smart ay boy wonder and honestly that tracks ackman's confidence doesn't come from just being smart. He thinks he's the designated fixer of the American economy. Icahn's take on it?

Carl Icahn 8:46

I gotta tell you, I left, I couldn't figure out if he was the most acrimonious guy I ever met in my life, or the most arrogant.

Cherise 2 8:52

He, however, does not always follow his own advice. Ackman advises his clients to remain unemotional about their investments to see them only as a way to maximize returns. But Bill crying on CNBC is set to be by some as a leading indicator of market volatility. In fact. In 2020, he got so emotional during one appearance asking for COVID Lockdowns that he managed to knock off 7% of the market in one day. But let me take you back to earlier in his career when he wasn't on top of the world and what icon couldn't forgive Ackman four. This is about money, pride, and what happens when you don't define words in a legal agreement. Let's go back to 1992. Fresh out of Harvard Business School, bill Ackman does what every ambitious MBA does. Starts a hedge fund with his buddy Gotham partners. For 10 solid years, they're crushing it, making money, hand over fist with a seemingly Midas touch. Until 2002 when everything goes sideways, they made the classic mistake of throwing good money after bad with a strong belief that depressed golf course values would rebound. They collected 17 courses even as prices continue to decline. When their last ditch effort to merge it with a winning company they owned was nixed by the court. Ackman and his partner David Berkowitz, couldn't recover and had to deliver the news that no one wants to hear. We're shutting the firm down, and now investors all want their money back, all of it right now. So obviously there's a problem. Gotham wasn't sitting on a pile of cash ready to hand it out. Their portfolio was stuffed with private companies and traded stocks with no immediate buyers. The kind of assets, you can't just dump on the market like you're having a garage sale. This is a typical issue for winding down a fund to have when people can ask for their money back in a week, but you can't get it for another 60 months. It was also complicated since the SEC and New York Attorney General Elliot Spitzer was investigating Ackman at the behest of another activist investment, M-B-I-A the bond insurer. So Ackman cold called Carl Icahn, the 66-year-old investment veteran. He only knew by reputation. But also knew he could buy assets and blocks and pay cash for it. So Ackman made an offer sell Icon Gotham's Hollywood Steak, a distressed real estate company for$80 a share more than it was trading for at the time, but still below Ackman's valuation. So we negotiated a safeguard. If Icahn bought and then sold within three years and made a killing, Ackman's, investors would get a cut. Basically a clause to keep icon from flipping the investment for more than 10% profit within three years. Now, who decided to call it schmuck Insurance is also a point of contention. Carl's version on CNBC's halftime report

Carl Icahn 12:11

But hey, let's start out with my history with this guy. I was minding my own business and in 2003 I get a call from this, uh, Aman guy. And I'm telling you, he is like the crybaby in the schoolyard. You know, I went to a tough school in Queens and they used to beat up the little Jewish boys and he was like one of these little Jewish boys crying that the world was taking advantage of him. He was almost sobbing and he's in my office talking about this, how wood and how I can help him. And uh, you know, it's like in the old song, uh, you rule the day I ever met the guy. And uh, so he's there and, uh, talking about this company and I actually. Called a friend who knew him, and the friend says, don't deal with a guy. He's in major, major trouble. So I got involved with this, uh, Ackman guy, and it cost me, uh, it cost me money. I, I, At the very end of the deal before he signed is You gotta do me a favor and signed something called schmuck insurance so that if you flip the. If you flip the stock, then I get half the profits and I said, Hey, I, I, I said to him, Hey Bill, I'm not gonna flip the stock. I'm gonna make a tender off for it. And I did and, and I said, and the company's gonna find another buyer, or I'll buy it so you're not gonna get any profits. He said, I realized that I've just gotta show my investors. And he only had one or two left, maybe by that time, God knows what he had left. And he said, I gotta show my investors that I'm making money and all that crap. And at the end we wrote it and my lawyer is a great lawyer. He's with me 20 days still with me.

Cherise 2 13:30

And Bill's Version We were winding down the fund. We were under no pressure to wind down the fund. In fact. I, I, the last tiny, little last that we still have, our goal was to maximize, uh, outcome for our investors. I never went to Carl's office to pitch him on Hall Realty. We did the transaction over the phone. We had, uh, you know, two bids for, for our deal with Carl Icahn. One was at a higher price. It was all cash. I told Carl that I would do a deal with him. It was worth more than twice the price it was trading for, and that's why Carl agreed to pay me$80 a share in cash, which was less than what we could have gotten selling. We could have sold the position for 90 bucks to someone else, or 85. I don't remember the exact number. I. Um, but with Carl, uh, I got$80 plus what he called schmuck insurance. Now, you again, who figured out the, the schmuck insurance terminology really was Carl Icahn. It was 50% of his profit if he sold in three years. That was the risk to us. Now, I was concerned about dealing with Carl Icahn because Carl Icahn unfortunately does not have a good reputation for, uh, being a handshake guy. Only a year later, Hull Wood, despite icon's wishes was acquired close to what Ackman's earlier valuation was. Icon shares were liquidated at 138 a piece. So Ackman expected his cut, which was around 4.5 million, but Icahn refused to pay, arguing. He didn't sell the shares. They were cashed out in a merger and one he had voted against. And then he pulled what could only be described as the professional equivalent of la la, la, la, la. I can't hear you. Ackman of course, becomes irate and sues, and what follows is an eight year legal cage match that probably costs more in attorney's fees than most people make in a lifetime. Ackman won and then won every appeal for eight years. That's longer than most marriages, longer than most presidential terms, and definitely longer than any reasonable person would hold a grudge over 4.5 million when you're worth billions. Icon and Ackman even had a dinner at one point for Icahn to suggest donating$10 million to Ackman's chosen charity, which Ackman rejected saying probably for the last time, something like this isn't for me, it's for my investors In 2011, Ackman finally conclusively wins and icon has to cough up 9 million, the 4.5 million with interest victory. Right. Well, sort of because then both men had spent eight years questioning each other's honesty, integrity, and basic human decency.

