05 Bill Ackerman & Pershing Square Capital

When the COVID-19 pandemic raged the world in 2020, US stocks tanked, triggering a market-wide circuit breaker four times in ten days and causing millions to lose their savings.

However, there was this investor who bet on the market crash and netted $2.6 billion on an outlay of only $27 million, making a close to 100 times return in a month.

He is Bill Ackman, founder and CEO of Pershing Square Capital Management, a hedge fund.

Bill Ackman was born in a wealthy Jewish family in 1966 in Chappaqua, New York. 

After receiving a Bachelor of Arts degree from Harvard in 1988, he went to Harvard Business School and got an MBA.

He worked with his father in real estate before starting his own hedge fund with Joel Greenblatt in 1992. Though it had a good track record, he decided to close it in 2002.

Two years later, Ackman established Pershing Square Capital Management L.P. with $54 million.

Ackman never lacked media exposure. But his 5-year attack against Herbalife, a nutritional supplement maker, gave the investor more spotlight. The story was even adapted into a documentary,  "Betting on Zero".

In 2012, Ackman massively shorted Herbalife stock, which he accused of running a pyramid scheme. He claimed its stock price would crash to zero.

However, another financier Carl Icahn took the other side of the battle and built up his stake in Herbalife.

Their back and forth escalated into a public feud on a CNBC program in 2013.

In 2017, Herbalife skyrocketed by 51% for the year. Early next year, Ackman exited his position with substantial losses.

Bill Ackman, known as an “activist investor”, was subjected to intense scrutiny by the SEC.

(Note: A shareholder/activist investor tends to change corporate strategy and maximize shareholder value. This implies taking a very active role in both the Board of Directors and management. )

However, in March 2022, he announced that he would "retire from" activist short-selling campaigns and was ready to take his firm to the next era, focusing on long-term, “quieter” bets.

Typically, Ackman takes a concentrated approach, holding only 10-15 positions in his portfolio. Just like Warren Buffett, Bill Ackman believes that excessive diversification leads to "diversification". This echoes the argument "You have to go for the jugular when you have tremendous conviction on a trade".