How Bill Ackman Made His Billions

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How hedge fund manager Bill Ackman made his money, including his best investments, worst investments, and lessons investors can take away

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  • Image sources: Wikimedia Commons, http://commons.wikimedia.org/wiki/Category:Harvard_UniversityText sources: http://www.businessinsider.com/the-fabulous-life-of-bill-ackman-2012-12?op=1
  • Image source: Wikimedia Commons, JRLibbyText sources:http://www.businessinsider.com/the-fabulous-life-of-bill-ackman-2012-12?op=1http://www.reuters.com/article/2010/10/14/us-hedgefunds-ackman-gotham-idUSTRE69D2OH20101014
  • Image sources: Wikimedia Commons
  • Text sources:http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a7.NpGwa19TYhttp://www.briem.com/files/Ackman_MBIA_12092002.pdfhttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=a7.NpGwa19TYhttp://www.marketfolly.com/2009/01/bill-ackmans-pershing-square-files-13d.htmlhttp://observer.com/2011/04/the-busybody-of-the-beresford-bill-ackman-fixed-his-own-imageand-now-hell-fix-you/https://whalewisdom.com/filer/pershing-square-capital-management-l-p
  • Image sources: Wikimedia Commons,Fool Editorial’s Flickr pageText sources:http://www.businessinsider.com/the-fabulous-life-of-bill-ackman-2012-12?op=1http://online.barrons.com/article/SB124303588507648835.html?mod=article-outset-boxhttps://whalewisdom.com/filer/pershing-square-capital-management-l-phttp://online.wsj.com/news/articles/SB10001424052702303722604579113661616491516
  • Image source: Wikimedia Commons, www.herbalife.com.brText sources:http://online.wsj.com/news/articles/SB10001424052702303722604579113661616491516http://www.fool.com/investing/general/2014/03/19/bill-ackmans-claims-that-herbalife-pyramid-scheme.aspxY! Finance
  • Image source: Wikimedia Commons, www.herbalife.com.brText sources:http://online.wsj.com/news/articles/SB10001424052702303722604579113661616491516Y! Finance
  • Image sources: Wikimedia Commons, Mark Hirschey (Buffett photo)Text sources:http://jewishvoiceny.com/index.php?view=article&catid=96%3Abusiness&id=995%3Ajewish-billionaires-join-group-pledging-majority-of-their-wealth-to-charity&tmpl=component&print=1&page=&option=com_content&Itemid=279
  • How Bill Ackman Made His Billions

    1. 1. How Bill Ackman Made His Billions
    2. 2. • Raised in Chappaqua, N.Y. • Attended Harvard University • Received Bachelor of Arts degree magna cum laude and an MBA His early years Source: Wikimedia Commons.
    3. 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. Source: Wikimedia Commons.
    4. 4. How he made his fortune • Regulators alleged Gotham Partners used research reports to influence the price of stocks it owned. • Investigation went nowhere. • Fund was eventually closed and client funds were returned. Source: Wikimedia Commons.
    5. 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. 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 last year after resigning from the board and generating a more than $600 million loss. Bets that didn’t pay off Source: Wikimedia Commons, The Motley Fool.
    7. 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. 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. 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. Source: Wikimedia Commons. Source: Mark Hirschey.
    10. 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. 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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