Pershing Square Capital Management

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When the Wolves Bite: Two Billionaires, One Company, and an Epic Wall Street Battle by Scott Wapner

activist fund / activist shareholder / activist investor, AOL-Time Warner, asset allocation, Bear Stearns, Bernie Madoff, Carl Icahn, corporate governance, corporate raider, Credit Default Swap, deal flow, independent contractor, junk bonds, low interest rates, Mark Zuckerberg, Michael Milken, multilevel marketing, Pershing Square Capital Management, Ponzi scheme, price discrimination, Ronald Reagan, short selling, short squeeze, Silicon Valley, Tim Cook: Apple, unbiased observer

Katherine Burton, “Defeat at JC Penney Hurts Ackman as Performance Trails,” Bloomberg, August 14, 2013. 2. Letter to Investors, Pershing Square Capital Management, November 22, 2011. 3. Joseph Checker, “Bill Ackman Likely Takes $200 Million Bath on Borders,” Wall Street Journal, May 19, 2011. 4. Ibid. 5. Ibid. 6. Letter to Investors, Pershing Square Capital Management, November 22, 2011. 7. Shira Ovide, “Bill Ackman Buys 12.2% Stake in Canadian Pacific Railway,” Wall Street Journal, October 28, 2011. 8. Michael De La Merced, “Ackman Buys into Penney and Fortune,” New York Times DealBook, October 8, 2010. 9. Investor Letter, Pershing Square Capital Management, November 22, 2011. 10. Brad Tuttle, “Why JC Penney’s No More Coupons Experiment Is Failing,” Time, May 17, 2012. 11.

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Jonathan Berr, “Herbalife Wins a Round Against Bill Ackman,” CBS Money Watch, July 22, 2014. 22. Herbalife Earnings Call Transcript, July 28, 2014. 23. Herbalife Earnings Call Transcript, November 4, 2014. 24. Ibid. 25. Ibid. 26. Ibid. 27. Letter to Investors, Pershing Square Capital Management, November 25, 2014. 28. Ibid. 29. Top 20 Hedge Funds, LCH Investments. 30. Svea Herbst-Bayliss, “Exclusive: Ackman’s Pershing Square Makes $3.3 Billion Bet on Valeant,” Reuters, March 9, 2015. Chapter 13: The Year That Wasn’t 1. Nathan Vardi, “Bill Ackman Wins 2014,” Forbes, November 17, 2014. 2. Jordan Walthen, “Bill Ackman, Pershing Square Deliver Legendary Performance,” USA Today, October 4, 2015. 3.

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Ibid. 42. Jackie Crosby, “Shareholders: Target 4, Ackman 0,” Star Tribune, May 29, 2009. 43. Heidi N. Moore, “Bill Ackman to Hedge-Fund Investors: ‘I Neglected to Apologize,’” Wall Street Journal, February 9, 2009. 44. Joseph Guinto, “Who Wrecked JC Penney?,” D Magazine, November 2013. 45. Drew Sandholm, “Howard Schultz Slams Ackman Over JC Penney Fight,” CNBC.com, August 9, 2013. 46. William Ackman, “Harbor Investment Conference,” February 13, 2015. 47. Pershing Square Capital Management Letter to Investors, June 12, 2012. Chapter 4: Selling a Dream 1. Certificate of Death, Mark R. Hughes, State of California, May 21, 2000. 2.