Carl Icahn 16:06

Even though by that time I realized he's the quintessential example that, you know, on Wall Street, if you want a friend, get a dog, I really, I gotta admit to you, I really didn't read this. So I got involved with this, uh, Ackman guy, and it cost me, uh, it cost me money. I, I, uh, I, uh,

Scott Wapner 16:22

well, because it cost you money, Carl, because the court said that you reneged on an agreement that you guys had, right? And, and a court repeatedly said that,

Carl Icahn 16:28

well, let me just say one thing. I will tell you, and I've, I've done stuff for the seventies and eighties on a handshake, and I will tell you categorically Ackman knew that he wasn't gonna get half the profits. This guy was in such trouble. He was in no position to ask for anything We wrote it and said. And, and we still think Eric, what we said is right, but he, but Ackman got a New York court to agree that the fact that they took it away from us, we never sold it. They took the stock away. We voted against the deal, and they took it away. I was amazed when Ackman called me. I really was,

Cherise 2 16:58

icahn said that he'd rule the day he ever met Ackman. In Icahn's mind, Ackman broke every rule there is on Wall Street. He gloated. When the New York Times interviewed Ackman about the end of the suit, Ackman had insisted the agreement to be short and clear. Since he was concerned Icahn was going to screw him, and then told the journalist that if Icahn had played ball, he could have made even more money off of Ackman's creative ideas that move practically begged for retaliation. Who is Carl Icahn? Imagine your tough uncle from Queens, the one who made it big but never lost his edge. Today at 89, Carl Icahn's got that weathered face that looks like it's been through a few hostile takeovers on its own sharp eyes that miss nothing. A mouth perpetually curled either into a smirk or a snarl, and sometimes both. And hands that look like they've signed more pink slips than birthday cards. Icon's got that compact stocky build that says, I've been throwing elbows since the Eisenhower administration. He's not tall, but he carries himself like he's worth all the billions. He is. He's the kind of guy that owns every room through sheer force of personality rather than physical presence. Carl made his name in the 1980s as one of Wall Street's original corporate Raiders, forever disappointing his mother who wanted him to be a doctor. Armed with an unspoken philosophy of unlocking shareholder value, performed through hostile takeovers. He built his empire by shaking up boardrooms and terrifying CEOs. From TWA to Texaco to Time Warner, Icahn earned a reputation as a master of the long game and the grudge. His punishing work schedule led him through two marriages, though the third one seems to be sticking since she started as his assistant and broker. Because nothing says I'm committed to this relationship like battling your second wife for seven years in court to marry your third. This man seems to really like to be in front of a judge. After the collapse of Gotham Partners, bill Ackman reemerged with Pershing Square and with a new ethos on high conviction investing, going all in on a few companies, really concentrating his approach, his war with MBIA, the Bon Insure. Which got him investigated by the SEC and Spitzer way back in 2002 would continue under the new Pershing name. He was convinced the firm was sitting on too much debt to be viable. And when the financial crisis hit in 2008, the hunch was proven correct netting, Ackman a billion dollars. He also took down Farmer Mac, a seller for agricultural loans. After discovering that they were heavily Over leveraged, he published his findings, he watched the stock crater and walked away with just a kiss over 75 million. He convinced Fortune Brands to break up the company, creating another 300, 2 million. Of paper profit pressed Wendy's to spin off Tim Horton's and engineered a corporate shakeup at Canadian Pacific Railway, turning a$1.4 billion investment into a double. But his bet on general growth partners, a mall owner on the edge of bankruptcy, was his biggest win that turned into a 60 times return, to put it bluntly by 2012. Bill Ackman now 46, was riding high. He had the money, the record, and the conviction to take on anyone He wasn't just confident, he was bulletproof, confident. This is a guy who spent 10 years being proven right about everything from municipal bonds to fast food chains. Why would a nutrition company selling shakes in suburban basements be any different? You could speculate that that success had turned Ackman into exactly the kind of overconfident target that someone like Carl Icahn dreams about. Because when you've been right for a decade straight, you start to believe your own press releases. You start thinking, being smart is the same thing as being invincible. In the summer of 2012, when Destiny comes knocking in the form of Christine Richard, a reporter turned researcher as part of the Indigo Girls. She and Diane Sch Luman ran Indigo, a boutique investment research shop that basically functioned as the gossip network for hedge funds. Richard was familiar with Ackman's swing for the fences style. She had written a book on him literally two years earlier. Her book called The Confidence Game, how Hedge Fund Manager, bill Ackman, called Wall Street's Bluff had been released. Richard pitches a possible short sale opportunity to Ackman with a hundred page confidential report using all of her research and reporting skills. Don't know what a short sale is. Here's Forbes Magazine.

anchor 22:35

Basically, you borrow shares of stock from a big institutional investor for a small fee, sell the shares at the current market price, and then wait for the price to fall. Once the price of the target stock falls low enough, you buy back the shares, return them to the lender, then pocket the difference.

