Is Ackman Back?

Chances are when one attempts to debate Carl Icahn on national television, they're going to come out on the short end of the stick. Especially if he has taken on the opposing position in a controversial issue that has the potential to move heavily in his favor.

Ackman-Icahn Feud Goes Public

This represents the exact circumstances surrounding the last Ackman-Icahn face-off on CNBC in January 2013 concerning Herbalife Ltd. (NYSE: HLF). At that time, Ackman's well-publicized short position in the issue was facing opposition from Icahn and several other large fund managers, including Soros Fund Management.

Around that period, Icahn identified Herbalife as undervalued, and disclosed his investment.

Ackman Doubles Down

Interestingly, this January, a massive bearish call was made against Herbalife. 

The common view, at the time, was that it was the result of Ackman's dealings in Herbalife in the over-the-counter market.

Whoever purchased 45,000 January 2015 50-strike puts may have been trying to offset an OTC position they had completed with Ackman. The 32 million wager was banking on a near-50 percent decline in Herbalife from its current price in order to be profitable.

Dan Nathan, an options traders who writes for RiskReversal.com explained on CNBC: "The long-dated, way-out-of-the-money puts could suggest that Ackman is adding to the over-the-counter put position and the dealer that sold it to him is hedging the position in the listed market, or there is a new entrant on the bear case."

Since 13F filings do not disclose short positions, it is hard to determine what the actual combination of short stock and long exchange-traded and over-the-counter put options positions Ackman has accumulated.

Herbalife Moves In Ackman's Favor

One thing is for sure, though: Herbalife shares have dropped. Since peaking at $83.51 in January 2014 ($83.51), it declined to $38.63 in September. After rebounding to $56.74 earlier this month, it has made a new low and is attempting to build a base at the $38.00 level in order to rebound.

It should be noted: Herbalife is still Icahn's tenth-largest position and he has not disposed of any shares as of his latest 13F. Icahn may have locked in some profits by offsetting his large stake with selling of calls, when the issue traded at much higher levels, but that remains uncertain.

Other Holding Pays Off For Ackman

Ackman's holdings got another boost in Monday's session, as Actavis plc (NYSE: ACT) agreed to purchase Allergan, Inc. (NYSE: AGN) well above Friday's closing price of $195.06.

Ackman, who had accumulated a $5.3 billion-stake in Allergan (his largest holding) as of October 28, had hoped to instigate a hostile takeover by Valeant Pharmaceuticals Intl Inc (NYSE: VRX).

Ackman is the proud owner of 28.8 million shares of Allergan per his latest 13F filing, and shares are up nearly 7 percent since Monday.