Quick answer: On In Good Company with Nicolai Tangen, Bill Ackman traced his Herbalife losses back to an old fight with Carl Icahn. Ackman sued Icahn over a 2003 Hallwood Realty deal and, after years of appeals, collected in 2011. When Ackman later shorted Herbalife, he said, Icahn "basically figured he would squeeze us and he very effectively did." Asked "and you lost a billion?", Ackman answered, "We did." That figure is Ackman's own account. Publicly, he disclosed losses of $400 million to $500 million by November 2013, and the final total was never disclosed.
Source episode: "Bill Ackman: Is Permanent Capital an Investor’s Biggest Edge?", In Good Company with Nicolai Tangen (Norges Bank Investment Management), watch the full episode.
What Ackman said in the interview
In the clip, Ackman says Icahn sold the shares within two years and "owed us like $4 and half million dollars and he refused to pay. So I had to sue him." He says he had insisted on "a very simple agreement," an eight-page document with "a little mathematical formula," and a complete definition of "sale or otherwise transfer." Of Icahn, he said: "He likes the battle."
Ackman described years of appeals and said the delay lasted "like I don't know six, seven years," while the money earned 9% interest under the agreement. After Ackman won, he said, Icahn called to congratulate him, Ackman "said some fairly strong words back," and Icahn "sat in the weeds." Then came Herbalife: "Carl, without doing any due diligence in the business, basically figured he would squeeze us and he very effectively did." Those are Ackman's characterizations of Icahn, not findings.
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The Hallwood deal and lawsuit
The record backs up the outline. In 2003, Ackman, whose fund Gotham Partners was winding down, sold Icahn a stake in Hallwood Realty at $80 a share. If Icahn unloaded the shares within three years, the two would split any profit above a 10% return. In 2004, Hallwood merged with another company for $137 a share. Icahn argued a merger wasn't a sale, and Ackman sued that year. After about seven years in court, Icahn's final appeal was denied in 2011, and Ackman received nearly $9 million, almost double the original $4.5 million because of the accrued interest (The New York Times via CNBC). Business Insider later published the contract itself (Business Insider), and Ackman addressed the case in a January 2013 statement (PR Newswire).
Herbalife: the bet and the squeeze
In late 2012, Ackman's Pershing Square unveiled a $1 billion short bet against Herbalife, which he called a pyramid scheme. Herbalife denied the claim. On Jan. 25, 2013, Ackman and Icahn clashed live on CNBC (CNBC). Icahn went on to become Herbalife's biggest shareholder (Reuters).
Instead of falling, Herbalife's stock rose. In November 2013, Ackman told Bloomberg Television his firm had lost $400 million to $500 million on the bet (Reuters). In November 2017, he converted the short into put options, and in February 2018 he said Pershing Square had exited the position (CNBC). Reuters reported at the time that Pershing Square's total loss was unknown (Reuters). The "billion" in the new interview is Ackman agreeing with Tangen's question, not an audited figure.
In 2018, Icahn sold about $552 million of Herbalife stock back to the company and remained its largest owner, with about 21% (Reuters).
A truce, but no agreement on Herbalife
In 2014, the two appeared together at the Delivering Alpha conference and called a truce, while still disagreeing about Herbalife (Institutional Investor).
Real-name note: "Bill" is short for William. The New York Times identified him as William A. Ackman, and Reuters calls him William Ackman.
FAQ
What was the Ackman vs. Icahn lawsuit about? A 2003 sale of Hallwood Realty shares with a profit-sharing clause. Ackman said Icahn owed him after a 2004 merger. Courts agreed, and in 2011 Icahn paid nearly $9 million including interest, per The New York Times.
How much did Bill Ackman lose on Herbalife? He disclosed $400 million to $500 million in losses by November 2013. The final total was not publicly disclosed. In the In Good Company interview, he said "We did" when asked if he lost a billion.
When did Ackman exit his Herbalife bet? February 2018, per CNBC and Reuters.
Did Carl Icahn sell his Herbalife shares? He sold about $552 million of stock back to Herbalife in 2018 and remained the largest shareholder, according to Reuters.