Cherise 2 22:51

The company was called Herbalife Nutrition. Now Herbalife founded in 1980 by 24-year-old, Mark Hughes had evolved into a global health and wellness company operating in over 90 countries. It employs a direct selling business model distributing a wide range of science-backed nutrition and personal care products through a vast network of independent members. This is also referred to as a multi-level marketing company. Hughes frequently cited the tragic death of his mother in 1975 from an accidental overdose of prescribed substances for weight loss and sedation. Leading to an almost maniacal desire to solve problems that had plagued his mother. However, Hughes had been successfully selling a product called Slender Now in another MLM before starting Herbalife.. And family members describe his mother's passing as inevitable due to her crippling opioid addiction. Whatever the story. Hughes only armed with a ninth grade education, grew sales to over 423 million by 1985 and went public in 1986. Hughes, his friends had been pressuring him to enter rehab, passed away in May of 2000 with a blood alcohol level of 0.21, and the presence of antidepressants that he took for sleep. It was declared an accidental overdose. After a few years, the company was acquired by two private equity investors and brought on Michael Johnson, a Disney executive, known for his love for protein shakes and juicing to take the helm and work to legitimize the company. The company moved to focus on overall fitness and nutrition and spent lavishly on sports sponsorships, which included As well as David Beckham And the LA Galaxy soccer team wearing the Herbalife Green into battle. With net sales of 3.4 billion in 2011. This was not some small time company. Its Premier product Formula One, so one point eight million dollars in the same year outpacing Pala, Betty Crocker and Listerine christine Richards paper concluded that this multi-billion dollar company was a fraud. Despite all the global revenues and millions of distributors, herbalife wasn't actually selling a healthy lifestyle. Oh no. The actual merchandise they claimed was little more than a vehicle for selling the financial investment in the pyramid scheme. bill Ackman Being a seasoned investor initially remained cautious. Herbalife had been trading on Wall Street for over 25 years. I mean, why hadn't anyone else seen this opportunity? Also Ackman after the bruising, but profitable war with MBIA. He was looking to dial back the drama for a bit, but then a moment of clarity arrives, courtesy of another hedge fund, bigwig, David Ihorn. I horn on Herbalife's investor conference call begins asking What percentage of Herbalife sales goes to genuine customers versus their own distributors? A crucial indicator for a potential pyramid scheme when Herbalife's president fumbles on stage, unable to give a clear answer, the stock drops 20%. Achman sees vindication he smells blood in the water and he believes that ihorn is also shorting the stock, meaning there will be one more dog in this fight. So unlike MBIA, he wasn't lone wolf in it here. Ackman, being Ackman and using his high conviction strategy, decided to go big after the investor call, he started buying shares at the knockdown price. Ihorn had created betting the fall even further. So Ackman builds his position through Goldman Sachs, more than 20 million shares, while his team spends the rest of the summer and the fall of 2012, crafting an exceptional PowerPoint presentation. His plan debut this masterpiece at the Saul Research Conference on December 20th and watch Herbalife crumble under the weight of his brilliant analysis. it's really hard to create anticipation for a PowerPoint presentation, but unemotional, bill Ackman was going to give it a shot. So the day before his presentation, CNBC, breaks the news announcing Bill Ackman has taken a$1 billion short position against Herbalife. A billion dollars, not million, billion with a B that stands for holy shit. This guy is really committed to his thesis. He also informs everyone he's going to present detailed evidence the next day. It's like calling a press conference to announce you're gonna call a press conference. December 20th arrives an Ackman, A man who, some say personifies the maxim. Often wrong. Never in doubt delivers what can only be described as a TED Talk from hell. It's titled, who Wants To Be A Millionaire? And we're talking 3.4 hours and 342 slides. It's in front of what Ackman claims to be, 500 people, but others pegged the audience at 200. But there are television cameras. Bill opened with the line. Herbalife is the best managed pyramid scheme in the world. The presentation had the aesthetic appeal of a grocery store flyer from the 1990s. For three and a half hours. Ackman believed he methodically dismantled Herbalife's business model. He showed how distributors made money from recruiting, not selling. He demonstrated how the company inflated retail sales numbers. He said the business was bad for America. He basically did everything except hiring a skywriter to spell out Herbalife is mean over Manhattan. The unemotional investor, even teared over his own personal love for America. Most listeners were unmoved. Having seen this matinee before. Now, some cynics thought that Ackman chose to do this exactly 11 days before year end, right? When hedge funds mark their position for annual reporting so that if the stock tanked immediately, he could juice his returns for 2012. And initially that seemed to be what was happening. Herbalife dropped nearly 40% in four days, but they weren't taking this laying down. CEO. Michael Johnson publicly dismissed Ackman's claims as bogus and scheduled an investor day for January 10th to deliver a detailed rebuttal, and Johnson soon had some serious backup. On Christmas Eve, as Johnson was heading into midnight mass, his phone rang. It was Carl Icahn. They had never met, and Johnson had no idea how he got the number. Icahn only had time to say he was taking an opposing position before Johnson's wife made him hang up. Now think about it from Icahn's perspective. Here's Ackman once again yelling that he was smarter than everyone else and betting billions on it. He's not just short Herbalife. He's short and loud about it with terrible PowerPoint slides to back it up. He's basically begging someone to take the other side just to shut him up. Carl Icahn. Doesn't care about protein shakes. He cares about watching the teacher's pet learn that being loud and being right are two very different things. An icon had 20 billion of his own money to make that point, and after that initial 40% drop. Herbalife stock rebounded and closed up a staggering 25 percent Either all the bad news had already been priced in, or someone with some serious firepower was buying up the shares as fast as Ackman could dump'em. It was official in January, 2013 when Icon announced a huge stake in Herbalife. perhaps looking to squeeze Ackman.

