Bill Ackman’s Life and Lessons: Learn from His Successes and Failures

Bill Ackman is a famous Wall Street billionaire who runs Pershing Square Capital Management. He is famous for losing more than $4.4 billion in an investment. In this article, we will look Bill Ackman’s life and the lessons we can learn from him.

Education, Biography, Age, Net Worth

Bill Ackman was born in 1966 to a wealthy family in New York. His father founded a real estate company called Ackman Ziff, which is still present. He is the founder and CEO of Pershing Square Capital Management, a hedge fund management company. Ackman is known for his activist investing style, often taking significant positions in companies and advocating for changes to unlock shareholder value. His net worth is $3.4 billion (estimated by Forbes as of June 2023).

He received a Bachelor of Arts in Social Studies from Harvard College in 1988 and a Master of Business Administration from Harvard Business School in 1992. After graduating from business school, Ackman worked as an investment banker at Goldman Sachs. After graduating from Harvard, Bill was given a job by his father, but he declined. Instead, he decided to start a hedge fund, which he called Gotham Partners, when he was just 26 years old. The fund became a resounding success, especially after Bill’s short on a company known as MBIA prevailed. The fund then collapsed after some disastrous bets on real estate.

In 2004, Ackman founded Pershing Square Capital Management. Pershing Square has been very successful, generating billions of dollars in profits for its investors. Ackman has made a number of successful investments, including stakes in Starbucks, Chipotle Mexican Grill, and Lowe’s. In addition to his work at Pershing Square, Ackman is also a philanthropist. He is the founder of the Pershing Square Foundation, which supports a variety of causes, including education, healthcare, and the arts. He has also been a focus of several Hollywood films, such as Betting on Zero and Dirty Money.

Ackman is currently married to Neri Oxman, an architect and designer. He has four children from two marriages.

What You Can Learn from Bill Ackman

Bill Ackman’s lessons are important because he is one of the most successful hedge fund managers in the world. He has a long track record of generating high returns for his investors, and he is known for his sharp mind, his willingness to take risks, and his commitment to his investors. Ackman is passionate about sharing his knowledge and insights with others, and he believes that everyone can learn from his experiences.

Start Business Early in Life

As written above, Bill Ackman started his first hedge fund as a 26-year Harvard graduate. While he did not have many years of experience in the hedge fund industry, he decided to follow his gut and start the fund. The benefit of starting such a fund early in life is that it gives you room to fail. In Bill’s case, Gotham partners failed a few years after he launched it. He still had time to launch his new company.

Give Back to Society

To whom much is given, much will be required. Bill is a good example about this. As his fund grew, Bill launched his charitable organization known as Pershing Square Foundation. The foundation has given away more than $100 million to organizations around the world. Some of his best-performing recipients to his funds are One Acre Fund and Bridge Academies. These organizations have helped thousands of people make a livelihood and earn education. A few years ago, Bill joined Bill Gates’ giving pledge, in which he committed to give 50% of his funds to charity.

Know When to Cut Your Losses

Two investments that will always define Bill Ackman’s career are his bet on Valeant Pharmaceuticals and his short against Herbalife. He lost more than $5 billion on these investments. This led to a significant decline in his fund’s assets under management. As an investor, not all of your investments will succeed. No one, including Warren Buffett, is successful every time. Therefore, once you see that your investment is not doing well, you can trim your losses.

A mistake that Ackam did was that he did not put a stop loss on his investment in Herbalife and Valeant. A stop loss is a level where you exit a trade or investment because you don’t want to make extra losses. As an investor, you should always have this limit.

Don’t Give Up

Bill Ackman has had a difficult period in the past three years. He has seen the size of his hedge fund drop from almost $20 billion to as low as $7 billion. Many investors abandoned him. However, he did not give up. As a result of his resilience, he has managed to turn around his fund. This year, Pershing Square Capital is one of the best-performing hedge funds in the world. It has gained by more than 55% while the S&P 500 has gained by less than 20%.

Focus on Your Work

Another lesson we can learn from Ackman is to always focus on your work. Part of the reason why Ackman underperformed the market in the past three years is that he was not focusing. In the previous years, he had had great success, which consumed him. He stated travelling around the world giving lectures, appearing in tens of investment conferences every year, and appearing in television shows. At the same time, he was going through a divorce. Further, he was busy spending more than a $100 million apartment that he did not need. Bad things can happen once you stop focusing on what you do.

Bill Ackman’s Net Worth and Hedge Fund Portfolio

As we mentioned above, Bill Ackman comes from a wealthy New York family. He has two girls with his first wife, Karen. He has one infant bay with the current wife, Neri Oxman. According to Forbes, Bill Ackman has a net worth of more than $1.7 billion. Bloomberg pegs his net worth at more than $1.8 billion. Most of his fortune is invested in his firm, Pershing Square Capital.

As a hedge fund manager, Bill Ackman is known for having a small portfolio. Unlike other investors that hold more than 20 stocks, Bill follows a buy and hold strategy and holds less than 20 stocks. His portfolio includes companies like:

  • Starbucks
  • Chipotle Mexican Grill
  • Restaurant Brands International
  • Lowe’s
  • Fannie Mae
  • Freddie Mac
  • United Technologies

Bill Ackman House

In 2018, Ackman paid more than $22 million for an apartment on the Upper East Side in New York. He also owns the $90 million apartment at the billionaire row in New York.

Bill Ackman Quotes

“If your wife asks you whether she looks good in a dress, and every time you tell her she looks beautiful, she won’t believe you, but if you tell her, ‘Well … , ‘ and then other times, ‘Wow, that’s a really beautiful dress,’ … then she really appreciates it. And it’s the same thing with friendships and CEOs.”

About David Einhorn, another famous investor.

“David and I are friendly, but it’s like we were boyfriend and boyfriend, and then one day we were just friends, and now we’re just friendly. I have enormous respect for him. I stopped calling him and he stopped calling me.”

Bill Ackman Failures

Bill Ackman has had a few notable failures in his career:

  • Valeant Pharmaceuticals: In 2015, Ackman made a large investment in Valeant Pharmaceuticals, a Canadian drug company. Valeant was growing rapidly at the time, and Ackman believed that it was undervalued. However, Valeant’s stock price collapsed in 2016 after it was revealed that the company had been engaging in accounting fraud and price gouging. Ackman’s fund lost billions of dollars on the investment.
  • Herbalife: Ackman has been shorting Herbalife Nutrition, a multi-level marketing company, since 2012. Ackman alleges that Herbalife is a pyramid scheme, but Herbalife has denied these allegations. Ackman’s short bet against Herbalife has been unsuccessful so far, and he has lost millions of dollars on it.
  • JCPenney: In 2011, Ackman became a major shareholder in JCPenney, a department store chain. Ackman pushed for a number of changes at the company, including hiring Ron Johnson as CEO. However, Johnson’s changes were unsuccessful, and JCPenney’s stock price plummeted. Ackman resigned from the board of directors in 2013, and JCPenney filed for bankruptcy in 2020.

Despite these failures, Ackman is still considered to be one of the most successful hedge fund managers in the world. He has a track record of generating high returns for his investors, and he is known for his activism and his willingness to take risks.

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Crispus (BSc and MBA) is a finance professional with more than a decade experience as a financial analyst, writer, researcher, and trader. Crispus has written in-depth articles on leading platforms like CCN, Marketwatch, Investing Cube and Seeking Alpha. He also runs a forex education firm. Follow him on Twitter: @crispusnyaga and read more about us.