SMELLING BLOOD

Meet Wall Street’s new whipping boy: Bill Ackman

Activist Bill Ackman used to be one of the cool kids on Wall Street. Now he’s become the one everyone loves to hate, with everyone from Starbucks CEO Howard Schultz to fellow hedge fund billionaire Dan Loeb ( a former friend of Ackman’s) throwing barbs at him. It shows how quickly you can rise and fall in the high-school world of Wall Street popularity.

Ackman has had a string of good investments over the last few years. He made a killing on his stake in mall operator General Growth Properties, successfully pushed for the breakup of Jim Beam distiller Fortune Brands in 2010, and won a proxy fight against Canadian Pacific Railway last year. He is known to be arrogant, but also a great salesman. And he’s often described as handsome, with intense blue eyes.

Of course, one of the quickest ways to become a Wall Street outcast is to lose money. The situation began to turn for Ackman after the man he picked for CEO of the retail chain JC Penney—Apple retail store guru Ron Johnson—began stumbling. Johnson got rid of the department store’s popular discounts and JC Penney sales plunged. Though the markets had supported Ackman’s choice of Johnson at the time, he was faulted for it when things went south. Last April Johnson’s predecessor, Mike Ullman, came back in as interim CEO.

It may have just been coincidence that Ackman made what now looks increasingly like a bad bet on nutritional-products company Herbalife at around the same time. His personal fight with fellow activist Carl Icahn (they have longstanding lawsuits against each other) heated up in the form of a battle over Herbalife, which Ackman accuses of being a Ponzi scheme. Ackman has taken a short position worth around $1 billion on Herbalife and Icahn, Loeb and eventually George Soros’s hedge fund have taken long positions. So far, Ackman is losing, as Herbalife’s shares have surged.

And with Ackman winded, the knives are out. More critics have piled on in the last few days, since Ackman went public in his fight with the JC Penney board over the pace of hiring a new CEO. Ackman has been exchanging open letters with JC Penney chairman Thomas Engibous, whom Ackman also wants to oust. Starbucks’s Schultz has weighed in, calling Ackman’s actions “despicable.” (Ullman, the former and now interim JC Penney CEO, sits on Starbuck’s board.)

Today, Loeb used his Bloomberg terminal—where users can post a “header” that’s much like the status message on Skype or an instant-message service—to convey a not-so-veiled judgment on Ackman: “Never interfere with an enemy when he is in the process of destroying himself.” Last month, Loeb posted a similar barb: “New HLF product: The Herbalife Enema, administered by Uncle Carl.”

It’s definitely become cool to trash Ackman. And Ackman, who is not afraid of a fight, brought some of this upon himself. But the others should be warned. In the jungle world of Wall Street, they could be the next victim of the pack.

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