How’s it going, everyone? Today, we’re talking about one of the biggest names on Wall Street: Bill Ackman.
He does political and investment commentary on CNBC and Bloomberg so you’ve probably seen him before!
He manages about $20B through his hedge fund, Pershing Square Capital Management.
While in college, he convinced one of his professors to give him $250K to start his own hedge fund.
With that $250K, he went and raised an additional $3.2M, which he traded all very successfully.
By the time 1993 rolled around, he turned that into $10M!
And in 1998, this guy was managing $500M at Gotham Partners!
How’d He Do It?
His first thesis was value investing.
Value investing isn’t multiple small bets, it’s very few large bets.
Ackman started analyzing companies and identifying firms that had a higher book value than what they were trading at.
No, I am not giving you financial advice, but like Lincoln said in the YouTube video…
“Diversification is a hedge against ignorance.”Warren Buffett
Bill got in some trouble when he started investing in illiquid assets.
Usually hedge funds have a lockup period of 1 year, but after that, investors reserve the right to a redemption notice – meaning that they can request to withdraw their money.
Back to illiquid assets: If multiple investors ask for their money back but the money is tied up in an illiquid asset like golf courses, then there’s no way to get that money!
So, his investors wanted their money, he couldn’t provide it, lawsuits occurred, and he closed Gotham’s doors.
Many fund managers that fail like that can’t recover due to their reputation.
However, Bill bounced back 5 years later and started Pershing Square Holdings.
Since then, Bill has been deeply involved in activist investing.
This is when you take a position in a stock or other asset, then promote or degrade the party in order to drive prices up or down.
He’s had considerable success with this over the years, but it’s becoming less and less popular among fund managers.
There’s a brief summary on Bill Ackman and Pershing Square Capital Mgmt!
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That’s it for today!
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DISCLAIMER: This content is for educational and informational purposes only. It is not to be taken as tax, financial, or legal advice. You should always consult a legal professional before taking action. Furthermore, this is not a recommendation to buy or sell any security. The content is solely just the opinion of the author