Edward 31:01

Curious what Short Squeeze is? Well, Short sellers borrow shares and sell them, betting the price will go down so they can buy them back cheaper and pocket the difference. But if the price rises instead, short sellers face potentially unlimited losses. To limit those losses, they start buying back shares known as covering which adds more buying pressure. This demand spike pushes the price up further, squeezing other short sellers, who also rush to cover. Which can get prety expensive.

Cherise 2 31:28

Since Icahn was playing with his own money, he didn't have a fiduciary responsibility to anyone but himself and he was willing to mix it up any, anytime and any place. And the time was January 25th, 2013. And the place was CNBC Live the night before Ackman had arranged to be interviewed to respond. A comments icon made on Bloomberg that day. An enterprising news producer let Icahn know about it, so it all starts as a standard interview. Bill Ackman was on the phone being interviewed, live on CNBC for the halftime report, discussing his Herbalife short and Carl Icahn did what Carl Icahn does best. He crashed the party, he called into the show And what unfolded instantly was dubbed as breathtaking, unforgettable, smack down.

Scott Wapner 32:20

All right. Welcome back to the halftime report live today from the New York Stock Exchange. We've been speaking with hedge fund investor, bill Ackman. Now it's time to hear what Carl Icahn thinks of our conversation. He joins us live on the phone. Gentlemen, lemme just make sure I have both of you with us, uh, just for technical purposes. Carl, are you there? Bill there? Yeah, I'm here. I'm here as well. Um, you know, Carl, we've been speaking with Bill, uh, for the last several minutes, uh, following the, the accusations that you made yesterday. And he's essentially saying that you're a hypocrite. Uh, Carl, in your argument that you've laid out short positions yourself publicly, how do you respond?

Carl Icahn 32:53

Well, you know, listen, I, I, you know, I, I really sort of had it with this guy act then, uh, you know. You know, I'm, I'm not gonna get into, you know, talking about short positions as much as maybe you'd like me to,

Cherise 2 33:05

Carl wasn't really interested in discussing anything about 2013, he wanted another chance to set the record straight about what happened with Hallwood and he wasn't going to take anyone's shit. And Bill wasn't going to let Carl control this story

Scott Wapner 33:18

i've got a few more points to make. Stick with me for one more second. Okay. I like, yeah. One more second.'cause I mean, look, we can, we can go back through the whole merits of the case. Like, as I mentioned, I think this stuff is important. Okay.'cause again, if someone goes on TV and tries a slander your reputation, I think you have an, you have an opport given a proper opportunity to respond. Fair enough. Carl, by the way, made a lot of money with us. Okay. He bought the stock from us at 80. He sold it to a hundred,$3,036 a share. Okay. When I, when I didn't get paid within the two business days, I was supposed to get paid. After the deal closed, I called Carl up, I congratulate him on.

Cherise 2 33:43

i'm cutting some of stuff here I favorite Italian restaurant, you know, Hey, what's his name, guy? Hello. So again, I think this is not a great use of, uh, CNBC airtime. Well, let's, let's, I can tell you is this is not an honest guy, and this is not a guy who keeps his word, and he's a guy who takes, takes advantage of little people. That's what, let, let's,

Scott Wapner 33:59

let's make good use of it or better use of it then. Um, Carl, why, why don't, why don't you just come clean on, on the Herbalife thing? Um, are, are you long or not right? I mean, the whole market knows.

Cherise 2 34:06

And Carl the billionaire bully tries to turn the tables

Carl Icahn 34:10

I didn't on. I didn't get on to be bullied by you. Okay. If I could talk, let me talk, but I don't need you to. Hello?

Scott Wapner 34:16

Yeah, I'm here. I'm no one, no one's bullying you, Carl. I mean, I'm just, you know, you the one who called in to, to our show to talk to Bill Ackman and the, the principal issue is the Herbalife thing.

Carl Icahn 34:24

Hey, hey, listen to me. I was called in or Max Meyer to have a conversation, not to argue with you. Alright. If you, if you wanna take Hello? Hear me? Yeah, we're listening. Well, if you're listening, let me talk. I did. I, you know, I wanna say what I wanna say and I'm not gonna talk about my Herbalife position'cause you wanna bully me. Alright. I'm not bullying you. I'm asking the

Scott Wapner 34:40

question. Everybody wants to know Carl, that's all. But you can make a statement. I don't

Carl Icahn 34:42

get what you want to know. I'm gonna talk about what I wanna talk about. Okay. And if you want to take that position, I'll never go and CNBC, you know? So you can say what the hell you want. Okay? But I'm gonna tell you, I'm gonna talk about what Ackman just said about me, not about Herbalife. And I'll talk about Herbalife, but I want to not when you ask me, okay? I'm never going on a show with you again. That's for damn sure. Okay? So let's start with what I wanna say. Ackman is a liar. Okay.

Cherise 2 35:02

The noise in the background are the traders reacting on a delayed feed. That was for the swear word.

35:08

To begin with, I've lived my life from 1960s to seventies by handshakes. I almost lost my firm a few times by handshakes.