The Alpha Masters: Unlocking the Genius of the World's Top Hedge Funds by Maneet Ahuja, Myron Scholes, Mohamed El-Erian

"World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Alan Greenspan, Asian financial crisis, asset allocation, asset-backed security, backtesting, Bear Stearns, Bernie Madoff, book value, Bretton Woods, business process, call centre, Carl Icahn, collapse of Lehman Brothers, collateralized debt obligation, computerized trading, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, diversification, Donald Trump, en.wikipedia.org, family office, financial engineering, fixed income, global macro, high net worth, high-speed rail, impact investing, interest rate derivative, Isaac Newton, Jim Simons, junk bonds, Long Term Capital Management, managed futures, Marc Andreessen, Mark Zuckerberg, merger arbitrage, Michael Milken, Myron Scholes, NetJets, oil shock, pattern recognition, Pershing Square Capital Management, Ponzi scheme, proprietary trading, quantitative easing, quantitative trading / quantitative finance, Renaissance Technologies, risk-adjusted returns, risk/return, rolodex, Savings and loan crisis, short selling, Silicon Valley, South Sea Bubble, statistical model, Steve Jobs, stock buybacks, systematic bias, systematic trading, tail risk, two and twenty, zero-sum game

AR: Absolute Return + Alpha, February 2010. Teitelbaum, Richard. “Tepper Turns Panic to Profits with $6.5 Billion Hedge Fund Gain,” Bloomberg Markets, January 2010. Chapter 6: The Activist Answer: William A. Ackman, Pershing Square Capital Management Interviews Bill Ackman, founder, Pershing Square Capital Management, January 2011. Bill Ackman, founder, Pershing Square Capital Management, May 2011. Mark Axelowitz, managing director of investments, UBS Private Wealth Management, January 2012. Adam Geiger, chief investment officer, New Legacy Capital, August 2011. Jonathan Gray, senior managing director and head of global real estate, Blackstone Group, November 2011.

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“Sometimes it’s time to make money, sometimes it’s time not to lose money. Last year was a time not to lose money; we’ll see what this year brings.” Chapter 6 The Activist Answer William A. Ackman Pershing Square Capital Management This is not a black-box strategy. With most of our investments, we share our thesis about what’s going to happen. —Bill Ackman, February 2011 interview “What motivates people to succeed?” That was the question posed by the 45-year-old hedge fund manager Bill Ackman to a roomful of students in a real estate entrepreneurship class at Wharton Business School. It was a sunny afternoon in October, the last class of an eight-lecture series, and the students had prepared by reading Christine Richard’s book Confidence Game, which details Ackman’s six-year battle with bond-insurer MBIA.

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“The Optimist,” Portfolio.com, May, 2009. www.portfolio.com/executives/2009/04/22/Hedge-Fund-Manager-Bill-Ackman/. “First Quarter 2011.” Pershing Square Capital, May 25, 2011. First Union Real Estate Equity and Mortgage Investments. Schedule 14A. 1998. Gohel, Kapila. “New Mexico State Pension on a Roll for Hedge Funds.” Hedge Fund Manager Week, January 20, 2010, www.hfmweek.com/news/427823/new-mexico-state-pension-on-a-roll-for-hedge-funds.thtml. Goldstein, Matthew. “REIT Deal Wasn’t Gotham’s First Rodeo.” The Street, January 27, 2003. www.thestreet.com/story/10064701/1/reit-deal-wasnt-gothams-first-rodeo.html. Harris, Melissa. “Activist Investor Bill Ackman Won’t Back Down from Fight.”

Confidence Game: How a Hedge Fund Manager Called Wall Street's Bluff by Christine S. Richard

activist fund / activist shareholder / activist investor, Alan Greenspan, Asian financial crisis, asset-backed security, banking crisis, Bear Stearns, Bernie Madoff, Blythe Masters, book value, buy and hold, Carl Icahn, cognitive dissonance, collateralized debt obligation, corporate governance, corporate raider, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, diversification, Donald Trump, electricity market, family office, financial innovation, fixed income, forensic accounting, glass ceiling, Greenspan put, Long Term Capital Management, market bubble, money market fund, moral hazard, old-boy network, Pershing Square Capital Management, Ponzi scheme, profit motive, Savings and loan crisis, short selling, short squeeze, statistical model, stock buybacks, subprime mortgage crisis, white flight, zero-sum game

