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Why Icahn will win his battle with Ackman: Portfolio manager

Talking Numbers

Bill Ackman is once more calling Herbalife a short. He's had the stock price double under him when he shorted last year. But, is he right?

Fund manager Bill Ackman doesn't like Herbalife.

Of course, that isn't news. Ackman has been short the "vitamin supplement" company for about a year now. His $13.2 billion fund, Pershing Square Capital Management, even runs a website – FactsAboutHerbalife.com – that is one, giant portal of ant-Herbalife articles and data.

What's news is that Ackman still thinks Herbalife is a scam begging to be shorted, even a year after first saying so and the stock's subsequent doubling in price. Ackman spoke at the Robin Hood Investments Conference on Friday to once again make his case for why the company's "multilevel marketing" system is a Ponzi scheme.

(Read: Herbalife rallies as Ackman says he'll short it to the end of the earth)

A year ago, Ackman submitted a 334-page slideshow presentation on why Herbalife should be shorted titled "Who Wants to Be a Millionaire?" If you went in with Ackman and shorted Herbalife's stock when he did, you would indeed be a millionaire – provided you started off as a billionaire.

Since giving that presentation a year ago, Herbalife's shares nearly doubled. That must be particularly painful for Ackman given that he put down $1 billion to short the stock. Along the way, Ackman publicly feuded about the company with billionaire Carl Icahn, who owns about 16.5% of Herbalife. To add insult to injury, George Soros also took a huge stake in Herbalife this summer.

(Watch: Short sellers see once in a lifetime opportunity—if they can survive)

This isn't the only investment that has gone against Ackman. His acrimonious feud with the board of JC Penney led him to walk away from the company, losing several hundred million dollars when he sold off his shares.

Yet with Ackman still insisting Herbalife is a short, is he really right or is he just hoping to sway opinion his way just enough to cut his losses or, at least, break even?

"[Ackman] is in a classic short squeeze," says John Stephenson, portfolio manager at First Asset Investment Management. "Right now, the market is telling you this company is worth far more than Bill Ackman thinks. He's going to continue to feel the pain until he finally gives up on his short. "

According to Steven Pytlar, Chief Equity Strategist at Prime Executions, the charts aren't favorable to Ackman, either.

"Based on the charts, the stock is in what we'd call a positive consolidation phase," says Pytlar. "It might not be ready to break out yet, but we do think that the technical side suggests this is a very positive consolidation."

To see the rest of Stephenson's fundamental reasons why he thinks Herbalife is a buy and to view which levels Pytlar says are significant for the stock, watch the video above.

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