Bill Ackman, billionaire investor and head of Pershing Square, has had a long-standing feud with Herbalife, Ltd., (HLF) the nutritional supplement company, since May of 2012. Ackman has long maintained that Herbalife's business structure resembles a pyramid scheme and that the company is destined for a major collapse. Therefore, he has entered into (and subsequently maintained) a bet against the company for more than four years. While the publicity battle has raged on between Ackman and Herbalife, Ackman at the start of 2017 shows no signs of backing down on his bet to short the Herbalife share price.

Massive Losses for Ackman?

So far, Ackman's losses on the short bet have been astronomical. Fortune made a calculation regarding the FTC settlement that was settled in the middle of 2016 to determine Ackman's potential losses up to that point. Based on estimates that Ackman may have shorted more than 20 million shares of Herbalife stock, and given the changes in the stock's price, the calculation predicted that he may have lost about $500 million on the bet, including the lost cost of buying back shares to cover short positions, maintenance costs, marketing campaigns in the prolonged effort to discredit Herbalife as a company, and more.

Ackman, for his part, has remained extremely critical of Herbalife, accusing the company of recruiting new distributors to supplement earnings of the most elite distributors and of relegating the vast majority of Herbalife distributors to wages below the minimum federal requirements, including 86% of distributors which reportedly earn $0.

Maintaining Short Position

As recently as last week, in its annual presentation on its holdings, Pershing Squre indicated that it was still short on Herbalife stock and that the position accounted for about 9% of its total capital. Pershing indicated its belief that a $200 million settlement that Herbalife agreed to with the FTC, and saying that this settlement will put pressure on the company's earnings, Pershing dug in its heels and defended its position. The hedge fund also suggested that Herbalife has posted slow rates of international growth and that the business is involved in an ongoing corruption compliance issue in China. Beyond those issues, Ackman believes that management turnover and general negative opinion of multi-level management companies will further hinder the company.

For its part, Herbalife has seen a tumultuous 2016 with regard to stock price. The company's stock declined by 100% in the past year, although the stock did appreciate thanks to perceptions of leniency toward multi-level management regulations under President Trump's administration. Regardless, the battle between Herbalife and Ackman's Pershing Square continues to be drawn out and bitter. Given how long Ackman has been publicly vocal about his position, many investors wonder if he would risk losing face by backing down.