“MBIA Document Subpoenas Supplemented,” MBIA press release via Business Wire, Mar. 30, 2005. “MBIA Purchases Shares as Part of Its Buyback Program,” MBIA press release via Business Wire, Apr. 4, 2005. William Ackman, letter to Pershing Square investors, “Re: First Quarter 2005 Performance,” Apr. 25, 2005. Bethany McLean, “The Mystery of the $890 Billion Insurer,” Fortune, May 2, 2005. William Ackman, e-mail to John Rutherfurd, Apr. 20, 2005. John Ruherfurd, e-mail to William Ackman, Apr. 22, 2005. CHAPTER 11 THE BLACK HOLE Video of Capital Asset Board Meeting, Capital Asset headquarter, West Palm Beach, Florida, Sept. 24, 1998. Richard Heitmeyer, letter to Jay Brown, Aug. 27, 1999.

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Goggins, Senior Vice President and General Counsel, Moody’s Investors Service, letter to William Ackman, Jan. 18, 2006. William Ackman, letter to Pershing Square investors, “Re: Fourth Quarter and Annual Performance for 2005,” Feb. 6, 2006. William Neuman, “Completing a Comeback,” New York Times, Aug. 13, 2006, section 11, p. 2. CHAPTER 13 THE INSURANCE CHARADE MBIA first quarter 2006 earnings conference call, Bloomberg transcript, Apr. 27, 2006. Christine Richard and Darrell Preston, “The Insurance Charade,” Bloomberg Markets, November 2006. William Ackman, letter to Pershing Square investors, “Re: Second Quarter 2006 Performance,” Aug. 23, 2006. Charles Pollock, Goldman Sachs, e-mail to Erika Kreyssig, Pershing Square, Aug. 29, 2006.

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Index ABX Index ACA Capital CDOs and CDSs and mark-to-market and mortgage crisis and rescue proposals for bond insurers and Standard & Poor’s and ACA Financial Guaranty Ackman, Bill See also Gotham Partners, Bill Ackman and; Pershing Square, Bill Ackman and background of books on investing, favorite children of grandmother of Harvard and Ackman, Jeanne Ackman, Karen Herskovitz background of Ackman, Larry Ackman Brothers & Singer Adamson, Simon Adelphia Adelson, Mark Aetna Life & Casualty Company AHERF (Allegheny Health, Education, and Research Foundation) bankrupty/ reinsurance Allegheny General Hospital Gotham Partners / Ackman and Moody’s and NYS attorney general’s office and- NYS Insurance Department and Pershing Square / Ackman and SEC and transaction details Wall Street Journal and AIG (American International Group) CDOs and CDSs and Congress and downgraded Federal Reserve bailout of Nightingale NYS attorney general’s office and AIG Financial Products (AIGFP) Aladdin Capital Management Allegheny General Hospital Allegheny Health, Education, and Research Foundation.

Shaky Ground: The Strange Saga of the U.S. Mortgage Giants by Bethany McLean

activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, Alan Greenspan, Bear Stearns, collateralized debt obligation, crony capitalism, housing crisis, junk bonds, Michael Milken, mortgage debt, negative equity, obamacare, Pershing Square Capital Management, race to the bottom, Savings and loan crisis