Cherise 2 35:15

And this is for calling Ackman a liar

35:17

Ackman has a, he does pump dump. He's got one of the worst reputations on Wall Street, and I'm gonna tell you this. Herbalife is a classic example of what he does. Let, let's look at Herbalife. Ackman was doing badly in 2012. He was down two, 3%. He probably woke up in the morning, said, let's see what company we can destroy and put out a, a bear rate on it.

Cherise 2 35:37

Cute little song, right

35:38

It's happened from the late, from the late eighties till now, and go do a bear rate, kill the stock, and now we can show our investors we made more money. And by the way, if we can mark these things and make more money, he says he's not taking the profit, but that gives him a, a better, a better rate of return for himself. Ackman has done that. If you read the articles about him, he's done it all his life. And I will swear to you, and I don't, I don't need, we didn't make a lot of money on this. Uh, this, this fucking crazy thing I did with him.

Cherise 2 36:00

The bleep seems to have missed the actual word.

36:03

We made 4 million, but I was incensed because I will tell you that without question, I will swear to it on any Bible you want that I had a verbal agreement with him that he was not gonna get any piece of the money. And he was, as he said, he was in major, major trouble and he's basically lying. He was in major trouble and he said, look, I'm not gonna take any of the profits, but there's one thing I will do. I don't want you just flipping the stock in a couple of weeks, a couple of months, or whatever it was, and therefore put that in. We didn't flip the stock. The agreement, we thought, unfortunately, said that it only applies to flipping the stock. And unfortunately, the agreement wasn't well written. My lawyer's a great lawyer, but this one was missed. So we go in into that. And I'll tell you something, as far as I'm concerned, I wanted to have dinner once with me. I had dinner with him and I gotta tell you, I left. I couldn't figure out if he was the most acrimonious guy I ever met in my life, or the most arrogant. And that's Ackman. And that's the last time I met with the guy I don't wanna meet with.

Cherise 2 36:53

And then something else occurs to him.

36:55

Oh yeah. When it comes to friends, he called me and said, Hey. I'd like, you know, if we were friends, we could make a lot of money invested together. And I, I knew that even if I wasn't friend, I never would invest with this guy because I tell you, the guy takes inordinate risks. Carl, let, let me, let me, let me, um, let finish, if I may, what the hell I wanna say? You let, you let Ackman talk, so let me talk. Oh, you've been talking. Okay. You can continue. Okay. Thank you.

Carl Icahn 37:14

But I will tell you one day, yeah, that I think HALF could be the mother of all, uh, short squeezes. That's, that's not me saying it, but. Ackman did it. And then he talks about charity that's complete. He's not giving it to charity. He's his limited partner aren't gonna give it to charity. That's assuming they don't need charity themselves. Now that Carl's all say about accident. Okay, let me,

Scott Wapner 37:32

lemme remind you that we are on live television. Um. So that was an interesting choice of words, but let, let me, lemme do this, lemme do this. I mean, uh, and the, the, the guys on the trading floor down here at the New York Stock Exchange. Clearly I need, need, I need Appreciate it as well. Need

Bill Ackman 37:43

to just address a few specific things because, uh, said, can I just say a couple things and we'll move on? Yeah. Alright. The last thing just to clear the record.

Cherise 2 37:50

the mumbling you hear in the background is Carl Icahn talking to somebody off the phone.

Bill Ackman 37:55

Okay. So Version Square was not having a bad year in 2012 and Herbalife did not double our returns. Okay. So it's just, it's just false. What?

Carl Icahn 38:00

I can't hear what you said, bill. I'm sorry. I can't hear you.

Bill Ackman 38:02

Carl, you and I can talk offline. We're wasting the world's, uh, time on this thing. Okay. Um, so. Uh, I think that, uh, Carl either has a very, very bad memory or he has trouble with the truth.

Cherise 2 38:10

Ackman's not going to call Icahn a liar.

Bill Ackman 38:12

Carl's a big boy. He signed the agreement, and then we had several courts conclude that we were right, and he held this up as long as he could. The big issue about Carl Icahn is he's not used to someone. Standing up to him and I, and particularly a little guy like me in 2003, who was in a difficult spot.

Cherise 2 38:23

We’ll skip Ackman’s monologue and head straight for the part where it gets personal.

Bill Ackman 38:27

Carl can try to orchestrate a short squeeze. He can do whatever he wants, okay? He can try to scare my investors from investing with me, which it sounds like he's attempting to do on this call. We take prudent risk at Pershing Square. We're an unlevered fund, uh, and we are very thoughtful in the way that we do our business. I'm gonna end my, you know, I told Carl after the whole thing called me up and he literally said, you know, bill, we can be friends now. Okay? I wish I had a recording of the conversation. I simply said to him, I said, look, Carl, you are no friend of mine. And, and that was it. And, and, uh, every time, so he goes on TV wants disciplinary, I'm gonna defend.

Cherise 2 38:53

And in case you thought we had moved beyond the playground

Carl Icahn 38:55

I never said that I wanna be friends with, with you, bill. I wouldn't be friends. Carl, Carl. Way you said Carl to me. Carl, you you'd like to be friends so that we could investate. Carl,

Bill Ackman 39:02

I have no interest. Do you think? I wanna invest with you. Okay. Let's, let's move on. I would invest with you. Lets move on. You last man on Earth. Let's move on.

