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HLF longs are starting to run out of steam.

Carl Icahn's credibility remains the last argument for longs.

As reported by Charlie Gasparino on Friday, further regulatory scrutiny into Herbalife is expected by the company and seemingly likely.

How do you really encourage someone to go out and buy Herbalife (NYSE:HLF) in the midst of an investigation from the FTC? Herbalife long arguments are starting to disappear quickly.

  • "The FTC will never investigate the company" - wrong.
  • "The company knows how much product is sold outside the network" - wrong.
  • "Nutrition clubs in low income Latino neighborhoods are not venues specifically for recruiting" - wrong.
  • "People in Cambodia need weight loss products" - wrong.
  • "Bill Ackman is a looser", and other assorted misspelled ad hominem remarks that plagued Twitter - wrong, wrong, and wrong.

But, the head of the snake for longs, the one argument they have left, that they're clinging to, that could bring down the entire house of cards if lost, is Carl Icahn's stake in the company. From the get go, Icahn's position in Herbalife has been one of the biggest lenders of credibility to the company.

Even Carl himself came out and said that, after discussing Herbalife with one of his FTC lawyers, that there wasn't a chance the company would be investigated. So, it looks like Uncle Carl got some bad information in that regard.

So many people have argued that with Carl on board, they have nothing to worry about. But, the fact is that Carl Icahn isn't coated in a sheet of Kevlar -- look at what just happened with Apple. Icahn, like the rest of us, is human. And humans get things wrong occasionally. And, this is looking more and more like an instance where Carl may have gotten in a bit above his head, similar to the time Bill Ackman sued him for a couple of million and won, ultimately spurring the rift between the two:

AS Wall Street smackdowns go, this one's a doozy.

In one corner is Carl C. Icahn, the corporate raider who made C.E.O.'s tremble back in the 1980s and, at 75, is still chasing deals.

In the other is William A. Ackman, 45, one of Mr. Icahn's figurative heirs and a leading practitioner of the bruising, Icahnesque craft politely known as activist investing.

These ultrarich men battled for seven years in multiple courts, over a relatively paltry $4.5 million. That might be real money to mere mortals, but to these two, it's barely a rounding error.

So why bother? This battle, it turns out, was more about big egos than big money - and it has left both men spitting expletives. The scrape finally ended this month, with Mr. Ackman victorious. But, before it was over, the affair occupied a Who's Who of powerful lawyers and ran up millions of dollars in legal fees, all because of an otherwise forgettable deal the pair cut back in 2004.

"The guy is a shakedown artist," Mr. Ackman sneers. "His word is worthless."

Mr. Icahn says: "He's now the young gunfighter who wants to show he beat the older gunfighter with a big reputation. He just likes pounding himself on the chest."

Thus, the Herbalife saga was born of this.

So, my question to longs is, if Mr. Icahn exits Herbalife, what else is there to hold on to?

Longs continue to argue that Icahn is there to protect them, citing the recent AGM delay news as proof that Icahn wants to stay on the Board of Directors and help out in the midst of the FTC crisis. If Icahn does exit, it'll likely send the stock tumbling. So, Carl, what's your plan?

Anyway, it finally seems that saner heads may be prevailing about Herbalife, simply judging from what I've seen in the media and on Twitter. The sentiment has shifted from, "who cares about the model, the stock is a juggernaut", to "this company should have been investigated a long time ago."

While I agree with the latter, let's not forget in the midst of this investigation the massive amount of flack that Bill Ackman and other shorts have gotten while watching Herbalife climb from $30 to $80 over the past year. It was my contention that this was ultimately what drove Shane Dinneen to take a breather from the situation. Think back to all the people that came out and publicly defended the company over the years - I'm not going to mention names, but cable business news personalities - you know who you are. And Shane, your validation might just be on the way, buddy.

Matt Stewart, another fellow Herbalife short, wrote a great article yesterday claiming that if the FTC brings in Dr. Peter Vander Nat to help with their investigation, all could be lost for Herbalife shareholders. I tend to agree.

And in network news current events, Charlie Gasparino broke some serious news on last Friday. He claimed that staff within the company was worried that the stock's price would continue to be suppressed going forward as Attorney General's Offices were likely to follow in the FTC's footsteps and launch probes into the company.

Now, imagine what would happen if Carl hit the exit?

Additionally, Canaccord Genuity came out yesterday and lowered their price target to $73 on the stock - still not sure what kind of QA they're engineering, thinking this stock is going to go anywhere near $73 anytime soon, but that is what it is. They seem to think there's 25% upside from yesterday's closing price. Not sure how they intend on doing this with the FTC looming over the company, but I don't work for Canaccord Genuity, so that lunacy isn't my problem.

The only question is how long Carl wants to hold on. One thing remains for sure, he is the Herbalife long's very last argument, in my opinion.

As the FTC methodically and objectively starts to move forward with their investigation, there's zero doubt in my mind that they're going to conclude what the rest of the critical thinkers have - that Herbalife is a pyramid scheme that operates as a confidence game.

The only question is going to be how they're going to react.

I remain bearish and short through puts. Best of luck to all investors.

Disclosure: I am short HLF. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I own puts and reserve the right to add to, close, or modify my position at any time, without notice.