Bill Ackman is one of the most controversial figures in the world of investing and finance in general. Ackman is the manager of one of the world’s largest hedge funds, Pershing Square Capital Management, and he’s often one of the most outspoken figures in the world of activist investing. He can be quite a polarizing individual thanks to his brash persona, but love him or hate him, the public seems to be completely mesmerized by him.
Almost none of us will ever have the capital to be activist investors, and only a handful of us will even have the capital to invest in a hedge fund. Ackman is at a level less than 1 percent of those reading this article will ever be able to come close to attaining when it comes to money management. Part of Ackman’s appeal then, is the fact that he’s the best of the best. Watching him as he conducts his business is like a little kid that loves to play in his kiddie pool watching Michael Phelps win yet another gold medal. It’s aspirational.
But there’s another aspect of Ackman that needs to be addressed, and it is illustrated best through his ongoing feud with Herbalife. The outspoken manager has publicly decried Herbalife as a sort of pyramid scheme and has a very large short position against the company. He’s been holding onto that short saying that the company will go under and he will see a pure profit off of them.
Most of us will never be able to take out multibillion dollar positions like Ackman is able to do with Pershing Square. Most of us will never sit on a company’s board and help direct moves like an activist investor does. But with trading tools like what we see with binary options, we have far more potential to create wealth for ourselves than we once did with just buying and selling shares of companies. We might never be hedge fund managers like Ackman, but we can open and close positions in a similar manner with these tools.
But despite all of the headlines, and despite all the big talk, there’s a big issue going on with Bill Ackman right now. His Pershing Square fund is down 19 percent for the year as of the time of writing this article. That’s a huge deficit, particularly when the overall market is up. Yes, his is a hedge fund, and yes, that allows him to take different types of positions than what the S&P 500 tends to represent, but being down in a bull market is often a mark of doom for a hedge fund—even one as mammoth as Pershing Square. There have been some overly risky positions that he has taken, such as moving a large portion of his capital into the struggling Valeant Pharmaceuticals, that have taken much longer to take off than what he probably expected.
The Valeant move is beginning to show signs of life, though. For example, after it was announced that there were companies making unsolicited offers on parts of Valeant’s business, Ackman’s shares alone jumped up in value by over $100 million in a single day. That’s an exciting move, but consider how much he has put into the company. His initial stake was $3.3 billion, and he has increased his shares of the company since then. Now, even with the huge jump in price, his stake stands at less than $500 million, as of writing this. There’s a long way to go for Ackman to regain the legendary posterity that he’s had. But if there’s anyone that can do it, it is most likely Ackman.