Scott Wapner 39:08

Carl. Carl, let me, let me just ask you though, I mean, the, the, the crux of the, the, the argument doesn't really go back or it doesn't so much focus on, on 10 years ago, or maybe it does. It focuses on the most recent history, and that is Bill Ackman's short play on Herbalife. You criticize him quite heavily for the way in which he, he went public with the short. Would, would you be willing to admit that in the past, I mean, look, you, you've got sharp elbows as well. You, you've got weight to throw around too, that. It. That's the way of the short world, isn't it, Carl?

Cherise 2 39:34

You can press all the buttons you want—Carl isn’t blinking

Carl Icahn 39:37

Hey, listen, if I'm gonna admit it, I'm not gonna, then I won't stock, I'm not gonna admit it with a guy like you on the tv because I don't think you've, you've been handling this fairly, I think you're trying to attack me and, and bully me into admitting something, and so you expect me to do it on your show? No, I'm not. I'd like to ask you a question if you think you're gonna bully me into doing it. Yeah. You seem like a nice enough guy. I don't think I've ever been on a show with you, but I don't think I take P bullion. So do you think that you're giving me all this.

Cherise 2 39:59

And then Carl drags in A-C-N-B-C producer as an excuse to say whatever in the hell he wants.

Carl Icahn 40:06

Hey, and Max by said I could say what I wanted on the show, so I'm saying it. Alright. Hey, we'll send, we'll send Maxia, uh, the bill minute on your show. We have to use, try bullying me and coming up against me. Do you? Alright, well, let, let me Hey look. No, no. Wait, wait. Carl, let just say first, wait. Let me say Carl, I'm not, I don't like being bullied. I'm not, I have, I believe nobody here.

Scott Wapner 40:25

Nobody here is bullying you, first and foremost. Second of all, I simply asked you, let me finish please. I simply asked you in and 10 years ago. Why the heck are you getting involved in it? I, I simply asked you to reveal whether you were long Herbalife, as the world wants to know and the motives behind it.

40:42

That's what every person watching this program wants to know, and if that position is in all, okay. Can I answer? Can I answer? You wanna keep talking?

Carl Icahn 40:48

Yeah. Max May called me up. He said, Ackman is making all these dispersions about you. He's gonna come on saying, you're the worst man in the world. Do you want to go on tv? I said, yeah, that's why he came on. I obviously don't like Ackman. Ackman is lying about what happened. I didn't need the 4 million bucks I made there. What it sensed me was that he weasel out of the deal and we'll leave that alone.

Cherise 2 41:07

He says he'll leave it alone, but he just can't

Carl Icahn 41:09

You're right, half or 10 years ago, leave it alone. But he weaseled out of it. And I'll tell you that. But, and, and, and you know, I'm known as a tough guy, but I think if you take my handshake, you live by it. There's nobody said that I ever went back on a handshake. So now let's go back in, into Herbalife Act. I I'm reading again, what, uh, uh, was it in the New York Times

Cherise 2 41:27

We'll skip past him reading a ten year old article..

Carl Icahn 41:30

And right now, I believe, I, I, I'm not going to the SEC or the FTC, but I believe he goes out and he has 300 people in a room. This is the typical Ackman. I wouldn't care if it was anybody else but Ackman, you, you, you scare the hell out of people. Get the stock down. He marks the stock on December 31st and makes 600 million bucks on paper and tells the world how great he is.

Cherise 2 41:50

Let’s jump over the blah-blah and hit the good part.

Carl Icahn 41:52

He's not risking his money. He is risk at his investors' money. You go in and you got 20%, and if there's ever a short squeeze, which well might be in Herbalife. What the hell does he do? I'd like him to answer. And if they ever does it, that stock could rush to a hundred. What the hell does Acton do? I ask him. He's on the phone. He's right here on the phone.

Bill Ackman 42:07

I'm happy. I'm happy to answer if I get a chance to speak. This is a short squeeze. Okay, couple, couple of interesting things. Number one, yeah, bill, lemme just say quick. We have to be quick'cause we're at the end of our, our road here, okay? Okay. So number one, Carl's free to make a tender offer for the company. Carl, you wanna bid for the company? Go ahead and bid for the company. Hey, hey, you don't have to tell me what I'm free to do, okay? Well, number one, number two, obviously we don't think there's gonna be a tender offer for the company. We don't think this company is viable, okay? We don't think any person's gonna write a check for five or$6 billion to buy a business that we believe is fraudulent. Okay? That's number one.

Cherise 2 42:32

Here comes the trader's reaction to Carl's You aint the boss of me

Bill Ackman 42:35

Number two, Carl Icon. Says it. He doesn't like this. Behavior says it's bad. Meanwhile, 2003 at the Iris Sewn Conference in front of a 500 people, Carl Icahn pitched Trinity Industries, which he was short and he was short, 22% of the outstanding shares according to Fortune Magazine. Carl, you can tell us whether that's true or false, but you did precisely that. So I find it interesting that you have an issue with what we did in Herbalife. In Herbalife, we simply provided to the public full transparency on this investment, 330 slides in detail,

Cherise 2 42:59

330 slides? Buddy, that’s not a pitch—that’s a cry for help.

Bill Ackman 43:04

Not scaring people, but going through the facts about the company. Okay. We did exhaustive research over a year and a half scare people. You could have, and we'll be either proven right or we'll be proven wrong. Okay? We shorted the stock. My guess is that Carl bought Herbalife if he did.'cause that's what he, someone at his shop leaked to the press and he flipped it out when the sock went up and he made a good trade. Congratulations on a good trade. I don't believe there's any real investor who can own this business long term because we believe it's a pyramid scheme. We believe you can prove that to a high degree of certain.

