Herbalife Ltd. (NYSE:HLF) has agreed to take on two boltard members appointed by Carl Icahn, and allow the hedge fund manager to buy up to 25 percent of the company.

The news, which came today after Herbalife halted trading, caused the company’s stock to rise by almost 7 percent as of writing.

Herbalife

The rationale given by most investors going long Herbalife Ltd. (NYSE:HLF) in the early days of the Ackman short was not that the company was a good one, but that the short wouldn’t work for various reasons, and the price would pop later on. Carl Icahn is going full activist on the company and it makes his position appear untenable.

Investors who are looking to stick with Icahn on the trade, rather than those looking to benefit from short term momentum, must be wondering what exactly he’s thinking, and what narrative he expects from the company. Adding board members usually means a long term commitment.

Icahn, for those following the barrage of stories, appears to have gotten into the Herbalife Ltd. (NYSE:HLF) because of Bill Ackman. The investor denied any connection between his televised argument with Ackman earlier in February.

Let’s take that at face value, and assume there’s nothing personal in his motivation. Why is he so fervently behind Herbalife?

In the time since Ackman announced his short, Herbalife Ltd. (NYSE:HLF) is down just 9 percent. There’s very little value left to recover. The company is trading at a P/E of just under 10, making it seem reasonably valued, unless it is in fact a pyramid scheme. What is Icahn expecting from the company?

There’s no doubt that Icahn expects to make some kind of return on this bet, and he’s laid down more than 100s of millions of dollars. His reputation is really on the line because of how public this trade has become. So is Bill Ackman’s of course. Up until now, Icahn could have quietly bowed out. That is now impossible.

Whichever manager wins this battle will be put on a pedestal, but there’s no telling how long that will take. The short bet has really take a beating from Icahn’s confidence. Ackman is left still paying fees for his position, while Icahn gets to collect gains on today’s bump.

Icahn is walking a tight rope, and he’s winning so far. There’s no doubt that, in Icahn’s mind, he’ll come out as the winner in the end. The plot that gets him there has, however, proved resistant to probe so far.