Herbalife fight: Heads I win, tails you win

The three stinking rich investors taking bets on the stock price of L.A.-based Herbalife are all making money - despite the fact that two of them, Carl Icahn and Daniel Loeb, are wagering that shares will go up and the third, William Ackman, is insisting that shares will go down. But how can that happen? Because in the stock market, knowing when to buy and sell is everything. Back in February, I questioned whether Herbalife - a distributor of nutritional products whose business model long has been suspect - "is being toyed with by a handful of billionaire investors who might as well be playing Monopoly." Six weeks later, it sure seems that way. From the WSJ:

Mr. Loeb has cashed out the most, whereas the others have made only paper profits. Mr. Loeb's hedge-fund firm, Third Point LLC, has made at least $50 million on its estimated bet of more than $200 million, according to a person familiar with the firm. As of several weeks ago, the firm had largely exited its Herbalife stake, according to people familiar with Third Point. Mr. Icahn has made roughly $25 million in unrealized gains on his about $590 million bet. Mr. Ackman's Pershing Square Capital Management LP has notched more than $200 million, also in paper profits, on a bet of more than $1 billion.

Not that the "Heads-I-win-tails-you-win" scenario will necessarily continue:

Attempts by either to realize those gains could move the stock in ways that would erode their profits. A large selloff by Mr. Icahn would drive down the price; should Mr. Ackman move aggressively to cover his short, the price could rise. "It's one thing to have a paper profit, it's another thing to actually realize the profits," said Tim Ramey, an analyst at D.A. Davidson & Co. who covers Herbalife. For Mr. Ackman, a brash 46-year-old who has been in the money-management game for the past two decades, a win on Herbalife could mollify investors who are concerned about whether his investment in J.C. Penney Co.