(born May 11, 1966) is an American investor,hedge fund manager, and philanthropist. He is the founder and CEO ofPershing Square Capital Management, a hedge fund management company. Ackman is considered by some to be acontrarian investor
Research published at theUniversity of Oxfordcharacterizes Ackmans activities withCanadian Pacific Railwayas paradigmatic of engaged activism, which is longer-term in nature with correlated benefits to the real economy, as distinct from shorter-term financial activism.6
Ackmans investing style has been praised and criticized by U.S. government officials, heads of other hedge funds, variousretail investors, and the general public. His most notable market plays includeshorting MBIAs bonds during the 2008 financial crisis, hisproxy battlewithCanadian Pacific Railway, and his stakes in theTarget CorporationValeant Pharmaceuticals, andChipotle Mexican Grill. From 2012 to 2018, Ackman held a US$1 billionshortagainst the nutrition companyHerbalife, a company he has claimed is apyramid schemedesigned as amulti-level marketingfirm.7His efforts were documented in the documentary filmBetting on Zero.8
Ackman was raised inChappaqua, New York, the son of Ronnie I. (ne Posner) and Lawrence David Ackman, the chairman of a New York real estate financing firm, Ackman-Ziff Real Estate Group.910His family isJewish.1112
In 1988, he received a bachelor of arts degreemagna cum laudein history fromHarvard College. His thesis was Scaling the Ivy Wall: the Jewish and Asian American Experience in Harvard Admissions.13In 1992, he received an MBA fromHarvard Business School.14
In 1992, Ackman founded the investment firm Gotham Partners with fellow Harvard graduate David P. Berkowitz.15The firm made small investments in public companies.9In 1995, Ackman partnered with the insurance and real estate firmLeucadia Nationalto bid forRockefeller Center. Although they did not win the deal, the bid caused increased interest in Gotham from investors, which led to $500 million in assets by 1998.9By 2002, Gotham had become entrenched in litigation with various outside shareholders who also owned an interest in the companies in which Gotham invested.9
Despite an ongoing probe of his trading by New York State and federal authorities, in 2002 Ackman began research challengingMBIAs AAA rating. He was charged fees for copying 725,000 pages of statements regarding the financial services company in his law firms compliance with a subpoena.16Ackman called for a division between MBIAs bond insurers structured finance business and its municipal bond insurance business.17
He argued that MBIA was legally restricted from trading billions of dollars ofcredit default swap(CDS) protection MBIA had sold against various mortgage backedCDOs, and was using a second corporation, LaCrosse Financial Products, which MBIA described as an orphaned transformer. Ackman bought credit default swaps against MBIA corporate debt and sold them for a large profit during thefinancial crisis of 2008. He reported covering his short position on MBIA on January 16, 2009, according to the 13D filed with the SEC.18
In 2003, a feud developed between Ackman andCarl Icahnover a deal involving Hallwood Realty. They agreed to a, under which, if Icahn were to sell the shares within 3 years and made a profit of 10% or more, he and Ackman would split the proceeds. Icahn paid $80 per share. In April 2004, HRPT Property Trust acquired Hallwood, paying $136.16 per share. Under the terms, Icahn owed Ackman investors about $4.5 million, but he refused to pay. Ackman sued. Eight years later, the Court forced Icahn to pay $4.5 million, plus 9% interest per year since the date of the sale.192021
In 2004, with $54 million from his personal funds and from his former business partner Leucadia National, Ackman startedPershing Square Capital Management.9In 2005, Pershing bought a significant share in the fast food chainWendys Internationaland successfully pressured it to sell itsTim Hortonsdoughnut chain. Wendys spun off Tim Hortons through an IPO in 2006 and raised $670 million for Wendys investors. After Ackman sold his shares at a substantial profit after a dispute over executive succession, the stock price collapsed, raising criticism that the sale of Wendys fastest-growing unit left the company in a weaker market position. Ackman blamed the poor performance on their new CEO.9
In December 2007, his funds owned a 10% stake inTarget Corporation, valued at $4.2 billion22through the purchase ofstockandderivatives.23
In December 2010, his funds held a 38% stake inBorders Groupand on December 6, 2010, Ackman indicated he would finance a buyout ofBarnes & NobleforUS$900M.24
At a panel meeting discussingBernie Madoffin January 2009, Ackman defended his longtime friendEzra Merkin, saying, Has Ezra committed a crime? I dont think so, and I think [Merkin] is an honest person, an intelligent person, an interesting person, a smart investor.252627In April 2009, Merkin was charged with civil fraud by the State of New York for secretly steering $2.4 billion in client money into Bernard Madoffs Ponzi fraud without their permission.28A settlement was reached on June 2012 requiring Merkin to pay $405 million to victims including the Metropolitan Council on Jewish Poverty.29
