Who is Bill Ackman 101: Everything You Wanted to Know
By Matteo Drelli. Updated Aug 31, 2023
William Albert Ackman, born on May 11, 1966, is no ordinary Joe. He's an American financial wizard with a billionaire status! Ackman is the CEO and founder of Pershing Square Capital Management, a name that's a big deal in the hedge fund world.
He's not just a money manager; he's an activist investor. Guess what? As of September 2023, Forbes estimates his net worth at a jaw-dropping $3.6 billion!
What was the early life and education of Bill Ackman?
Bill Ackman grew up in Chappaqua, New York. His dad, Lawrence David Ackman, led a major New York real estate firm called Ackman-Ziff Real Estate Group.
His family is of Ashkenazi Jewish background. In 1988, he earned a top-notch Bachelor of Arts degree in social studies from Harvard.
He even wrote an impactful thesis on Jewish and Asian American experiences in Harvard admissions.
Fast forward to 1992, and he snagged an MBA from Harvard Business School. Quite the educational journey, wouldn't you say?
The Road to Success
Making Waves at Gotham Partners
Bill Ackman launched Gotham Partners in 1992 with his Harvard buddy, David P. Berkowitz. They started small but had big dreams. In 1995, they teamed up with Leucadia National to bid on the famous Rockefeller Center.
Although they didn't win, the move caught investors' eyes. By 1998, Gotham was managing a cool $500 million.
However, by 2002, the firm was knee-deep in legal battles with shareholders.
Ackman didn't let it slow him down.
He set his sights on MBIA, a financial services giant. He dug deep into their records and challenged their AAA rating. His research led him to separate MBIA's two main businesses.
During the 2007-2008 financial crisis, Ackman made a tidy profit by betting against MBIA's corporate debt.
The Icahn Feud
In 2003, things got spicy between Ackman and fellow investor Carl Icahn. They had a unique "shmuck insurance" deal over Hallwood Realty.
Icahn bought shares at $80 each. A year later, those shares were worth $136.16. Ackman said, "Time to split the profits, buddy." Icahn refused. After a long legal battle, Icahn had to cough up $4.5 million plus interest.
💡 Did you know? 💡
The term "shmuck insurance" in the Ackman-Icahn deal is an informal term used in business to safeguard against a bad deal. It's a way to say, "If you make money and don't share, you're a shmuck." This unique arrangement became a talking point in the world of high-stakes investing.
A New Chapter: Pershing Square
In 2004, with a $54 million war chest, Ackman founded Pershing Square Capital Management. He partnered with his old ally, Leucadia National.
In 2010, Ackman went big on J.C. Penney, owning 18% of the company's stock. But by 2013, disagreements with the board led him to step down. Despite the setback, Ackman was far from done.
Taking Risks and Facing Challenges
In 2012, Ackman launched Pershing Square Holdings, a $3 billion closed-end fund. Though it underperformed the S&P 500, it still reported 17.1% in returns from 2012 to 2017. Pershing Square wasn't always a smooth ride. They took a $500 million hit when they sold their J.C. Penney shares.
But the fund had its wins too. By the end of 2014, it delivered a jaw-dropping $4.5 billion in net gains for its investors. That's a lifetime gain of $11.6 billion since its inception in 2004.
Ackman and Valeant: A Cautionary Tale
Ackman didn't shy away from controversy. In 2016, he testified before the U.S. Senate about his involvement with Valeant Pharmaceuticals. Ackman admitted his investment endorsed Valeant's controversial practices. In 2017, he sold his remaining stake, suffering a substantial loss.
So yes, Ackman had his ups and downs, but his journey is a lesson in resilience. Each challenge only paved the way for new opportunities. And we can all learn something from that.
The Herbalife Saga
Bill Ackman didn't just invest in companies; he actively questioned them. Case in point: Herbalife. In December 2012, Ackman came out swinging, labeling Herbalife a pyramid scheme. He put his money where his mouth was by shorting the company's shares, causing a price drop.
A Public Face-off
Soon after, Carl Icahn stepped into the ring, publicly challenging Ackman's claims on TV. Icahn went on a buying spree, accumulating 16.5% of Herbalife shares. But that ownership shrank to 6.4% by November 2013. The two billionaires had a public tug-of-war, and the stakes were high.
The Power of PR
Ackman went full throttle, spending $50 million on a PR campaign against Herbalife. It stirred the pot, prompting calls for Congressional investigations into Ackman's tactics. Even the former SEC Chairman, Harvey Pitt, questioned Ackman's motives.
Caught in the Crosshairs
Senator Ed Markey got pulled into the mix. He sent letters to federal regulators calling for an investigation into Herbalife. When the stock dropped 14%, Markey defended his actions, stating he was unaware of Ackman's financial gains.
