Herbalife Circus: Expect More Entertainment (Update1)

Tickers in this article: HLF
(Updated from 11:06 a.m. EST to include comments from Icahn on CNBC in the 15th and 16th paragraphs.)

NEW YORK ( TheStreet) -- Let the games begin.

Just a month after their very public battle on CNBC, the fight between Carl Icahn and Bill Ackman just ratcheted up another level, with Icahn revealing he has close to a 13% stake in Herbalife (HLF) .

Icahn filed a 13D on Thursday , showing he has accumulated a stake in the multi-level marketing (MLM) company. The interesting part is that it's mostly in options, and the majority of it was accumulated this week, in anticipation of a deluge of regulatory filings.

In the filing, Icahn noted that Herbalife "has a legitimate business model, with favorable long-term opportunities for growth. The Reporting Persons Icahn intend to have discussions with management of the Issuer regarding the business and strategic alternatives to enhance shareholder value, such as a recapitalization or a going-private transaction."

Ackman, through his Pershing Square Capital Management hedge fund, is short some 20 million shares of the company, which he called a fraud last year. Ackman has even gone so far as to set up a Web site devoted to his thesis on the company, factsaboutherbalife.com.

The short position caused Herbalife to respond last month, with executives calling the claims false. "The allegation that Herbalife is a pyramid scheme is bogus. Make no mistake: Today's announcement isn't about Herbalife's business model. It's about Bill Ackman's business model," the company said in a statement.

The Wall Street Journal reported last month that the Securities and Exchange Commission has opened an inquiry into Herbalife.

Herbalife CEO Michael O. Johnson has appeared repeatedly on CNBC to defend his firm, which he has described as a "legitimate company." Then there was this bizarre statement from Herbalife demanding a correction from the NY Post last month. It's become a circus, except now we have billionaires involved, instead of Barnum & Bailey.

This spat is clearly personal, boiling down to the fact that Icahn simply does not like Ackman, alleging that he reneged on a deal in the past. Since then, Icahn, 76, has clearly held a grudge against the 46-year-old hedge fund manager.

The battle on CNBC in January between Icahn and Ackman was one of the most entertaining segments on financial television in years -- maybe ever. Icahn cursed repeatedly, saying he was given permission to say "whatever the hell I wanna say." He even accused CNBC host Scott Wapner of trying to bully him.

The amazing thing about this story is that it doesn't stop at Icahn and Ackman. Dan Loeb, another hedge fund heavyweight, recently announced that he owns 9 million shares, or 8% of Herbalife.

In a letter to investors, Third Point's Loeb refuted Ackman's claims that Herbalife is a pyramid scheme. "The pyramid scheme is a serious accusation that we have studied closely with our advisors. We do not believe it has merit," Loeb wrote in the letter.