It's a hedge fund battle for the ages. It's a battle that appears to be turning into something not about the company, but about hedge fund managers who want bragging rights - who want to stick it to other hedge fund managers who may have won the last battle.

This is Wall Street theater at its finest. Some of the biggest hedge fund bosses are taking sides, and they are doing it with Herbalife (NYSE:HLF). Here are the players.

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Bill Ackman
Ackman runs Pershing Square Capital Management, an $11 billion hedge fund famous for taking stakes in Yahoo! (Nasdaq:YHOO), Target (NYSE:TGT), Canadian Pacific (NYSE:CP) and recently, J.C. Penney (NYSE:JCP). Ackman made headlines after making a three-hour presentation outlining why Herbalife is an illegal pyramid scheme.

He's apparently so passionate about saving people from Herbalife that he has vowed to donate all of the profits from his $1 billion short position to charity. Ackman's goal is to see the FTC get involved and eventually cause Herbalife's stock to go to zero.

Robert Chapman
Chapman runs Los Angeles-based Chapman Capital. Soon after Ackman's presentation, Chapman wrote a blog post that isn't likely to get him on Ackman's Christmas card list any time soon. Chapman disagrees with Ackman to the extent that he is willing to put one-third of his firm's capital into a long position in Herbalife. Why?

Chapman said that after listening to Ackman during a CNBC interview, one response stood out. Instead of asserting that he was 100% certain the FTC would take action, Ackman said, "I think the FTC is going to take a very hard look. But I think, most importantly, the new distributor someone is trying to suck into the scheme will be better informed ..."

Chapman said in his post, "The moment I read this response, after having researched HLF on/off since 2000 ... I decided I had to place a monster long bet on HLF."

Daniel Loeb
CFO Magazine described Loeb as the Simon Cowell of American business, so you can be sure that he's not somebody you want as an enemy. On Jan. 9, Loeb disclosed that he had taken an 8.2% long position in Herbalife. Loeb outlined why he believes Ackman's claims are "preposterous."

Among Loeb's points is that the FTC has brought 13 separate cases against alleged pyramid schemes since 1997, so there's no reason to think it somehow missed this massive cover-up. Further, it's not likely to start an investigation just because a hedge fund short seller asked it to.

Carl Icahn
On Jan. 10, the New York Post cited "sources" that famed activist investor Carl Icahn may have taken a long position in Herbalife. Icahn has a reputation for amassing large stakes in companies while attempting to oust underperforming managements. Some of his targets have included Clorox (NYSE:CLX), Netflix (Nasdaq:NFLX), Research In Motion (Nasdaq:RIMM) and Lionsgate Films.

Icahn later confirmed his long position in Herbalife, according to The Wall Street Journal.

The Feuds
Here's where the drama comes in. Ackman isn't exactly the most well-liked hedge fund manager among his peers. They see him as overly vocal in a world where secrecy, at least to some degree, is the unwritten rule. Loeb and Icahn took opposing sides of Yahoo! Loeb won that battle. Ackman and Icahn had a real estate deal together over a decade ago that ended in court with Ackman the winner, and judging by Chapman's response, they aren't each others' biggest fan either.

The Bottom Line
The truth is that even when feelings and egos are set aside, all of these managers are charged with making money for their clients. Those who have come out against Ackman are attempting to cause a short squeeze that leaves Ackman the loser. Ackman has vowed to refute Herbalife's rebuttals against his three-hour presentation in the coming days in an attempt to, once again, send the stock lower.

Although Herbalife is the stock of choice for this battle, judging by the comments made by these investors, it's less about Herbalife and more about winning what CNBC called the bloodiest hedge fund battle ever.

At the time of writing, Tim Parker did not own any shares in any company mentioned in this article.

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