When the Wolves Bite

This is the story of Bill Ackman's billion-dollar bet that Herbalife, the multilevel marketer of shakes and supplements, was a pyramid scheme, and of Carl Icahn, who took the other side.

Scott Wapner hosted the CNBC Halftime Report segment where the two men traded insults on air. As anchor of the show, he had covered activist investors for years, and he had access to both camps, which shows in the book's reconstruction of phone calls, pitches and private maneuvering.

Wapner's central point is that Ackman's trade depended on the government shutting Herbalife down, and when the FTC stopped short of that, the short became a long, costly drain on Pershing Square. Icahn came out ahead, though Wapner leaves open whether either man was better off for the war. Publishers Weekly found it read like a business thriller but noted its narrow focus. Readers who want the regulatory or legal side in depth will need other sources.

It is a good companion to coverage of activist investing, and a useful lesson for anyone running concentrated or public short positions.

1. A short needs a catalyst you control. Ackman's thesis needed a regulator to act. When the FTC settled instead of shutting Herbalife down, the trade had nowhere to go.
2. Public shorts invite a squeeze. Announcing a big short tells every long holder, including a rival with deep pockets, exactly where your pain point is.
3. Being right on the business is not the same as making money. Even after the FTC forced changes to Herbalife's business model, the stock went up. Markets pay for timing and outcomes, not for moral victories.
4. Concentration magnifies mistakes. One oversized position became a long drain on Pershing Square's returns and on investor confidence in the fund.
5. Personal history shapes market fights. Icahn's old dispute with Ackman made the stake partly a matter of pride, a reminder to think about who is on the other side of a trade and why.

Wapner tells the story in short, chronological chapters that move from the setup to the long endgame.

1. The players and the pitch. An introduction to the masters of the universe and a profile of Ackman, Pershing Square and the research behind the short, ending with the December 2012 presentation that called Herbalife a pyramid scheme.
2. The other side. Icahn's history with Ackman and his move to buy into Herbalife. The book follows the attacks and counterattacks, including the January 2013 on-air brawl that Wapner moderated.
3. The long campaign. Ackman's push to make his case to regulators and lawmakers, the reporting and lobbying around it, and Herbalife's efforts to defend its distributors and its stock.
4. The death blow that wasn't. The FTC's July 2016 settlement forces Herbalife to change how it pays distributors, but it doesn't call the company a pyramid scheme or close it down. The stock rises, and the short becomes a burden.
5. Exit and aftermath. Ackman's retreat from the position, the damage to Pershing Square's returns and reputation, and a closing coda on what the fight showed about activism, short selling and ego.

The inside story of the clash of two of Wall Street's biggest, richest, toughest, most aggressive players -- Carl Icahn and Bill Ackman -- and Herbalife, the company caught in the middle With their billions of dollars and their business savvy, activist investors Carl Icahn and Bill Ackman have the ability to move markets with the flick of a wrist. But what happens when they run into the one thing in business they can't control: each other? This fast-paced book tells the story of the clash of these two titans over Herbalife, a nutritional supplement company whose business model Ackman questioned. Icahn decided to vouch for them, and the dispute became a years-long feud, complete with secret backroom deals, public accusations, billions of dollars in stock trades, and one dramatic insult war on live television. Wapner, who hosted that memorable TV show, has gained unprecedented access to all the players and unravels this remarkable war of egos, showing the extreme measures the participants were willing to take. When the Wolves Bite is both a rollicking, entertaining read--a great business story of money and power and pride.