One Of The Greatest Feuds In Wall Street History Has Officially Come To An End
Billionaire activist investors and long-time rivals Carl Icahn and Bill Ackman have made up after a decade of fighting.
The Wall Street Journal reports:
The hatchet was buried on Thursday. Mr. Ackman spoke with Mr. Icahn's assistant on April 24 saying, "I am calling to forgive Carl," according to Mr. Ackman. Mr. Icahn, 78 years old, returned the call and told Mr. Ackman, 47, that "it is a blessing to forgive," Mr. Icahn said, "and I forgive you."
The development suggests that the duo, who famously clashed on their views about nutrition company Herbalife, could team up on activist investments, where investors push for broad changes at companies or try to move prices with their arguments. Neither would name a target or timetable.
In the future, Mr. Ackman said: "There is a much greater possibility that we are on the same side than the opposite."
The pair of activist investors have been fighting for years.
It all began with a deal a "forgettable" deal in 2003. Back then, Ackman was running Gotham Partners, which was being hit with redemptions and investigated by the SEC at the time over MBIA.
He cold-called Icahn and asked him to buy his shares of Hallwood Realty, a real estate company trading for about $60. Ackman believed the stock was worth $140. Icahn agreed to buy the shares for $80, with a deal that he would split the profit with Ackman if he sold the shares within 3 years.
In 2004, Hallwood merged with another company for $137 a share, Icahn wouldn't give Ackman a cut. A lawsuit followed, Ackman won and Icahn paid him $9 million Ackman's investors were owed.
Things got so nasty between the two fund managers that waiters at upscale Italian restaurant Marea know never to seat them near each other.
Then, in December 2012, Ackman publicly declared that he was shorting $1 billion worth of Herbalife because he thinks the company is a "pyramid scheme." Shortly after, Icahn decided to bet against Ackman and amassed a large long position. He called it a "no brainer."
A month later, the two fund managers were involved in a nasty public fight live on CNBC. While Ackman was was responding to Icahn's criticism of his Herbalife investment, Icahn called into the "Half Time Report" and the insults were flying.
"I'm telling you he's like a crybaby in the schoolyard. I went to a tough school in Queens you know and they used to beat up the little Jewish boys. He was like one of the little Jewish boys crying that the world is taking advantage of him..." Icahn said when Ackman called him up in 2003, adding "You rue the day I ever met the guy."
"He's the quintessential example of if you want a friend on Wall Street, get a dog," Icahn later said.
While Ackman made the first call to forgive Icahn, it was actually Icahn who made the first step by defending Ackman on CNBC after slamming him for the last year.
He defended criticism of Ackman's Valeant and Allergan play. Some folks have raised concerns about Ackman buying a 9.7% stake in Allergan's stock knowing that Valeant would make a bid for the Botox-maker.
"I don't even think it's immoral. I mean, he's doing something for the company. I mean- I, frankly, never thought I'd be defending him. But I think he's- I don't think there's anything wrong with that," Icahn told CNBC's David Faber.
While they still disagree on Herbalife, all the fighting in the past seems to be water under the bridge for now.