Cherise 2 43:26

Carl’s not done until he gets in one more punchline.

Bill Ackman 43:29

hey, uh, I, I appreciate Bill, that you called me a great investor. I thank you for that. Unfortunately, I can't say the same for you, but I'd like to ask you congratulations on what could trade. I, I, I sort of missed that. Let me guys, we're we're gonna, we're gonna end it there. Um, bill. I so much appreciate you coming on today, Carl. Uh, I hope you'll come back. Uh, that's all I can say. Uh, it was, uh, a good conversation and it wasn't anybody. I hear that. I I don't hear you tell me that you appreciated me coming on. Uh, well I think it was, um, obviously, uh, meant there when I said I hope you'll come back. Right. I mean Alright. Alright, thanks very much. I appreciate it and have a good day. Okay. Alright, Joe Ackman, Carl Icahn, we'll go to break and then power Lynch, we will pick up the ball.

Cherise 2 44:06

here's what gets even more fascinating, almost as if the market itself paused to gawk at the spectacle. As traders across Wall Street tuned in, captivated by the live SmackDown between these two titans, trading volume on the major exchanges actually dipped significantly by nearly 23% according to CNBC analysis. Icon's initial stake was just under 13%, valued at more than 200 million, but he wasn't done. Over the next few years, he continued to pile on increasing his holdings to 21% by May, 2018, and ultimately owning more than 24% of Herbalife. This massive ownership gave him significant power, including control over five of the company's 13 board seats. And he wasn't just an investor, he was a major player in the company's future. Herbalife stock surged like a rocket, leaving Ackman's short position, feeling the squeeze carl Icahn's dramatic entry into the Herbalife saga transformed a financial bet into a personal vendetta. But Bill Ackman wasn't about to give up. When the market didn't immediately bend to his will, he doubled down shifting tactics from just financial maneuvers to an all out public relations and lobbying blitz. Think of it as taking the playground fight to the principal's office and then buying ads on the school newspaper, this wasn't just a few press releases. He bordered on having to file as a lobbyist. And he Took the unusual approach during a meeting with the FTC staff of raising his voice to tell them to do their jobs since he had already done most of the tough work for them. It did not go well. Ackman himself publicly stated he had probably spent more than 50 million to research and publicize his fund's negative view on Herbalife. Herbalife in its counter narrative claimed that Ackman's carrying costs were approximately a hundred million annually just to maintain his short position, and he had spent more than 75 million on lobbying and public relations. Following his persistent efforts the Federal Trade Commission, the FTC, the agency responsible for protecting consumers initiated an investigation into Herbalife. This was a significant development and a negative ruling from the FTC could have been devastating for the company, but that's not what happened.

anchor 46:42

Space of good news, bad news for Embattled Company Herbal Life. The Federal Trade Commission will not classify it as a pyramid scheme, but in return, herbal Life will pay a settlement of$200 million. It's a victory in one of the longest running battles on Wall Street and Herbal Life Stock jumped around 15% on the news

Cherise 2 47:01

in response to Ackman's relentless assault, Herbalife had mounted an incredibly vigorous counter campaign defending its business practices and its very legitimacy. After five years, a billion dollars short and an all out media war, Ackman exited the trade at a loss. How much did it cost him? Reports say hundreds of millions, but the bigger price may have been to his reputation. Investors question his judgment, and Pershing Squares shine dull. It was the end of a very public crusade. Acton lost the trade, lost the narrative, and for a time looked like he might lose the confidence of the market itself. Since 2018, Ackman's life has been anything but quiet. On a personal front. He married Israeli American designer and former MIT Professor Neri Oxman. In 2019, the two welcomed a child the same year adding to the children he had from a previous marriage, but it hasn't been smooth sailing. When his eldest daughter, a Harvard student, started dabbling in Marxist theory, Ackman didn't just roll his eyes like most dads, no. He saw it as a full-blown ideological mutiny. Unable to make it through dinner without launching into capitalistic lectures and watching her tune out, he became convinced she had been indoctrinated into a cult. And the twist, it was a cult. He had donated millions to his alma mater. So in 2023 and 2024, using copy and paste and his ex account, Ackman waded into controversy with his vocal criticism of Harvard University over student protests and antisemitism, demanding the names of students who had signed anti-Israeli letters forcing the dismissal of Claudine gay, Harvard's first black president, and just asking the question, but wondered aloud if she had the role due to being black and being a woman using his staff's research skills, found minor points in GA doctoral thesis to accuse her of plagiarism to force a resignation. However, he was outraged when similarities were pointed out between his wife's MIT, PhD and Wikipedia. He threatened to sue and pointed out oddly, that MIT's plagiarism policy did not explicitly object to taking content from Wikipedia. Oxman, who Ackman now referred to as the wife of the protagonist, asked him to stop tweeting about it. Professionally though. Ackman's been on a tear. Afic of Twitter slash x posting daily while on his elliptical for time management. The Financial Times posted a quiz to see if readers could determine, which was a tweet from Ackman. And what was a quote from the main character of American Psycho. Ackman got a perfect score the biggest headline, his infamous hell is coming CNBC interview in 2020. You know that one that knocked 7% off the stock market? Well, it seems before that call, Ackman had purchased$27 million of hedge using credit default swaps, which turned into$2.6 billion in windfall in less than a month as the market sank. Since then, he shifted away from aggressive activism towards concentrated bets in big, high quality names. Think Chipotle, Hilton, alphabet, and Uber. And in 2024, he sold 10% of Pershing Square for 1.5 billion, Of course not every bet paid off The$1 billion position in Netflix that cratered in 2022. His splashy SPAC experience, and his$25 billion IPO fiasco. Which was announced On X but he Was unable to raise the 25 billion, lowered it to 10, and then just scrapped it in June, 2025. A$900 million investment Aims to transform a real estate developer into a conglomerate in the style of Berkshire Hathaway, just like his favorite guy, Warren Buffett. In short, bill Ackman has had one of the most dramatic second acts in hedge fund history. Love him or lo them. He's still in the game. Smarter, wealthier, louder, and more unpredictable. However, apparently now bored with winning against his employees. In 2025, he was looking to be the oldest player to receive official pro points, playing doubles with an Olympic gold medalist. He made the announcement to 1.8 million followers on Twitter. What happened next is considered one of the most embarrassing things to happen on a tennis court, and he was never the oldest player. Here is former world champion, Andy Roddick's. Take.