In December 2012, Pershing Square Capital Management launched a new closed-end fund calledPershing Square Holdings, which raised $3 billion in an October 2014IPOon AmsterdamsEuronextstock market.30As a closed-end fund valued at $6.7 billion, PSH was designed as a permanent capital vehicle from which investors would not be able to directly withdraw funds.31PSH reported 17.1% in returns since inception (Dec. 2012 November 2017) under Ackmans management, 80% below the S&P 500.32
Ackman started buyingJ. C. Penneyshares in 2010, paying an average of $22 for 39 million shares or 18% of Penneys stock. In August 2013, Ackmans two-year campaign to transform the department store came to an abrupt end after he decided to step down from the board following an argument with fellow board members.33
In a statement dated August 27, 2013, Pershing Square reported that it had hired Citigroup to liquidate the 39.1 million shares the firm then owned of the Plano, Texas-based department-store chain at a price of $12.90 per share, resulting in a loss of approximately $500 million.34In January 2015, LCH Investments named Ackman one of the worlds top 20 hedge fund managers after Pershing Square delivered $4.5 billion in net gains for investors in 2014, bringing the funds lifetime gains to $11.6 billion since its launch in 2004 through year-end 2014.35
On April 27, 2016, Ackman along with Valeant Pharmaceuticals outgoing CEO,J. Michael Pearson, and the companys former interim CEO, Howard Schiller, testified before the United States Senate Special Committee on Aging.36The testifying panel answered questions related to the Committees concerns about repercussions to patients and the health care system posed by Valeants business model and controversial pricing practices.37
Ackman sold his remaining 27.2 million share position in Valeant to the Investment Bank Jefferies for about $300 million in March 2017. It has been estimated that the total cost of the position, including direct stock purchases and 9.1 million shares that were underlying stock options traded withNomuraGlobal Financial Products, was $4.6 billion, leading to a loss greater than the original price of the securities.3839
According toForbes Magazine, Ackman has anet worthofUS$1.09 billion as of February 12, 2018.1
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In December 2012, Ackman issued a research report that was critical ofHerbalifemulti-level marketingbusiness model, calling it apyramid scheme.40Ackman disclosed that his hedge fund,Pershing Square Capital Management, sold short the companys shares directly (not with derivatives) starting in May 2012, causing Herbalifes stock price to drop.
At an investor conference in January 2013, the company released results of a Nielsen Research International survey showing 73 percent of Herbalife distributors never intended to make money by reselling the product. Instead, they wanted to buy products at a discount for personal use.41To make the distinction clearer, the company announced on its June 2013 earnings call that it would begin referring to these discount buyers as members rather than distributors.42
A few months after Ackmans initial comments, billionaire investorCarl Icahnrefuted Ackmans comment in a public spat on national TV. Shortly thereafter, Icahn bought shares of Herbalife Intl. As Icahn continued to buy up HLF shares, the stock price continued to show strength.43By May 2013, Icahn owned 16.5% of the company.44That number had declined to 6.4% by November 2013.45
In 2014, Ackman spent $50 million on a public relations campaign against Herbalife, which was designed to hurt the companys stock price.4647
Former Rep.Bob Barr(R-GA) has called on Congress to investigate Ackmans use of public relations and regulatory pressure in his short campaign, and Harvey L. Pitt, a former chairman of the Securities and Exchange Commission, has questioned whether Ackman aims to move the price rather than spread the truth.4849In 2014,Senator Ed Markeywrote letters to federal regulators, including theFTCand theSEC, demanding they open an investigation into Herbalifes business practices. The day the letters were released, the companys stock dropped 14%. Markey later told theBoston Globethat his staff had not informed him that Ackman stood to benefit financially from his actions and defended the letters as a matter of consumer rights.50
