Highly successful activist hedge-fund bosses like Bill Ackman share one universal trait, says Felix Salmon for Axios. They all believe they know “how best to run a public company”. But when they try to do so themselves, it doesn’t always work out.
British investors will be most familiar with Wall Street billionaire Bill Ackman through Pershing Square Holdings, his London- and Amsterdam-listed investment vehicle. While returns have been good, for most of the past decade the fund has been trading well below its net asset value, a fact that recently helped sink Ackman’s grand plans for a $25 billion New York listing of Pershing Square USA.
Undeterred, he is pushing to construct a deal that will bring investors on board. A public listing is “a somewhat odd choice for a hedge fund,” says Allison Morrow for CNN. Hedge funds usually prefer to stay “in the shadows” to avoid the intense “glare of US securities regulators”.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Bill Ackman's turn to the right
But Ackman is no stranger to fame. The listing plans are designed to cash in on his newfound clout on social media. Long experienced in launching stinging attacks on corporate leaders, he has recently turned his hand to politics. On social media site X (formerly Twitter) he has amassed 1.4 million followers.
Ackman first gained widespread notice beyond the world of finance last year when he used X to campaign against anti-Semitism on US college campuses, backing a push that ultimately forced Harvard’s president to step down. Though a registered Democrat, his online persona has taken a notably right-wing turn. He is supporting Donald Trump and has penned long critiques of US affirmative-action practices.
He has taken some stick for that, but criticism won’t faze him, says Reeves Wiedeman in New York Magazine. Shareholder activists are used to having a “fervent commitment” to their positions. Hedge funders are said to be “often wrong”, but “never in doubt”. Ackman, 58, has been both spectacularly right and crushingly wrong during his long career on Wall Street. In 1992, aged 26 and fresh out of Harvard Business School, he co-founded his first hedge fund with backing from a small group of investors, including his father, a well-to-do New York real estate broker.
In 2013 he waged an “infamous activist battle” against Herbalife, a dietary supplements business that he labelled a “pyramid scheme”. Later regulatory investigations partly “vindicated” his stance, but they came too late for him to make any money. Pershing Square has since sworn off “bombastic” campaigns in favour of taking stakes in “boring” blue chips like Starbucks and Hilton. Today the model is less a pugnacious corporate raider and more Warren Buffett.
Ackman's love-in with Twitter
Ackman joined Twitter in 2017 when he was reeling from the end of his marriage of more than two decades and “some of the most disastrous investments of his career” – he closed out the Herbalife position in 2018 at a roughly $1 billion loss, says Maureen Farrell in The New York Times. He has since re-married. Yet arguably it is his “relationship” with Twitter that really marked a new chapter in his life. Ackman credits social media with allowing him to “see around corners” during the pandemic.
In February 2020 he was early to see the writing on the wall as Covid spread, betting $27 million against the market and turning it into $2.7 billion in a matter of weeks. In the US, Ackman’s fame is such that Facebook is now “full of impersonators” pretending to be him and offering stock tips.
Having discovered a taste for political activism, is a move into elected office the next step? “I have no plans to run for president,” he says, “but I do like having an independent voice and having influence.”
This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.
-
8 of the best houses for sale with librariesThis week: the best houses for sale with libraries – from a five-storey Georgian townhouse in Bloomsbury, London, to a 15th-century property with a library in a medieval tower in Lozère, France
-
Investors pull money from UK equities as government warns of “painful” BudgetThe government’s post-election honeymoon period has been short-lived, and investors are shying away from UK equities as a result
-
Who is John Donahoe, the man who made Nike uncool?Nike’s 48-year success story has been put into question by John Donahoe, its outgoing CEO who knew nothing about Nike or its culture. What mistakes did he make?
-
Anders Holch Povlsen: the Danish tycoon reshaping BritainAnders Holch Povlsen has snapped up land in the Highlands, returning it to a wilderness, and plans to transform a historic department store in Edinburgh. Can he also revive Topshop?
-
The US election has witnessed more political violence, just how ugly could it get?US Election Donald Trump is at the center of the US election yet again, but not for good reason. Will there be a peaceful handover of power in 2025?
-
Buffett’s "insurance guru" Ajit Jain sells upWarren Buffett has long sung the praises of Ajit Jain, who he once tipped to take over in the top job. Now he is selling a big chunk of his stake in Buffett’s firm. Why?
-
Paetongtarn Shinawatra becomes Thailand's youngest-ever PM – will she succeed?Paetongtarn Shinawatra is joining the family business: both her father and aunt have governed the country. She has promised to “end a cycle of coups”. Can she?
-
Bill Gates: from hero to villain and back againBill Gates was a tech billionaire at 31. Then he was knocked down for ruthless business practices – and hailed again for his philanthropy. Who is the real Bill Gates?
-
Jeff Yass: the poker player betting on TrumpJeff Yass is a professional gambler who built one of Wall Street’s most powerful trading operations and is backing Donald Trump for president. What’s in it for him?
-
Michele Kang: the first tycoon of women’s footballMichele Kang made her fortune in healthcare IT. Then, in 2019, she became interested in football. Her sports empire now consists of clubs around the globe.