Andy Roddick 52:03

Bill Ackman, who's been a massive tennis fan, supporter, you know, funds, the PTPA, does the whole thing, wanted to play a pro tournament. So, you know, there was obviously some exchange of something like you don't give a wild card to someone who. 50 players at my club are better than, he's 59 years old, right? Yeah. I this was a total miss. It was, it was hard to watch it. It was, I came in here hot today, like it is just, I was pissed.

Cherise 2 52:30

Andy seems to think the players went easy on Ackman.

Andy Roddick 52:34

It was, it was pathetic. It was pathetic. The least pathetic part about it was, was Bill Ackman's effort on the court. Like honestly, and, you know, he, he wedged himself in there and if this fills his cup up, great. It, it's, what I saw was, was, was, was rough. It was tough. I didn't like it. Hopefully tomorrow the good news is I don't have to watch it anymore, hopefully.

Cherise 2 52:57

Since 2018, Carl Icahn has remained a powerful polarizing force through Icon Enterprises or IEP. He began looking for a simpler life selling sizable pieces of his portfolio. And after that selling spree, the numbers turned south. IEP incurred substantial losses, But still, Icahn didn't stop what he was doing, what he does best. Activist warfare. Most recently in 2024, Icahn grabbed board seats at JetBlue. and Caesar's signaling that he still got a few plays left in the book, whether it's governance, digital strategy, or just stirring the pot. He's not going quietly. But icons own finances. That's where the story gets complicated. Back in 2019, Forbes pegged his net worth at 17 billion. But in May, 2023,

Scott Wapner 53:51

shell today from Short Seller Hindenberg Research, which is revealing a new short position against Carl Icahn's, IEP. The Hindenberg report says IEP has significantly inflated the value of its assets, that it trades at an unreasonable premium to its holding company peers. Hindenberg, saying IEP trades at a more than 200% premium to its reported net asset value when compared to Dan Loeb's third point and Bill Ackman's, Pershing Square, for example, which they contend each trade at a discount.

Cherise 2 54:19

Accusing Icon Enterprises of using inflated valuations and operating with Ponzi like economics. Still rich, but no longer invincible. And that Hindenberg report didn't just hurt his wallet, it drew the attention of the SCC, which revealed that Icahn had pledged up to 82% of his IEP shares as collateral for personal loans, and hadn't disclosed it. August 19th, 2024, Icahn and IEP settled with SEC, agreeing to cease and desist, without admitting wrongdoing. At 89, he's still loud, still fighting, still writing letters and filing lawsuits. He's a financial street brawler turned, philanthropist navigating a new era of transparency and volatility with the same old fire. Whether he's losing billions or making boardroom moves, he remains a force to be reckoned with. Herbalife is currently trading at$9 a share. And somewhere Bill Ackman is still explaining

Bill Ackman 55:23

If I see something that's a problem in society, I wanna do something about it. And there are a lot of people who have a lot of money, a lot of resources. You know what, they sit on their yacht, which is fine, and they live their life and no one's gonna criticize them. Or maybe they catch'em on the yacht, they'll criticize them, right? In my case, I want to, you know, when I'm 85, looking back, I wanna say, you know what? I helped solve a number of important problems. If you can't tell by now, I'm a fixer. Okay. Right. What is shareholder activism? It's fixing companies. What is this? Helping to fix universities. It's all the same.

Cherise 2 55:53

thank you for listening to Over Leveraged Overconfident. If you enjoyed this episode, please subscribe and leave us a rating on Apple Podcasts, Spotify, Google, Amazon Music, or wherever you get your podcasts. This episode was researched and written by Cherise Lloyd. A book valuable for research was when the Wolves bite. Two billionaires, one company, and an Epic Wall Street Battle by Scott Wapner. You can find show notes, transcripts and sources@overleveragedoverconfident.com. Follow us on Instagram at over leveraged overconfident. Support the show on Patreon and help us keep deep diving into those spectacular financial fails. Speaking, which if you have a favorite corporate disaster you'd like to hear about, reach out and connect with us@sevensevenspider.com. Over leveraged overconfident is part of Seven seven Spider specializing in deep dive research and financial storytelling. All research uses publicly available sources, so no confidential or regulatory information, just my keen sense of spotting nonsense. Until next time as we continue tracking the inevitable journey from hubris to bankruptcy.