Editor’s note: This article was first published in August 2013. Ackman’s family and property details are as of 2013, and his personal circumstances have since changed. The Pershing Square figures, its positions in Canadian Pacific, J.C. Penney and Air Products, and the $1 billion Herbalife short are as of mid-2013; several positions were later closed.
Tall, handsome and a billionaire, recently named one of Wall Street’s most attractive men, he stands out not only for the returns of his main fund, Pershing Square Capital, but for his philanthropy, his knack for spotting talent in people and, of course, his recent contrarian attack on Herbalife.
Not everything said about him is kind, of course. His main rivals in the world of finance have described him as a hypocrite and even as arrogant and “a fool”, given that his short position in Herbalife runs against the long positions of giants such as Carl Icahn, Daniel Loeb and, more recently, George Soros.
But…
Who is Bill Ackman, where does he come from and what is he really like?
William Albert Ackman was born on 11 May 1966. He is currently 46 years old. He comes from a Jewish family and was raised in New York. His father was the chairman of Ackman Brothers & Singer, a New York real estate mortgage broker. Perhaps that is where his passion for finance comes from.
He studied at Harvard and earned his MBA at the same university.
Bill Ackman was co-captain of the Harvard rowing team, and he caused his first “scandal” there by decorating the team’s oars and uniforms with the dollar sign.
In 1994 he married Karen, an architect, with whom he has 3 children. They live in a luxury apartment building on Manhattan’s Upper West Side, in an apartment valued at more than $5 million, and he also has a mansion in the Hamptons worth around $22 million. He has his own private jet, worth about $32 million.
How did Bill Ackman get started?
Ackman knew exactly what he wanted to do and how he wanted to do it, so right after finishing his MBA he set up his own fund with a Harvard classmate, David Berkowitz. They called it Gotham Partners. In doing so, Ackman skipped many of the first steps that most beginners on Wall Street take.
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He quickly proved his worth, of course, by growing the fund rapidly from $3 million to $300 million.
But even people like Bill Ackman get a taste of failure at some point in their lives. They were forced to close their investment fund after buying a majority stake in a golf course. In other words, they became owners of the company that held the golf course, renamed it Gotham Golf, and set out not only to generate returns for their fund but to build their own big business around golf courses. They went on buying several golf courses, until they had piled up a large amount of debt.
They fought to the very end to save that investment, and even considered merging the golf company with a real estate company, but a judge blocked the merger and they had to return the money to their investors.
That failure didn’t take away his hope of carrying on, and in 2004 Ackman founded his current hedge fund, Pershing Square Capital. It started out managing $54 million and today, with 51 employees, it manages more than $11 billion.
How does Bill Ackman invest?
Ackman is known for taking long positions and holding them for the long term. He is anti-diversification, so his fund consists of large amounts of capital in a few companies. One of his biggest exposures is Canadian Pacific Railway, a company that has earned the fund a return of more than 100%.
Ackman is also the largest shareholder of J.C. Penney Company, although in this case his investment can’t be very profitable, since the stock isn’t doing well. Overall, though, we could say that Bill Ackman’s track record as an investor since he set up his latest fund in 2004 has been flawless, at least until he announced his $1 billion bet against Herbalife. Ackman’s latest big investment, of historic size according to experts, was made recently in Air Products.
Ackman is known for his unusual hires
Ackman doesn’t look for people with university degrees but for people with talent. One of the first stock analysts at his current fund was a young man who had been his guide on a fishing trip. According to Ackman, the young man was largely self-taught in finance. He was passionate about it, and during the trip he told Ackman which companies he liked and which he didn’t, and his views matched Bill Ackman’s own. He didn’t hesitate to hire him.
Later he hired a tennis coach and a young man he met in a taxi (we don’t know whether he was the driver). You could say he is obsessed with finding and recognizing talent anywhere.
See also: How the rich with more than 200 million have invested
Otherwise, Ackman watches what he eats, avoids excess and does a lot of sport. He even boasts of having played tennis with Andre Agassi. Everyone describes him as a very self-assured person, to the point that he is still sure he made the right decision with Herbalife and that its stock will go to $0.
Rumour has it that at the restaurant next to the building where he works, the waiters have orders never to seat Ackman near Carl Icahn, and, if possible, to keep them out of each other’s sight, since their feud goes back decades, not just to now.
Without doubt, an interesting character who shows how simple it can be to multiply a fortune in a short time if you are in the right place, working in the right industry, with the right knowledge.
Featured image: Andrew Bowden, CC BY-SA 2.0, via Flickr.
