…..Ackman has been betting that Herbalife is operating a
pyramid scheme and, therefore, is overvalued. Loeb has taken the opposite
position. Icahn, meanwhile, has been rumored to have followed Loeb and gone
long on the nutrition-products company.
What is certain is that as soon as Loeb placed a big long
bet against Ackman’s short bet on Herbalife, investors in the funds, as a
group, became the losers because of the way hedge- fund compensation works. If
you are an investor in both the Ackman and Loeb funds, the total return before
fees on the Herbalife trade will be 0 percent. Whatever Ackman makes, Loeb
loses; and, vice versa. If Ackman makes $1 billion, Loeb loses $1 billion...
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