Herbalife shares are up 7 percent after activist investor Dan Loeb took an 8 percent stake in the company. Loeb is countering well-known hedge fund manager Bill Ackman, whose short last month sent the stock into a nosedive. Dan Loeb’s Third Point Management said today in a regulatory filing that it bought almost 9 million shares of Herbalife Ltd. (NYSE:HLF) on a bet that the stock would go up.

Dan Loeb

Ackman’s Pershing Square Capital Management has sold short on approximately 20 million shares of Herbalife Ltd. (NYSE:HLF). He has called Herbalife “the best managed pyramid scheme in the history of the world.” His verbal attacks on the company have become so strong that Herbalife Ltd. (NYSE:HLF) is reportedly considering legal action against him. Tomorrow Herbalife Ltd. (NYSE:HLF) is scheduled to hold an investor meeting to address Ackman’s allegations.

DealBook reports that an anonymous source said Loeb met with officials from Herbalife not long after Ackman began speaking out against the company. Ackman spent three hours delivering a broadside against Herbalife last month. Ackman claims that Herbalife makes most of its money by selling to its distributors rather than by selling to customers outside the company.

Now that Loeb has come up against Ackman, it’s essentially a battle of the hedge funds. Federal authorities have already investigated Herbalife Ltd. (NYSE:HLF), but they ended up dropping their investigation. Ackman is calling for them to reopen the case, although with Loeb leading the charge to bring Herbalife back, it remains to be seen whether that investigation will ever be reopened.

CNBC points out that Loeb’s track record as a hedge fund manager during a dismal 2012 was better than most. His firm’s flagship fund gained 21 percent last year, while other funds posted as high as a 34 percent gain.