In March 2014, theNew York Timesreported that Ackman had employed tactics to undermine public confidence in Herbalife to lower its stock price, including pressuring state and federal regulators to investigate the company, paying individuals to travel to and participate in rallies against it, and boosting its spending on donations to nonprofit Latino organizations. According to the article, groups such as theHispanic Federationand theNational Consumers Leaguesent federal regulators numerous letters. Each person contacted by The Times acknowledged in interviews that they wrote the letters after being lobbied by representatives from Pershing Square, or said they did not remember writing the letters at all. Mr. Ackmans team also then started to make payments totaling about $130,000 to some of these groups, including the Hispanic Federation money he said was being used to help find victims of Herbalife.51
By December 2, 2014, stock prices had fallen nearly 50% to $42.08 from their January 8 high of $83.48.52Later that month, Pershing Square Capital released a 2005 Herbalife distributor training session, which described high turnover rates and implied that the companys business model was not sustainable.535455According to an unnamed source speaking to theNew York Post, the video had previously been subpoenaed by federal investigators.54In an interview withBloomberg, Ackman predicted that the company would experience an implosion in 2015 or early 2016, citing federal scrutiny and debt.5556
On March 12, 2015,The Wall Street Journalreported that prosecutors in the Manhattan U.S. attorneys office and the FBI were investigating whether people hired by Ackman made false statements about Herbalifes business model to regulators and others in order to spur investigations into the company and lower its stock price.5758In March 2015, U.S. District Judge Dale Fischer, inLos Angeles, California, dismissed a suit filed by Herbalife investors alleging the company is operating an illegal pyramid scheme. In response to Fischers ruling, Herbalife stock rose approximately 13%.59Herbalife and the FTC reached a settlement agreement in July 2016, ending the agencys investigation into the company. On the day of the settlement,Fortuneestimated that Ackman lost $500 million.60
Ackmans position on Herbalife led to a discussion on live television with Herbalife supporterCarl Icahnfor nearly half an hour onCNBCon January 25, 2013.616263During the segment, Icahn called Ackman a crybaby in the schoolyard and claimed that going public with his short position would eventually force Ackman into the mother of all short squeezes. On November 22, 2013, Ackman admitted on Bloomberg Television that Pershing Squares open short position in Herbalife was $400 million to $500 million in the red, but that he wouldnt be squeezed out and would hold the short to the end of the earth.64
In November 2017, Ackman told Reuters that he had covered his short-sell position, but would continue to bet against Herbalife using put options with no more than 3% of Pershing Squares funds.65
On February 28, 2018, Ackman exited his near billion-dollar bet against Herbalife after the companys stock price continued to rise, choosing to build his position in United Technology instead.66
Ackman has given to charitable causes such as theCenter for Jewish History,67where he spearheaded a successful effort to retire $30 million in debt, personally contributing $6.8 million.6869This donation and those ofBruce Berkowitz, founder of Fairholme Capital Management, and Joseph Steinberg, president ofLeucadia National, were the three largest individual gifts the center has ever received.70
Ackmans foundation donated $1.1 million to theInnocence Projectin New York City andCenturion Ministriesin Princeton, N.J.68He is a signatory ofThe Giving Pledge, committing himself to give away at least 50% of his wealth to charitable causes.71
In 2006, Ackman, and then wife Karen, founded the Pershing Square Foundation to support innovation in economic development, education, healthcare, human rights, arts and urban development.7273Since its inception, the foundation has committed more than $400 million in grants since 2006.74In 2011, the Ackmans were onThe Chronicle of Philanthropys Philanthropy 50 list of the most generous donors.75
In July 2014,Challenged Athletes Foundation, which provides sports equipment to those with physical disabilities, honored Ackman at a gala fundraiser at the Waldorf Astoria hotel in New York City for helping raise a record $2.3 million.76
Ackman endorsedMichael Bloombergas a prospective candidate for President of the United States in the2016 presidential election.77He is a longtime donor to Democratic candidates and organizations, includingRichard BlumenthalChuck SchumerRobert Menendez, theDemocratic National Committee, and theDemocratic Senatorial Campaign Committee.78
Ackman married Karen Ann Herskovitz, alandscape architect, on July 10, 1994, and they have three children.979On December 22, 2016, it was reported that the couple had separated.8081
In 2018, Ackman became engaged toNeri Oxman.82In January 2019, Oxman and Ackman announced they had wed and are expecting their first child together, due in the Spring.83
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American chief executives of financial services companies
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