Hedge fund manager William Ackman has restructured his $1 billion short bet against Herbalife Ltd in order to cut the risk of further mark-to-market losses, he told investors in a quarterly letter.

"In recent weeks we have restructured the position by reducing our short equity position by more than 40 percent and replacing it with long-term derivatives, principally over-the-counter put options," Ackman wrote in a letter seen by Reuters.