Bill Ackman

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Bill Ackman
Born William A. Ackman
May 11, 1966
Nationality United States
Alma mater Harvard College
Harvard Business School
Occupation CEO of Pershing Square Capital Management
Director of Canadian Pacific Railway
Net worth Increase US$1.2 billion (March 2013)[1]
Spouse(s) Karen Ann Herskovitz
(1994–present)
Children 3
Parents Lawrence Ackman (father)

William A. "Bill" Ackman (born May 11, 1966) is an American hedge fund manager. He is the founder and CEO of hedge fund Pershing Square Capital Management LP.[2]

Early life[edit]

Ackman was raised in Chappaqua, New York, and is the son of Ronnie I. (née Posner) and Lawrence David Ackman, the chairman of a New York real estate financing firm, Ackman-Ziff Real Estate Group.[3][4] His family is Jewish.[5][6] He received a Bachelor of Arts degree magna cum laude from Harvard College in 1988, and an MBA from Harvard Business School in 1992.

Career[edit]

In 1992, Ackman founded with a fellow Harvard graduate the investment firm Gotham Partners, which made small investments in public companies.[3] In 1995, Ackman's reputation was enhanced when he partnered with the insurance and real estate firm Leucadia National to bid for Rockefeller Center. Although they did not win the deal, the high-profile nature of the bid caused investors to flock to Gotham Partners growing it to $500 million in assets by 1998.[3] In 2002, Ackman began winding down Gotham Partners which had become entrenched in litigation with various outside shareholders who also owned an interest in the same companies which Gotham invested. A 2003 investigation of Gotham's trading practices by New York Attorney General Eliot Spitzer found no wrongdoing.[3]

In August 2013, Ackman’s two-year campaign to transform the department store J.C. Penney came to a sudden end after he decided to step down from the board following an argument with fellow board members.[7]

MBIA activities[edit]

In 2002 Ackman began research challenging MBIA's AAA rating despite an ongoing probe of his trading by New York State and federal authorities. He was charged the fees for copying 725,000 pages of statements regarding the financial services company in his law firm's compliance with a subpoena.[8] Ackman has called for a division between MBIA's bond insurers' structured finance business and their municipal bond insurance side despite statements from the insurance companies that this would not be a viable option.[9]

He argued that the billions of dollars of CDS protection MBIA had sold against various mortgage backed CDOs was going to be a problem. He also argued that it was not proper for MBIA, which was legally restricted from trading in CDS, to instead do it through a second corporation, LaCrosse Financial Products, which MBIA described as an "orphaned transformer". Ackman bought credit default swaps against MBIA corporate debt as a way to bet that it would crash. When MBIA did, in fact, crash as the financial crisis of 2008 came to a head, he sold the swaps for a large profit. Ackman reportedly attempted to warn regulators, rating agencies and investors about the bond insurers' high risk business models. The story of Ackman's battle with MBIA was turned into a book called Confidence Game (Wiley, 2010) by Bloomberg News reporter Christine Richard.[10] He reported covering his short position on MBIA on January 16, 2009 according to the 13D filed with the SEC.[11]

Pershing Square Capital Management[edit]

In 2004, with $54 million in funding from his personal funds and from his former business partner Leucadia National, Ackman started Pershing Square Capital Management.[3] In 2005, Pershing bought a significant share in the fast food chain, Wendy's International and successfully pressured them to sell its Tim Hortons doughnut chain. Wendy's spun off Tim Horton through an IPO in 2006 and raised $670 million for Wendy's 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 Wendy's fastest-growing unit left the company in a weaker market position.[3] Ackman blamed the poor performance on their new CEO.[3]

In December 2007 his funds owned a 10% stake in Target Corporation, valued at $4.2 billion[12] through the purchase of stock and derivatives.[13] His funds now own a 7.8% stake.[14] In December 2010, his funds held a 38% stake in Borders Group and on December 6, 2010, Ackman indicated he would finance a buyout of Barnes & Noble for US$900M.[15] He most recently won a shareholder proxy battle for Canadian Pacific Railway. Ackman is known to occasionally hire people outside of non-traditional finance backgrounds, for instance, his professionals have included a former fly fishing guide, a former tennis pro and "a man whom he met in a cab."[16]

Defense of J. Ezra Merkin[edit]

At a panel meeting discussing Bernie Madoff in January 2009, Ackman defended his long time friend J. Ezra Merkin stating, "Has Ezra committed a crime? I don’t think so,” "I think [Merkin] is an honest person, an intelligent person, an interesting person, a smart investor."[17][18][19] On April 6, 2009, Merkin was charged with civil fraud by the State of New York, for "secretly steering $2.4 billion in client money into Bernard Madoff's Ponzi fraud without their permission."[20] A settlement was reached on June 2012 requiring Merkin to pay $405 million to victims including the Metropolitan Council on Jewish Poverty.[21]

Herbalife criticism[edit]

