Betting on Zero Page #6

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herbalife stock,

Another wall street

heavyweight

leapt into the fray.

Dramatically changing

the nature of

ackman's campaign.

Paul vigna:
Herbalife is up

much more in pre-market.

Why are they up so much?

'cause carl icahn,

the famed hedge fund trader

Has taken out a big

stake in the company.

Why has he done that?

It kind of seems like

he's done it pretty much

'cause he hates bill ackman.

Carl icahn:

most guys on wall street,

I sort of like

and I get along with.

And it's no secret,

I don't like ackman.

I don't respect him

and I don't like him

and that's not a secret.

Carl icahn is one of

the world's richest men

He's probably worth

like 25 billion dollars.

Carl was an activist investor,

you know

When bill was just

getting out of diapers.

He essentially could

buy out this company

And really just

crush ackman's short.

Icahn:

as far as I'm concerned,

He 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 sanctimonious guy

I ever met in my life

or the most arrogant.

Cohan:
Ten years before,

they had invested in a deal.

Bill ackman

ended up suing icahn

for $10,000,000

That he thought

that carl owed him.

Ackman:

he's a bully, okay.

I was not in

a very good place

in my business career

And carl icahn thought,

you know what,

This guy is road kill

on the hedge fund highway.

I'm never gonna have to worry

about this kid again.

So, I'm not going to pay him.

They went to court

and ackman won

And icahn ended up having to

pay him this $10,000,000,

Which is kind of like nickel

and dimes to these guys.

Icahn:

and I'm telling you,

He's like the cry-baby

in the school yard,

You know I went

to a tough school

in queens that

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.

You know,

it's like in the old song

You rue the day

I ever met the guy.

Cohan:
For 10 years,

they couldn't

stand each other.

This sort of

expressed itself when icahn

saw a technical opportunity

To put what's called

a "short squeeze"

onto bill ackman.

Some people have said this is

the ultimate short squeeze,

We've got a stock now,

It's up 20% year to date.

Icahn:

ackman has given us

An opportunity

to buy a company

at a discounted price.

And for that,

I thank him, actually.

Again, the worst thing

for a short seller

Is when the stock goes up

Because that stock can go

to infinity, theoretically.

That's gonna just make

his losses massive.

Why is the stock going up?

Simply because carl icahn

and others have been

promoting it, that's why.

Ultimately...

Meaning that the people

in investment communities

believe in carl icahn

More than they believe in you.

Certainly on this investment,

that's the case.

Icahn:
I bought it

'cause I really do think,

It's an opportunity for

unemployed people

in these countries

To make money

and I think the product

is a good product.

Cohan:
He's not there

because he believes

in herbalife's products

And what herbalife is

doing to lift people

Out of poverty

and into the middle class.

He's doing it because

he thinks he can make money

by squeezing bill ackman.

Ackman:

carl can try to orchestrate

a short squeeze,

He can try to scare

my investors,

From investing with me,

Which sounds like

he's attempting to do

on this call.

Icahn:
Ackman takes

inordinate risk.

What the hell?

He's not risking his money.

He's risking

his investors' money

And I'll tell you,

This could be the mother

of all short squeezes.

Now, how long can bill ackman

hold out now?

He's got a billion dollars bet

that this company

is going to go down.

Man:
How big do you

think their egos are?

Icahn:

then he talks about charity,

that's complete...

He's not giving it to charity.

Reporter:
Carl, let me...

Let me remind you that we are

on live television.

That kind of

defines the market

for months and months.

All the discussion about

what herbalife is really doing

Gets displaced and it becomes

like a big wall street circus.

Ackman:

I told carl after

the whole thing,

He called me up

and he literally said,

"you know,

bill, we can be friends now,"

I wish I had a recording

of the conversation.

I simply said to him, "look,

carl, you are no friend of

mine," and that was it.

Icahn:
I never said that

I wanted to be

friends with you, bill.

I wouldn't be

friends with you,

-And you said to me...

-Ackman:
Okay, carl...

Icahn:
You'd like to be

friends so that we can

invest together.

Ackman:
Carl,

I have no interest...

Do you think

I want to invest with you?

-Okay, let's move on...

-Icahn:
I wouldn't

invest with you

If you were

the last man on earth.

Reporter:
Let's move on.

Zac kirby:
I was in

my last semester of college,

finishing at business school.

Didn't really have

any job prospects,

Any idea what

I really wanted to do

even at that time

And I had

an old high school friend

approach me

About these nutrition clubs

that were popping up

everywhere.

We're in oklahoma

and the obesity rate

is extremely high,

It's 67% among adults

Over the age of 30,

so a weight loss company,

In a region where it was...

Weight loss is greatly needed.

I thought it'd be a good fit.

The person who signed me up

took me down to oklahoma city

To one of their

success trading seminars.

It's like a big

motivational event.

Johnson:
Herbalife is

a global nutrition company

That sells our

products exclusively

Through a network of people

just like you.

After the presentation

You will have a chance

to discuss our products

And our business

opportunity

With the person who

invited you here today.

And welcome to

our herbalife family

And our herbalife opportunity.

These pres team guys,

they would actually

show you their checks

What herbalife

was sending them.

Saying how you should get

involved right now

Because these

nutrition clubs could

easily produce, you know,

$20-30,000 in sales

apiece each month.

So I'm thinking,

I've found a cash cow here.

Right as soon as somebody

gets into our club,

We say,

"welcome to the club."

And that's a little something,

we welcome them to the club...

You know,

they feel the high energy

That's in there,

there's music going.

You wanna watch out how much

you tell him about,

You know, the business,

'cause they're gonna be like,

"they're just looking

to recruit me,"

Or, "they're just looking for,

you know,

"to get me into

their business."

So you really

wanna start building

Your relationships

with these people first.

On that very first day,

It's all part of

planting the seeds.

You don't need

the whole tree yet.

That'll come in time.

Trust me.

But be patient. Do the deal.

The deal is here.

What we're doing

Inside the club, it's about

building herbalife.

It's about duplicating.

It's about

growing our royalty.

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