A Multi-Faceted Strategy
The New York Times reported that Ackman used diverse tactics to tarnish Herbalife's image. This included rallying public protests and even lobbying nonprofit Latino organizations to write to regulators.
Payments followed to these groups, totaling around $130,000. Ackman said this money was used to identify Herbalife's victims.
It's a story of high stakes, public clashes, and intense strategies. Whether you're on Team Ackman or Team Icahn, one thing's clear: Bill Ackman never backs down from a fight, especially if he believes he's on the right side.
Herbalife's stock took a nosedive by December 2014, dropping almost 50%. Ackman doubled down, releasing damning Herbalife training sessions from 2005. He even predicted on Bloomberg that the company would "implode" soon.
In March 2015, big news hit. The Wall Street Journal said that the FBI and Manhattan U.S. attorney were looking into whether Ackman's hires lied about Herbalife to damage its stock. Meanwhile, a judge tossed a lawsuit claiming Herbalife was an illegal pyramid. Herbalife's stock popped up by 13%.
Settlements and Losses
Herbalife and the FTC reached a settlement in July 2016, ending the federal investigation. Ackman's wallet felt the impact. Fortune estimated he lost about $500 million on that day.
Ackman and Icahn took their feud to CNBC. Icahn labeled Ackman a "crybaby," predicting he would face the "mother of all short squeezes." Ackman countered, admitting he was losing big but would stick to his guns "to the end of the earth."
By November 2017, Ackman changed his approach. He told Reuters he'd covered his short-sell but would still bet against Herbalife using "put options." Finally, on February 28, 2018, Ackman called it quits, exiting his massive bet against Herbalife.
Whether you're investing or just watching the show, this saga shows how even Wall Street giants have their ups and downs. Ackman's persistent fight against Herbalife had its peaks and valleys, and it's a lesson in both the risks and tenacity in high-stakes investing.
When the pandemic loomed, Ackman took fast action. He invested just $27 million to protect Pershing Square's assets. This move wasn't a retreat; it was a hedge against potential market chaos. The gamble paid off big, turning into $2.6 billion in under a month.
Ackman took his concerns public on March 18, 2020. In a heartfelt talk on CNBC, he urged a 30-day U.S. shutdown. He had stark warnings, saying hotel stocks might plummet to zero and that "hell is coming."
But Ackman stirred the pot. Even as he warned of doom, he bought discounted stocks in the very companies he said were at risk. This raised eyebrows, but it turns out, he'd already banked a hefty profit before going on CNBC.
In a later chat, Ackman revealed that the movie Contagion sparked his early COVID-19 worries. It seems life really does imitate art sometimes.
💡 Did you know? 💡
The movie 'Contagion,' which inspired Ackman's early concerns, was released in 2011. Yet, it became one of the most-watched movies in 2020 because of its eerie resemblance to the COVID-19 pandemic. It's a reminder that sometimes fiction can offer real-life lessons.
The Biggest SPAC Ever
In June 2020, Ackman rolled out a game-changer. His Pershing Square Tontine Holdings (PSTH) filed for the largest-ever SPAC IPO, raking in a cool $4 billion. This wasn't just another SPAC; it was record-setting!
But in July 2022, Ackman dropped a bombshell. Addressing PSTH shareholders, he said he'd return the funds. The reason? He couldn't find a deal that met his strict criteria and was also doable. It was a dramatic pivot but one that shows Ackman's commitment to quality over haste.
Hitting the High Notes with UMG
In July 2021, Ackman's Pershing Square made headlines. How? By snapping up a 7.1% stake in Universal Music Group (UMG) for a staggering $2.8 billion. The deal valued UMG at a whopping €35 billion.
Not stopping there, Ackman went back for seconds. On September 9, 2021, he invested another $1.15 billion, grabbing an additional 2.9% stake in UMG. Now, Pershing Square holds a total 10% of UMG's share capital. That's serious skin in the game!
As if these investments weren't big enough news, Ackman got a cherry on top. On May 12, 2022, he was appointed as a non-executive director at UMG. Ackman's not just a major investor; he's now in a position to influence the company's future. Talk about making a statement!
Betting Big on Netflix
In January 2022, Bill Ackman saw an opportunity. Netflix stock was in a free fall, dropping 30% due to a bleak subscriber growth forecast. But Ackman wasn't discouraged.
His firm, Pershing Square, swooped in and invested a jaw-dropping $1.1 billion in Netflix. In a letter to investors, he raved about Netflix's "best-in-class management team" and CEO Reed Hastings.
Just three months later, Netflix stock took another nosedive, plummeting 35%. What did Ackman do? He sold off his entire stake. The rollercoaster ride was over, but it left a mark on Ackman's investing strategy.
Risk and Reward: Ackman's Strategy
Bill Ackman loves controversy. He says his most lucrative investments have sparked debate. What's his first rule for activist investing? "Make a bold call that nobody believes in." And he's not shy about taking risks.
