What was supposed to be a banner day for Bill Ackman quickly turned into a colossal embarrassment Tuesday. Herbalife's stock had its best day ever by gaining more than 25 percent—as Ackman gave a presentation that he had proclaimed would be a "death blow" to the company. But Pershing Square Capital Management clients aren't very concerned.
"We are long-term investors—his track record is amazing," said Bryan Schneider, a Pershing Square investor at EnTrust Capital, which manages $11.6 billion in hedge fund assets for more than 400 institutional investors.
"Yesterday's move was mostly a recovery of losses from selling in advance of the presentation. There was no single 'a-ha' moment, so I think people were saying 'I don't know why we went crazy selling off.'"
Other clients, who asked to remain anonymous, agreed.
"What Herbalife may mean is that he'll be up more than other hedge funds but not up as much as he would have been without that position. I don't know any managers who are always up on 100 percent of their positions," a current investor said.
The $14.7 billion Pershing Square is up more than 25 percent through June and likely several percentage points more in July given increases in its large stock holdings like Allergan. That's far better than the Absolute Return Composite Index gain of 4.16 percent across all hedge fund strategies over the first half of the year.
"Even with yesterday's squeeze, the fund is still up nicely this month. And, it's tough to get too upset when Pershing Square is one of the best, if not the best, performing institutional-quality funds this year," added another investor.
A spokesman for Pershing Square declined to comment.
While investors were supportive of Pershing Square overall, there were mixed feelings on the Herbalife presentation.
"When you state that, 'this is going to be the most important presentation of my career,' it had better be! That said, many of his seeming losers have eventually turned into winners," one of the investors said, noting MBIA and Ambac Financial Group.
Another was more sanguine. "We are long-term investors. The stock is still down year-to-date, (and there was) further evidence yesterday but (we) need a true smoking gun for regulators to act," the client said. "(It's) getting there."
At least one said he was "surprised" by the cost—$50 million—of the Herbalife investigation and campaign.
Schneider of EnTrust wasn't concerned. "Part of a being a manager of his size is the ability to do serious work on a position, so $50 million in expenses isn't a jarring number for us," he said. "It's hard to argue with the level of detail and quality of work on Herbalife. We like that. Whether or not he's right is in the hands of other entities."
Read MoreAckman: Why Herbalife will collapse
Still other clients said they barely followed the news.
"I think people focus on the theater of it all not on whether or not it actually matters to the world at large," one said of the Herbalife controversy and the public attention around it. "We find it entertaining, not informative."
—By CNBC's Lawrence Delevingne