CAST OF CHARACTERS Fannie Mae Jim Johnson CEO, 1991–1998 Franklin Raines CEO, 1999–2004 Daniel Mudd CEO, 2005–2008 Timothy Mayopoulos CEO, 2012–current Timothy Howard CFO, 1990–2004 Thomas Lund Executive Vice President of Single-Family Mortgage Business 2005-2009 Freddie Mac Leland Brendsel CEO, 1987–2003 Richard Syron CEO, 2003–2007 Federal Housing Finance Agency Ed DeMarco Director, 2009–2014 Mel Watt Director, 2014–current Office of Federal Housing Enterprise Oversight Jim Lockhart Director, 2006–2008; Director of the FHFA, 2008–2009 Armando Falcon Director, 1999–2005 White House Henry Paulson Secretary of the Treasury, 2006–2009 Timothy Geithner Secretary of the Treasury, 2009–2013 Lawrence Summers Director of the National Economic Council, 2009–2010 Gene Sperling Director of the National Economic Council, 2011–2014 Austan Goolsbee Chairman of the Council of Economic Advisers, 2010–2011 Federal Reserve Ben Bernanke Chairman, 2006–2014 Alan Greenspan Chairman, 1987–2006 Paul Volcker Chairman, 1979–1987 Marriner Eccles Chairman, 1934–1948 Congress Jeb Hensarling Chairman of the House Financial Services Committee, 2013–current Barney Frank Chairman of the House Financial Services Committee, 2007–2011 Mark Warner Democratic Senator of Virginia Bob Corker Republican Senator of Tennessee Charles Schumer Democratic Senator of New York Courts Robert Pratt Senior District Judge, District Court for the Southern District of Iowa Royce Lamberth Senior Judge, District Court for the District of Columbia Investors Richard Perry Founder of Perry Capital Bruce Berkowitz Founder and Chief Investment Officer of Fairholme Capital Management William Ackman CEO of Pershing Square Capital Management Housing Activists John Taylor President of National Community Reinvestment Coalition Judy Kennedy President and CEO of National Association of Affordable Housing Lenders, 1998–2015 Analysts Peter Wallison Scholar, American Enterprise Institute; Member, Financial Crisis Inquiry Commission Ed Pinto Scholar, American Enterprise Institute Mark Calabria Director of Financial Regulation Studies, Cato Institute Yu Yongding Member, Monetary Policy Committee of the People’s Bank of China, 2004–2006 Laurie Goodman Director, Housing Finance Policy Center Joshua Rosner Managing Director, Graham Fisher & Co.

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Some investors say that they view the lawsuits merely as a wedge to force the door open to what they really want: a recapitalized, albeit heavily reformed, version of Fannie and Freddie, which, they argue, is the right solution for the housing market—as well as one that would increase the value of their stock. This, of course, is precisely what the administration has said it does not want. In the spring of 2014, the hedge fund manager and activist investor Bill Ackman announced that his fund, Pershing Square, had bought 13 percent of the remaining 20 percent of the GSEs’ common stock. Pershing Square also sued the government. But the purchase of common stock is essentially an all-in bet that Fannie and Freddie will be revitalized in some way. In a presentation he called “It’s Time to Get Off Our Fannie,” Ackman laid out a plan for the future of the housing finance system, essentially calling for the return of Fannie and Freddie.

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LIST OF ACRONYMS FNMA Federal National Mortgage Association, or Fannie Mae FHLMC Federal Home Loan Mortgage Corporation, or Freddie Mac GNMA Government National Mortgage Association, or Ginnie Mae GSE Government-Sponsored Enterprise FHFA Federal Housing Finance Agency FHA Federal Housing Administration OFHEO Office of Federal Housing EnterpriseOversight NEC National Economic Council GAO Government Accountability Office CBO Congressional Budget Office HUD Department of Housing and Urban Development SEC Securities and Exchange Commission FCIC Financial Crisis Inquiry Commission HERA Housing and Economic Recovery Act of 2008 PATH Protecting American Taxpayers and Homeowners Act NHA National Housing Act NCRC National Community Reinvestment Coalition RFC Reconstruction Finance Corporation AIG American International Group TARP Troubled Asset Relief Program Introduction “If the housing market tanks, so does the stock market. No matter who you are, this is hugely impactful. And no one is talking about it. No one realizes it.” —Ryan Israel, partner at Pershing Square Capital Management On a bitterly cold gray day in December 2014, there was a strangely large crowd at the United States Courthouse in Des Moines, Iowa, where Senior District Judge Robert Pratt was hearing arguments in Continental Western Insurance Company v. FHFA. The title gave few hints as to why the room, the goings-on of which rarely transcend local interest, would be packed close to standing-room-only, filled with representatives of the country’s top investment firms, including a slew of New York hedge fund types, along with prominent Washington lawyers, including a George W.