Ackman's standout moments are many. Remember his short on MBIA's bonds in the 2007-2008 financial crisis? Or how about his tussle with Canadian Pacific Railway?
Ackman also invested in companies like Target, Valeant Pharmaceuticals, and Chipotle. And who can forget his $1 billion short against Herbalife from 2012 to 2018? All of these are chapters in Ackman's high-stakes playbook.
After a slump from 2015 to 2018, Ackman needed a change. So he cut staff and stopped investor visits. He focused on research and it paid off. In 2019, Pershing Square had a 58.1% return. Reuters even named it one of the world's top-performing hedge funds.
Ackman looks up to other risk-takers in the business. He has praised short sellers like Carson Block of Muddy Waters Capital and Andrew Left of Citron Research.
💡 Did you know? 💡
Ackman's gamble against Herbalife was featured in a documentary called "Betting on Zero." The film sheds light on the intricate world of high-stakes investing.
A Giving Billionaire: Ackman's Philanthropy
Bill Ackman isn't just about high-stakes investing. He's also a huge giver. As a signatory of The Giving Pledge, he's promised to donate at least 50% of his wealth to charity in his lifetime.
Ackman is all in when it comes to giving. He helped the Center for Jewish History erase $30 million in debt, chipping in $6.8 million himself. He's also given $1.1 million to the Innocence Project and Centurion Ministries. These are just some of the giant gifts he's made over the years.
In 2006, Ackman and his then-wife Karen launched the Pershing Square Foundation. The foundation is a major donor to Planned Parenthood and has granted over $400 million since its start. It supports causes from economic development and education to healthcare and human rights.
Ackman made news with a $1.36 billion donation in Coupang shares in 2021. He even auctioned a lunch with himself to help frontline workers in New York, matching the highest bid of $210,000.
Ackman also shows support for individuals. Despite controversies surrounding biologist David M. Sabatini, Ackman stood by him. He announced a $25 million fund for Sabatini to run a new research lab.
Personal Side of Bill Ackman
Bill Ackman isn't just about Wall Street. He's a family man, too. Married to landscape architect Karen Ann Herskovitz in 1994, the couple had three children. They separated in 2016.
In 2018, Ackman got engaged to Neri Oxman. They married in Manhattan's Central Synagogue in 2019 and welcomed their first child the same year. Ackman even stepped up to protect Oxman's lab donation privacy from MIT.
Ackman is politically active as well. He endorsed Michael Bloomberg for the 2016 U.S. presidential race. He's also a longtime donor to Democratic causes and candidates, like Chuck Schumer and Robert Menendez.
As of 2017, Ackman owned a Gulfstream G550 business jet. It's a glimpse into the high-flying life he leads outside of Wall Street.
💡 Did you know? 💡
In 2019, Ackman penned a letter to MIT, asking them not to disclose a donation to Oxman's lab from financier Jeffrey Epstein. It's a lesser-known fact that shows Ackman's protective side.
Debunked Myths of Bill Ackman
|"Ackman Always Shorts Stocks"
|Although famous for his short-selling, like in the case of Herbalife, Ackman also takes long positions, such as his investment in Chipotle.
|"He Only Cares About Money"
|Ackman is a signatory of The Giving Pledge, committing to give away at least 50% of his wealth to charitable causes. He's deeply involved in philanthropy.
|"Ackman's Strategies are High Risk"
|Ackman employs a mix of strategies, including hedging to protect against losses. His approach is more nuanced than simply taking high-risk bets.
|"He Manipulates the Market"
|While he's not shy about making his opinions known, there's no evidence to suggest Ackman engages in market manipulation. He operates within legal frameworks.
|"Ackman is Always Right"
|Even enthusiasts might think he's infallible, but Ackman has had his share of losses. For example, he sold his entire stake in Netflix after a drop in stock price.
Frequently Asked Questions About Bill Ackman
How much did Bill Ackman lose on Valeant?
Bill Ackman lost about $4 billion on his investment in Valeant Pharmaceuticals. It's a notable example of the risks even seasoned investors face.
How much did Bill Ackman lose in the Herbalife ruling?
Bill Ackman lost an estimated $500 million on his bet against Herbalife, according to Fortune. It was a high-stakes showdown that ended unfavorably for him.
When did Bill Ackman start accusing Herbalife?
Bill Ackman started accusing Herbalife of being a pyramid scheme in December 2012. It marked the beginning of a high-profile battle against the company.
Bill Ackman Quotes
Here are some of Bill Ackman's most famous quotes.
Investing is a business where you can look very silly for a long period of time before you are proven right.
Experience is making mistakes and learning from them.
I was a little bit of a cocky kid.
We hope we have been helpful to you in this "Who is Bill Ackman" article, and we hope you have a better understanding of who Bill Ackman is!