While analysts argue over what outcome they expect to see from the Federal Trade Commission (FTC) inquiry into Herbalife Ltd. (NYSE:HLF) that came to light this week, hedge fund managers have already taken sides on the stock with Bill Ackman short and basically everyone else going long.

Bill Ackman Herbalife

Ackman vs. Icahn, Soros, Loeb…

Talking with Street Smart host Trish Regan on Bloomberg TV, Bill Cohan (who has done extensive profiles of both Ackman and Dan Loeb) pointed out that Carl Icahn, William Stiritz, George Soros, and of course Dan Loeb have all at some point made money by going long against Ackman’s Herbalife Ltd. (NYSE:HLF) short, which lost several hundred million dollars last year.

“He’s not the kind of guy who’s willing to throw in the towel… He is an activist. He has religious fervor. He believes the company is an illegal pyramid scheme to be put out of business and he is using every trick in the book to make it happen,” said Cohan.

While Ackman is obviously pushing on Herbalife Ltd. (NYSE:HLF) to make good on his enormous short position, Cohan believes that Ackman is sincere in his belief that going after Herbalife is the right thing to do, and that this isn’t just another business investment for him. Equally, he thinks that going long against him is the perfect trade for other hedge fund managers because they made easy returns all last year and got to take a dig at someone who clearly rubs them the wrong way.

Herbalife stock tumbles after announcing probe

Herbalife Ltd. (NYSE:HLF) stock fell 9% after investors found out about the inquiry, though it recovered somewhat before the market closed. There has been mounting pressure on the FTC to look into Herbalife’s business practices recently, with Senator Edward Markey writing an open letter to the FTC and the Securities Exchange Commission, and a powerful Nevada labor union urging the FTC and the Nevada state attorney general to investigate as well.

While the announcement shocked markets, it’s far too early to make any assumptions about what the FTC will ultimately decide to do. Ackman and anyone else with a short position on Herbalife Ltd. (NYSE:HLF) would like to see the company put out of business, but the FTC could just as easily decide that everything is in order and drop the matter. If that happens, and Herbalife walks away from the probe with the FTC’s seal of approval, it would really put Ackman’s ‘religious fervor’ to the test.