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How Bill Ackman Made His Billions
How Bill Ackman Made His Billions
How Bill Ackman Made His Billions
How Bill Ackman Made His Billions
How Bill Ackman Made His Billions
How Bill Ackman Made His Billions
How Bill Ackman Made His Billions
How Bill Ackman Made His Billions
How Bill Ackman Made His Billions
How Bill Ackman Made His Billions
How Bill Ackman Made His Billions
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How Bill Ackman Made His Billions

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How Bill Ackman made his billions (including his best investments, worst investments, and biggest bets) and what lessons investors can learn from him

How Bill Ackman made his billions (including his best investments, worst investments, and biggest bets) and what lessons investors can learn from him

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  • 1. How Bill Ackman Made His Billions
  • 2. • Raised in Chappaqua, New York • Attended Harvard University • Received Bachelor of Arts degree magna cum laude and an MBA His early years
  • 3. How he made his fortune • Ackman set up his first hedge fund, Gotham Partners, with a Harvard classmate in 1992 • Fund grew from $3 million to $300 million in less than a decade • Posted impressive returns in the early years • Bought a controlling stake in a money-losing golf course operator • Racked up debt acquiring other golf courses
  • 4. How he made his fortune • Regulators alleged Gotham Partners used research reports to influence the price of stocks its owned • Investigation went nowhere • Fund was eventually closed and client funds were returned
  • 5. • Ackman challenged bond insurer MBIA’s AAA credit rating in 2002 • He took a short position and bought credit default swaps against MBIA debt as a way to bet it would crash • When MBIA did, Ackman sold the swaps in 2008 for a huge profit • Ackman founded Pershing Square hedge fund with $54 million in 2004 • Fund holds large positions of stocks in a few sectors • It’s valued at $13 billion today How he made his fortune
  • 6. • Ackman mostly takes large positions in companies and then agitates for changes to improve returns • He took losses on investments in Borders and Target • Ackman sold his stake in J.C. Penney's last year after resigning from the board and generating a $600+ million loss Bets that didn’t pay off
  • 7. Ackman’s biggest bet • December 2012: Ackman announced a $1 billion bet against nutritional-supplements maker Herbalife, claiming it was an illegal pyramid scheme • Herbalife’s share price initially dropped • But Herbalife’s stock surged 52% in the 12 months after Ackman initiated his short position • Ackman shifted some of his short bet on Herbalife into put options, a move that could cut his risks
  • 8. • October 2013: Ackman said accepting losses when necessary makes his firm better • In a letter, Ackman stated, "Confidence and conviction without humility can be dangerous in the investment business” • Federal Trade Commission recently announced it’d begun an official inquiry into Herbalife • Herbalife stock down 34% so far this year • Ackman’s fund still owns a short position Ackman’s biggest bet
  • 9. Philanthropy • Ackman has joined “The Giving Pledge”, committing to give away at least 50% of his fortune to charity • Other philanthropic heavyweights dedicated to this pledge include billionaires Warren Buffett and Bill Gates
  • 10. 5 lessons investors can learn from Bill Ackman 1. Use sound research as a basis for your investing thesis 2. If you don’t succeed at first, try again 3. When you make a mistake, ask yourself, “What did I learn?” 4. Don’t be afraid to take a contrarian position 5. Have humility
  • 11. Download The Motley Fool’s FREE REPORT that taps into the best of billionaire Warren Buffett’s investing tips and wisdom

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