Bill Ackman, Founder and CEO of Pershing Square Capital Management.
Adam Jefferies | CNBC
Investor Bill Ackman said Tuesday that he would no longer participate in vocal short-selling campaigns by activists, a practice he employed that led to one of the most colorful battles in Wall Street history.
“Despite our limited involvement in this investment strategy, it has generated tremendous media attention for Pershing Square. In addition to massive amounts of media success, our two brief activist investments managed to inspire a book and a film,” Ackman said in his annual letter. “Luckily for all of us, and just as important to our reputation as a supportive, constructive owner, we have permanently retired from this industry.”
The decision came years after his five-year battle against Herbalife ended in massive losses in 2018. The founder and CEO of Pershing Square Capital Management had made a big bet against the supplement maker whom he accused of running a Ponzi scheme.
“We exited because we believed the capital could be better deployed to other opportunities, especially considering the opportunity cost of our time,” Ackman said in the letter. “The aphorism that you don’t have to put it back the way you lost it always won us over.”
At the height of his fight against Herbalife, Ackman famously engaged in a verbal brawl with Carl Icahn on CBNC. The fight inspired Scott Wapner’s book When the Wolves Bite: Two Billionaires, One Company, and an Epic Wall Street Battle.
Ackman also shorted mortgage lending companies FannieMae and FreddieMac in 2007 before the Great Financial Crisis, in what turned out to be a winning bet.
PershingSquare 3.0
As Pershing Square entered its 19th year, Ackman said he was ready to take his firm into the next era to focus on long-term, “calmer” bets.
“We’ve had the opportunity to meet many directors and management teams, and we’ve built a reputation as a constructive, long-term and supportive owner,” said Ackman. “The result is that all of our interactions with companies over the past five years have been cordial, constructive and productive. We intend to keep it that way as it makes our jobs easier, more fun and improves our quality of life. So if it’s helpful to call this quieter approach Pershing Square 3.0, be anointed with it.”
In January, Ackman bought over 3 million shares from Netflix to become one of the top 20 shareholders. He recently built a new stake in the Canadian Pacific Railway, a company the activist investor overtook years ago.
Ackman said that about 30% of our stock portfolio is invested in music and video streaming — UMG and Netflix — while 26% is invested in restaurants and restaurant franchising — Chipotle, Restaurant Brands, and Domino’s. He also owns significant stakes in Lowe’s, Howard Hughes and Hilton.
“We expect each of these companies to grow their sales and profitability over the long term, regardless of recent events and the various other challenges that the world will face in the short, medium and long term,” Ackman said in the letter.