Bill Ackman, founder and CEO of Pershing Square Capital Management.
Adam Jeffery | CNBC
Investor Bill Ackman said Tuesday that he will no longer take part in vocal activist short selling campaigns, a practice he engaged in that led to one of the most colorful battles in Wall Street history.
“Despite our limited participation in this investment strategy, it has generated enormous media attention for Pershing Square. In addition to massive amounts of media hits, our two short activist investments managed to inspire a book and a movie,” Ackman said in his annual letter . “Fortunately for all of us, and as importantly for our reputation as a supportive constructive owner, we have permanently retired from this line of work.”
The decision came years after his five-year battle against Herbalife ended with massive losses in 2018. The founder and CEO of Pershing Square Capital Management had placed a big bet against the nutritional supplement maker he accused of running a pyramid scheme.
“We exited because we believed that the capital could better be deployed in other opportunities, particularly when one considered the opportunity cost of our time,” Ackman said in the letter. “The aphorism that you ‘don’t need to make it back the way you lost it’ has always resonated with us.”
At the height of his fight against Herbalife, Ackman famously engaged in an on-air verbal brawl with Carl Icahn on CBNC. The battle inspired Scott Wapner’s book “When the Wolves Bite: Two Billionaires, One Company, and an Epic Wall Street Battle.”
Ackman also shorted mortgage loan companies FannieMae and FreddieMac in 2007 before the great financial crisis, which turned out to be successful bets.
Pershing Square 3.0
Entering the 19th year of Pershing Square, Ackman said he’s ready to take his firm to the next era to focus on long-term, “quieter” bets.
“We have had the opportunity to get to know many boards and management teams, and we have built a reputation as a constructive, long-term, and helpful owner,” Ackman said. “The result is that all of our interactions with companies over the last five years have been cordial, constructive, and productive. We intend to keep it that way as it makes our job easier and more fun, and our quality of life better. So , if it is helpful to call this quieter approach Pershing Square 3.0, let it hereby be so anointed.”
In January, Ackman bought over 3 million shares of Netflix to become a top 20 shareholder. More recently, he built a new stake in Canadian Pacific Railway, a company that the activist investor helped overhaul years ago.
Ackman said about 30% of our equity portfolio is invested in music and video streaming — UMG and Netflix, while 26% in restaurants and restaurant franchising — Chipotle, Restaurant Brands and Domino’s. He also owns sizable stakes in Lowe’s, Howard Hughes and Hilton.
“We expect that each of these companies will grow their revenues and profitability over the long term, regardless of recent events and the various other challenges that the world will face over the short, intermediate, and long-term,” Ackman said in the letter .