In December 2012, Ackman issued and presented a research report that is critical of Herbalife's multi-level marketing business model, calling it a pyramid scheme.[22] Ackman has disclosed that his hedge fund, Pershing Square Capital Management, has sold short the company's shares directly (not with derivatives) starting in May 2012. Ackman stated that he will donate all of his personal profits from the trade to charity, though this does not apply to profits earned for other investors in his hedge fund. Also he said that he's not daytrading the stock, he is for the long term.[23][24] Herbalife's management disputes the premise and ensuing conclusion of the report, i.e. that the stock is worth $0.[25] He said on CNBC that millions of low-income people around the world, hoping to become millionaires have been duped with this scheme and if they knew that to make hundred thousand dollars, what Herbalife calls the "millionaires team" there is a fraction of less than 1% no one will sign up for it.[23]

Ackman's position on Herbalife led to a discussion on live television with an Herbalife supporter, Carl Icahn, for nearly half an hour on CNBC, January 25, 2013.[26][27]

On November 22, 2013, Ackman admitted on Bloomberg Television that Pershing Square's open short position in Herbalife was "$400 million to $500 million" in the red, but that he wouldn't be squeezed out and would hold the short "to the end of the earth."[28] In April 2014, Reuters reported that, according to its sources, FBI is conducting a probe in Herbalife; agents are also reviewing documents obtained from the company's former distributors.[29]

Philanthropy[edit]

Ackman has given to charitable causes such as the Center for Jewish History to preserve Jewish genealogy[30] where he spearheaded a successful effort to retire their $30 million in debt personally contributing $6.8 million.[31] In a press release, the Ackman family stated, "We want our children to know, not only their living relatives, but those representing past generations for a greater connection to their family and ancestral origin and heritage."[32] This donation made with that of Bruce Berkowitz, founder of Fairholme Capital Management, and Joseph Steinberg, president of Leucadia National, were the three largest individual gifts that the center has ever received.[33]

Ackman's foundation donated $1.1 million to the Innocence Project in New York City and Centurion Ministries in Princeton, N.J. The two groups are dedicated to investigating the cases of people who have been wrongfully convicted.[31]

Ackman is a signatory of The Giving Pledge committing himself to give away at least 50% of his wealth to charitable causes.[34]

Bill and Karen Ackman founded The Pershing Square Foundation in 2006 to support innovation in the areas of economic development, education, healthcare, human rights, arts and urban development. Since it was founded, the Foundation has committed over $160 million in grants and social investments. In 2011, the Ackmans were among The Chronicle of Philanthropy’s "Philanthropy 50" list of the most generous donors.[35]

Recent Pershing Square Foundation’s grants include:

  • A $25 million gift to Signature Theatre to fund the innovative Signature Ticket Initiative.[36]
  • A five-year, $10 million grant to Human Rights Watch in support of the advocacy organization's strategic plan and new initiatives in its Africa and Women's Rights divisions.[37]
  • $25-million to help improve the public-school system in Newark, N.J. When Newark Mayor Cory Booker was seeking additional donors to match a $100-million pledge the Facebook co-founder Mark Zuckerberg was making to Newark’s school system, the Ackmans’ foundation came forward with the biggest commitment yet, next to Mr. Zuckerberg’s.[35] Employees from Pershing Square Capital Management and The Pershing Square Foundation also helped build and pay for a brand a new playground on an empty lot in Newark, New Jersey in partnership with the Greater Newark Housing Partnership, the Urban League of Essex County, organizers from the non-profit KaBOOM! and residents of the Fairmount Heights neighborhood.[38]
  • Grants totaling $6.5-million to the One Acre Fund since 2008, including a partnership with USAID.[39] One Acre Fund is an NGO in Kenya, Rwanda, and Burundi that invests in farmers to generate a permanent gain in farm income to reduce poverty and hunger. Unlike most interventions designed to improve farming incomes in poor settings, One Acre Fund facilitates activities and transactions at each level of the farming value chain, from organizing farmer groups to negotiating with export markets.[40]
  • $1.5-million, three-year grant to Social Finance to introduce social impact bonds to the United States, with Pershing Square acting as a founding partner of Social Finance US.[41][42]
  • $160,000 to the Temple Mount Sifting Project. An archaeological project that is dedicated to archaeological research of debris that came out of an illicit dig on Jerusalem's Temple Mount in Nov. 1999. The project is managed by Bar-Ilan University archaeologists and operated by the Ir-David Foundation.

Personal life[edit]

He married Karen Ann Herskovitz, a landscape architect, on July 10, 1994.[43] She is a trustee of Human Rights Watch and serves on the board of Friends of the High Line, a charity that transformed a stretch of an old elevated railroad line in New York City into a public park.[31] They have three children.[3]

References[edit]

