What is clear in William Ackman’s recent incarnation of the dating game is that he is blazing trails with a new activist hedge fund strategy: legal insider trading that leverages his growing “tough guy” reputation.

Bill Ackman

Ackman is the relationship’s third wheel

If Herbalife Ltd. (NYSE:HLF) does go down in regulatory flames, who becomes the toughest intimidator on the street?  Ackman or Icahn?

I predict at the end of this year, Ackman will be wearing the toughest activist investor “crown,” the one most feared by corporate boards. Even if Herbalife Ltd. (NYSE:HLF) remains whole after a savage beating at the hands of the government, Ackman gets credit for dropping the gloves and drawing blood. This reputation is a kind of currency.  After witnessing that spectacle, what corporate board wouldn’t seriously consider Ackman’s request?  Will Allergan, Inc. (NYSE:AGN)’s board seemingly give up control of research and development and succumb to the advances of pharmaceutical bean counters who think science means trimming costs to the bare bone and eschewing product innovation?  The answer to this question lies in a dating scenario and the answer to this question: will Allergan, Inc. (NYSE:AGN) succumb to intimidation to force it into a marriage with an opposite that doesn’t attract?

Who’s the lead man in the activist hedge fund category?

The difference in this romantic quantitative formula can be found in the relationship’s third wheel: the dashing figure of William Ackman.  Can Ackman “persuade” Allergan, Inc. (NYSE:AGN) to submit to something it has never done before?  He certainly has the “leading man” image. Ackman seems like the Ivy League fraternity boy who was loved by everyone’s mother but was a devil when the door was closed. Contrast this with Icahn’s sometimes car mechanic demeanor.  Who best to lead a new strategy innovation?  If there is ever a movie, Ackman gets my vote for the sophisticated lead, not the bare knuckle alley fighter Icahn. Don’t get it wrong, a good fight always makes a movie and a relationship story more interesting.  It’s just such a character is typically not the romantic lead.  This brings us back to the new strategy innovation from Ackman and the question:

Will Ackman’s only known contribution to the Allergan takeover bid – his intimidation factor – be the difference between success and failure?  Will Ackman’s recently leaked relationship with former SEC revolving door tough guy Robert Khuzami show his control of regulators?  Khuzami, who was said to receive a $5 million salary from a law firm representing Wall Street interests, was the SEC enforcement director when an investigation into the strange manipulation of MF Global documents occurred in the Edgar database and is a perfect complement to Ackman’s team.   “Anyone at SEC who has problems with this (Ackman’s legal insider trading in Allergan derivatives), talk to me,” he challenged. But is a foursome a little much?

What is the value of having a terminator hedge fund relationship?

Intimidation and dating don’t mix very well in civil society, which is why it will be interesting to watch Allergan, Inc. (NYSE:AGN)’s response to the second takeover attempt from Valeant Pharmaceuticals Intl Inc (NYSE:VRX) (TSE:VRX). If they do take the deal, watch how they carefully craft the answer to the obvious question: what’s different this time?