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Net Net: Promoting innovation and managing change

Herbalife bet worst ever for Pershing Square

Ackman/Herbalife saga not over

Virtually everyone on Wall Street knows that Bill Ackman's big short bet on Herbalife has cost him so far. Now we know exactly how much it has declined: by half.

Ackman's $11.96 billion hedge fund firm, Pershing Square Capital Management, first took a short position in the nutritional supplement company on May 1, 2012, according to a presentation at its annual investor dinner Feb. 13. Since then, the firm's cumulative loss on the stock has totaled 49 percent, representing Ackman's worst investment ever.

The dollar amount of the loss is unclear. Ackman said the short position was worth $1 billion in December 2012, when he publicly announced the bet. But Pershing Square has since restructured the position using options. The stock price has appreciated by 23 percent, including dividends, from May 1, 2012, to Feb. 10, 2014, according to the presentation.

A spokesman for Pershing Square declined to comment.

A spokesman for Herbalife once again fought Ackman's assertions.

"For the past 14 months, Bill Ackman has waged a sophisticated 'short and destroy' media and lobbying campaign against Herbalife. Despite his constant attacks, Herbalife delivered another year of record performance in 2013. During that time, shareholders who believe in Herbalife and our industry-leading products have been big winners," a statement from the company to said.

"But because of his reckless $1 billion bet, Mr.Ackman and his investors at Pershing Square have been big losers. Herbalife's success is a testament to strong customer demand for the products, healthy lifestyle and financial opportunity the company provides."

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Herbalife reports Q4 earnings

Ackman remains convinced that Herbalife's stock will fall to zero because it ultimately will be shut down by regulators.

"The facts that we have learned since our initial investment reinforce our belief that Herbalife is an illegal pyramid scheme," the presentation said.

Most recently, the firm has posted negative profiles of top Herbalife salespeople online in an effort to discredit the company.

While Pershing Square lost money in Herbalife and two other positions—J.C. Penney long and a short on the Hong Kong dollar versus U.S. dollar—it gained overall last year. The Pershing Square International Fund rose 9.3 percent net of fees in 2013 and has produced net annualized returns of 15.7 percent since its inception in January 2005.

(Read more: Ackman: Target's 'lost magic' ... and other thoughts)

Pershing Square's second-worst investment since inception was J.C. Penney, which declined 41 percent, according to a ranking of top winners and losers in the presentation. Citigroup was No. 3, with a loss of 31 percent.

Ackman exited J.C. Penney in August 2013, and shares have continued dropping.

The firm noted two lessons learned from its loss.

First, it said, "extreme business 'transformations' are riskier and more difficult than business 'renovations' (e.g., Canadian Pacific or Air Products)." They "require control (or near-control) and a totally aligned board."

Second, the experience was a "reminder of the importance of business quality," the firm said. " 'Fair' business at a 'wonderful' price can be a bad investment."

—By CNBC's Lawrence Delevingne. Follow him on Twitter @ldelevingne.