On Friday, shares of Herbalife Ltd caught the stock rally fever as it rose up to 7%. Despite recent attacks from its activist investors Bill Ackman, investors were observed to have not been affected by claims about the nutrition company being a pyramid scam. A pyramid scheme is defined as an unsustaining business model wherein the company or members of an organization promise investors payment or services purportedly of value simply by recruiting other participants into the scheme.

The hedge fund manager, who is chief of Pershing Square Capital Management, revealed to Bloomberg Television that his hedge fund had lost some USD400 million to USD500 million from betting short against the company.

Aside from nutrition products, Herbalife International also sells weight management and skin care products. Founded in February 1980 by Mark Hughes, the company grew into a multi-level marketing firm with 6,200 employees all over the world.

Ackman disclosed in December last year that Pershing made a short bet worth USD1 billion against Herbalife. Ackman also said later on that he has been engaging with regulators to discuss his investment in the company in a weekly basis at least.

"One of the critical measures of whether this is a pyramid scheme or not is a question that David Einhorn actually asked on a conference call a year and a half ago: what percentage of your sales are outside the system?" Ackman said, citing Greenlight Capital's David Einhorn on a conference call regarding Herbalife's retail sales.

At the Robin Hood Investors Conference, Ackman said in an interview, "We are going to take this, as I say, to the end of the earth." Ackman also shared that his USD11.45 billion fund was doing well even though it incurred massive losses with Herbalife. Ackman cautioned investors about the nutrition company's audit, which was yet to be released.

A Herbalife spokesperson addressed Ackman's latest comments, and also highlighted the hedge fund manager's ability to pick consumer products stocks.

"Mr. Ackman presented nothing new today. After a year of baseless claims about Herbalife and hundreds of millions of dollars of losses for his investors, the only thing Mr. Ackman has proven with his obsessive, ego-driven investing decisions is his lack of understanding of consumer product companies," the Herbalife spokesperson said.