Big Mistakes: The Best Investors and Their Worst Investments by Michael Batnick

activist fund / activist shareholder / activist investor, Airbnb, Albert Einstein, AOL-Time Warner, asset allocation, Bear Stearns, behavioural economics, bitcoin, Bretton Woods, buy and hold, buy low sell high, Carl Icahn, cognitive bias, cognitive dissonance, Credit Default Swap, cryptocurrency, Daniel Kahneman / Amos Tversky, endowment effect, financial engineering, financial innovation, fixed income, global macro, hindsight bias, index fund, initial coin offering, invention of the wheel, Isaac Newton, Jim Simons, John Bogle, John Meriwether, Kickstarter, Long Term Capital Management, loss aversion, low interest rates, Market Wizards by Jack D. Schwager, mega-rich, merger arbitrage, multilevel marketing, Myron Scholes, Paul Samuelson, Pershing Square Capital Management, quantitative easing, Reminiscences of a Stock Operator, Renaissance Technologies, Richard Thaler, Robert Shiller, short squeeze, Snapchat, Stephen Hawking, Steve Jobs, Steve Wozniak, stocks for the long run, subprime mortgage crisis, transcontinental railway, two and twenty, value at risk, Vanguard fund, Y Combinator

William D. Cohan, “Is Bill Ackman Toast?” Vanity Fair, October 17, 2016. 12. Cohan, “The Big Short War.” 13. Steve Schaefer, “Ackman Takes Ax to Herbalife, Company ‘Not an Illegal Pyramid Scheme,’” Forbes, December 20, 2012. 14. Pershing Square Capital Management, LP, “Who Wants to Be a Millionaire?” (presentation, December 20, 2012). 15. Bill Ackman, Interview with Andrew Ross Sorkin, First on CNBC breaking news interview, December 20, 2012. 16. Quoted in Cohan, “The Big Short War.” 17. Bill Ackman, Interview with Cristina Alesci, CNN Money, July 22, 2014. 18. Cohan, “Is Bill Ackman Toast?” 19. Quoted in Nocera, “Short Seller.” 20.

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“I'm still convinced some of the questions were wrong.”4 After closing Gotham, Ackman eventually got back on the horse. In January 2004, he started a new fund, Pershing Square Capital Management. He began with $10 million of his own money and $50 million raised from a single investor, and would open the fund to outside investors in 2005. The money flooded in, attracting some $220 million.5 The new Ackman would no longer invest passively. Gone were the days of buying a company at a discount, and letting the chips fall where they may. Bill Ackman rose from the ashes of Gotham Partners like a phoenix and came out one of the most aggressive activist investors of his era.

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19. Quoted in Nocera, “Short Seller.” 20. Pershing Square Capital Management, “Who Wants to Be a Millionaire?” 21. Roger Parloff, “Herbalife Deal Poses Challenges for the Industry,” Fortune, July 19, 2016. 22. Betting on Zero (motion picture), Filmbuff and Biltmore Films, 2016. CHAPTER 10 Stanley Druckenmiller Hard Lessons Can Be Necessary In a winner's game the outcome is determined by the correct actions of the winner. In a loser's game, the outcome is determined by mistakes made by the loser.1 —Charlie Ellis Charlie Ellis wrote this in his 1998 classic, Winning the Loser's Game.

