The investor library

Bill Ackman

1966- · Pershing Square · The one who has to say it out loud.

Overview

He founded Pershing Square in 2004 with fifty-four million dollars and has compounded at roughly fifteen per cent a year since — through a stretch in the middle where the fund lost about half its value and investors left in numbers. Almost uniquely in this library, the record is audited and public: Pershing Square Holdings is listed, so the net asset value is published rather than reported.

“Investing is a business where you can look very silly for a long period of time before you are proven right.”

Bill Ackman

Background

Born in Chappaqua, New York, in 1966. Harvard, then Harvard Business School. He co-founded his first fund, Gotham Partners, at twenty-six, with a classmate and very little money — and wound it down about a decade later, tangled in illiquid positions and regulatory attention he was ultimately cleared of.

Pershing Square opened in 2004 with fifty-four million dollars, part of it his own.

Style, and how it evolved

Very few positions, very large. Eight to a dozen names, held for years, in businesses simple enough to explain in a slide deck — which is not incidental, because he usually has to.

Activism as the value-realisation mechanism. He buys a stake and then argues, publicly and at length, for the change he thinks the business needs. The analysis and the campaign are the same act.

Public short campaigns — the most contested part of the method, and the part he has largely abandoned.

The evolution is real and worth taking seriously. After the 2015-18 collapse he stopped shorting publicly, cut the number of positions further, stopped courting the press about individual names, and moved the book decisively towards long-held quality compounders. He has said plainly that he was trying to be a better version of a much older approach, and the returns since have been considerably steadier.

Performance

paid offa decisiona losswalked awaythe lifeshaded columns are the crashes — hover any mark

Roughly 15% a year since 2004, net. ✓ — and unusually for this library, that figure can be checked: Pershing Square Holdings is a listed closed-end vehicle with a published, audited net asset value.

The shape matters more than the rate. Between 2015 and 2018 the fund fell by roughly half from its peak and investors redeemed heavily; between 2019 and 2021 it produced three of the best years of any large fund anywhere. The average of those is the fifteen per cent.

✓ documented — the vehicle is listed and the NAV is published

Case studies

2002-2008 — MBIA. He argued that a bond insurer rated triple-A was not remotely worth that rating, published the work, and was investigated by regulators for saying so. He was right, and it took six years and cost him a great deal of standing in the interim. About $1.1bn when it resolved. The mechanism: being early is indistinguishable from being wrong, and the public argument was the thing that eventually forced the question.

2009 — General Growth Properties. He bought equity in a bankrupt shopping-mall company that almost everyone had written to zero, on the reading that the assets were sound and only the financing had failed, then worked through the restructuring. Roughly sixty million dollars became something in the order of $1.6bn. The mechanism: separating a solvency event from an asset-quality event — the same distinction Buffett made about American Express in 1964. ✓

2012-2018 — Herbalife, and the limit of the method. A billion-dollar public short, argued as a matter of public interest, ran for five years and ended in a large loss. Carl Icahn took the other side partly because it was Ackman's, retail buyers rallied to the company, and the campaign itself became a reason for the stock to rise. The mechanism: publicity is not a neutral delivery system for an argument. It recruits the other side.

March 2020 — the hedge. About $27m spent on credit protection as the pandemic arrived returned roughly $2.6bn in a matter of weeks, and he then put the proceeds straight into equities near the bottom. One of the best-timed trades on record — and note that it was a macro insurance trade with almost nothing to do with his stated method. ✓

The other side of the record

A record this good is where scepticism is most worth spending, so:

Two convictions cost about five billion dollars. Valeant and Herbalife were not marginal errors; both were large, public, prolonged, and defended at length while they got worse. Concentration means the mistakes are the same size as the wins.

The 2015-18 drawdown is the real test and it went badly. Roughly half the value, heavy redemptions, and a listed vehicle trading at a wide discount to its own assets — which is what it looks like when the market stops believing the manager rather than the holdings.

The trade everyone cites is not evidence for the method. The 2020 hedge was extraordinary and it was a macro bet on credit spreads. Using it to validate an approach built on concentrated activist equity positions is a category error.

Public short campaigns raise questions the returns do not settle. Arguing publicly for the destruction of a company you are positioned against is legal, was disclosed, and is still a structure in which the argument and the interest cannot be separated by the audience.

And the record is short of the long ones here. Twenty years is respectable and it is not Buffett's sixty or Schloss's forty-five, and a good deal of the compounding arrived in three exceptional years.

Key lessons

• Separate a financing failure from an asset failure. General Growth was solvent in everything but its balance sheet, and almost nobody looked.
• Being early is indistinguishable from being wrong — for six years, in the MBIA case, with regulators asking why you keep saying it.
• Publicity recruits the other side. An argument made loudly enough to move a price also creates the coalition that opposes it, which is a cost the analysis never prices.
• Concentration sizes the mistakes as well as the wins, and there is no version of it where that is not true.
• Changing the method in public is possible. He stopped shorting publicly, narrowed the book, and said why — which is rarer than any single trade on this page.

Reading and links

• Pershing Square Holdings annual reports and NAV disclosures — the primary source, and audited.
• Confidence Game — Christine Richard, 2010. The MBIA campaign, in detail.
• Betting on Zero — 2016. The Herbalife documentary; partisan, and useful for how the campaign actually worked.
• His annual letters and investor presentations, for the theses in his own words.

Marked ✓ where documented. Unusually for this library the vehicle is listed, so the performance figures are audited rather than reported. This is a profile of an investor, not a view on any security.

Primary sources

Go to the thing itself. These are the subject’s own publications or an institution’s own site. No bookseller links, and no referral arrangements — a reading list that earns per click is not a reading list.

• Pershing Square HoldingsListed, so the NAV and the annual reports are published and audited.
• Pershing Square

Profiles of investors, not views on any security, and not personal advice. Figures are marked ✓ where they are documented and ○ where they rest on secondary or private accounts — investing biography is heavily mythologised and the well-known numbers drift with each retelling. Capital is at risk.

Corrections and right of reply. Where a criticism is made of a named person it is stated as a specific measure over a stated period, attributed to its source, and separated from opinion. Assessments are opinion, honestly held, on facts believed accurate at the date shown. If anyone profiled here — or anyone acting for them — believes a fact is wrong, it will be corrected promptly and visibly, and a reply will be published alongside it on request.

← David SwensenNick Sleep →