  1. ^ Forbes: The World's Billionaires - William Ackman March 2013
  2. ^ Garber, Amy (2005). "Having words with William Ackman: founder, Pershing Square Capital Management". Nation's Restaurant News. 
  3. ^ a b c d e f g h Minneapolis Star Tribune: "William Ackman - Targeting Target" by CHRIS SERRES January 13, 2008
  4. ^ "Miss Ronnie I. Posner Bride of L.D. Ackman". The New York Times. 7 October 1963. 
  5. ^ Jerusalem Post: "Jews take 5 of top 6 spots in annual list of top US givers" By JACOB BERKMAN September 2, 2011
  6. ^ Jewish Philanthropy: "Jewish Philanthropy 2.0" February 23, 2011
  7. ^ Phil Wahba and Matthew Goldstein (13 August 2013). "Ackman quits J.C.Penney board, removing distraction". Reuters. 
  8. ^ Richard, Christine; Katherine Burton (January 31, 2008). "Ackman Devoured 140,000 Pages Challenging MBIA Rating". Bloomberg. Retrieved February 22, 2008. 
  9. ^ "MBIA: Call to divide not viable". CNN. February 20, 2008. Retrieved February 26, 2008. [dead link]
  10. ^ Confidence Game by Christine S Richard, Bloomberg News, 2010
  11. ^ http://www.marketfolly.com/2009/01/bill-ackmans-pershing-square-files-13d.html Bill Ackman's Pershing Square Files 13D on Borders, Covers MBIA Short
  12. ^ "Ackman Boosts Target State". Bloomberg. 24 December 2007. 
  13. ^ Ackman's Target Campaign Is Off-Target, Barrons, May 25, 2009
  14. ^ "Ackman loses in Target proxy contest". Reuters. 28 May 2009. 
  15. ^ Jarzemsky, Matt. "UPDATE: Ackman Offers To Finance Borders Buyout Of Barnes & Noble" The Wall Street Journal, December 6, 2010.
  16. ^ "From Hedge Funds to Bonefishing," Forbes, July 16, 2012
  17. ^ Freed, Dan (January 16, 2009). "Hedge Fund Peers Come to Merkin's Defense". TheStreet.com. 
  18. ^ Kouwe, Zachery (January 16, 2009). "Despite Madoff, Merkin Still Has Some Defenders". New York Times. 
  19. ^ Cohen, Patricia (January 16, 2009). "But Is Madoff Not So Good for the Jews? Discuss Among Yourselves". New York Times. 
  20. ^ Graybow, Martha (April 6, 2009). "Merkin charged with civil fraud in Madoff case". Reuters. 
  21. ^ Associated Press (June 25, 2012). "Merkin charged with civil fraud in Madoff case". London: Daily Mail. 
  22. ^ Alden, William (December 20, 2012). "Ackman Outlines Bet Against Herbalife". NYT. Retrieved December 20, 2012. 
  23. ^ a b http://www.cnbc.com/id/100331139 Video - Ackman Defends Calling Herbalife a ‘Pyramid Scheme’
  24. ^ http://www.cnbc.com/id/100332723/There039s_No_Law_Against_Bill_Ackman_Talking_His_Book
  25. ^ "Ackman triggers Herbalife stock sell-off". FT. December 19, 2012. Retrieved December 19, 2012. 
  26. ^ http://video.cnbc.com/gallery/?video=3000144252&play=1
  27. ^ http://dealbreaker.com/2013/01/men-dislike-each-other-might-also-have-opinions-on-a-stock/
  28. ^ Stevenson, Alexandra (November 22, 2013). "Ackman Vows to Take Bet Against Herbalife ‘to the End of the Earth’". dealbook.nytimes.com. Retrieved 2013-11-23. 
  29. ^ "FBI conducting a probe into Herbalife: sources". April 2014. Retrieved 11 April 2014. 
  30. ^ The Center For Jewish History: "Single Largest Fund-Raising Effort Since Building was Completed in 2000" January 24, 2011
  31. ^ a b c The Chronicle of Philanthropy: "A Brash Hedge-Fund Manager Applies His Tactics to Philanthropy" By Caroline Preston February 6, 2011
  32. ^ Business Insider: "What The Richest People On Wall Street's Charity Donations Say About Them" by Mamta Badkar and Courtney Comstock November 12, 2010
  33. ^ The Jewish Week: "History Center In The Black" by Tamar Snyder January 25, 2011
  34. ^ Jewish Voice New York: "Jewish Billionaires Join Group Pledging Majority of Their Wealth to Charity" by Sholom Schreiber April 25, 2005
  35. ^ a b Chronicle of Philanthropy: "Philanthropy 50" February 6, 2011
  36. ^ PR Newswire: "The Pershing Square Foundation Donates $25 Million to Signature Theatre" January 26, 2012
  37. ^ Philanthropy News Digest: "Pershing Square Foundation Awards $10 Million to Human Rights Watch" May 28, 2012
  38. ^ Business Insider: "Bill Ackman And Pershing Square Helped Build And Pay For This New Playground In Newark" October 29, 2012
  39. ^ Philanthropy News Digest: "One Acre Fund Announces Partnership to Address Poverty, Hunger in Kenya" September 14, 2012
  40. ^ One Acre Fund Program Model
  41. ^ PR Newswire: "The Pershing Square Foundation Grants Social Finance, Inc. $1.5 Million for Social Impact Bonds" July 26, 2011
  42. ^ Social Finance: Our Supporters
  43. ^ "WEDDINGS; Karen Herskovitz, William Ackman". The New York Times. July 10, 1994.