Chaos Kings: How Wall Street Traders Make Billions in the New Age of Crisis by Scott Patterson

"World Economic Forum" Davos, 2021 United States Capitol attack, 4chan, Alan Greenspan, Albert Einstein, asset allocation, backtesting, Bear Stearns, beat the dealer, behavioural economics, Benoit Mandelbrot, Bernie Madoff, Bernie Sanders, bitcoin, Bitcoin "FTX", Black Lives Matter, Black Monday: stock market crash in 1987, Black Swan, Black Swan Protection Protocol, Black-Scholes formula, blockchain, Bob Litterman, Boris Johnson, Brownian motion, butterfly effect, carbon footprint, carbon tax, Carl Icahn, centre right, clean tech, clean water, collapse of Lehman Brothers, Colonization of Mars, commodity super cycle, complexity theory, contact tracing, coronavirus, correlation does not imply causation, COVID-19, Credit Default Swap, cryptocurrency, Daniel Kahneman / Amos Tversky, decarbonisation, disinformation, diversification, Donald Trump, Doomsday Clock, Edward Lloyd's coffeehouse, effective altruism, Elliott wave, Elon Musk, energy transition, Eugene Fama: efficient market hypothesis, Extinction Rebellion, fear index, financial engineering, fixed income, Flash crash, Gail Bradbrook, George Floyd, global pandemic, global supply chain, Gordon Gekko, Greenspan put, Greta Thunberg, hindsight bias, index fund, interest rate derivative, Intergovernmental Panel on Climate Change (IPCC), Jeff Bezos, Jeffrey Epstein, Joan Didion, John von Neumann, junk bonds, Just-in-time delivery, lockdown, Long Term Capital Management, Louis Bachelier, mandelbrot fractal, Mark Spitznagel, Mark Zuckerberg, market fundamentalism, mass immigration, megacity, Mikhail Gorbachev, Mohammed Bouazizi, money market fund, moral hazard, Murray Gell-Mann, Nick Bostrom, off-the-grid, panic early, Pershing Square Capital Management, Peter Singer: altruism, Ponzi scheme, power law, precautionary principle, prediction markets, proprietary trading, public intellectual, QAnon, quantitative easing, quantitative hedge fund, quantitative trading / quantitative finance, Ralph Nader, Ralph Nelson Elliott, random walk, Renaissance Technologies, rewilding, Richard Thaler, risk/return, road to serfdom, Ronald Reagan, Ronald Reagan: Tear down this wall, Rory Sutherland, Rupert Read, Sam Bankman-Fried, Silicon Valley, six sigma, smart contracts, social distancing, sovereign wealth fund, statistical arbitrage, statistical model, stem cell, Stephen Hawking, Steve Jobs, Steven Pinker, Stewart Brand, systematic trading, tail risk, technoutopianism, The Chicago School, The Great Moderation, the scientific method, too big to fail, transaction costs, University of East Anglia, value at risk, Vanguard fund, We are as Gods, Whole Earth Catalog

You will continue to receive exclusive offers in your inbox. NOTES PROLOGUE This account is based on an interview with Bill Ackman as well as several articles published about his trade, including Liz Hoffman, “Bill Ackman Scored on Pandemic Shutdown and Bounceback,” Wall Street Journal, January 31, 2022, https://www.wsj.com/articles/bill-ackman-scored-on-pandemic-shutdown-and-bounceback-11643634004. Some details of Ackman’s trade were taken from Emil N. Siriwardane, Luis M. Viceira, Dean Xu, and Lucas Baker, “Pershing Square’s Pandemic Trade,” Harvard Business School, July 2021, https://www.hbs.edu/faculty/Pages/item.aspx?

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Sudden crashes were extreme, often unpredictable events—like plagues and pandemics. He knew that highly contagious viruses can spread exponentially, resulting in mass death. In The Black Swan, he wrote: “As we travel more on this planet, epidemics will be more acute…. I see the risk of a very strange acute virus spreading throughout the planet.” Like Pershing Square’s Bill Ackman, Taleb also knew that most people didn’t grasp the frightening portent of the exponential. IBM executive John E. Kelly gave New York Times columnist Thomas Friedman an apt description of our all-too-human relationship with the exponential, a conversation Friedman relates in his 2016 book Thank You for Being Late.

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By the end of 2021, Spitznagel and his team oversaw some $16 billion in stock market risk, up from $4 billion when the pandemic hit—many billions more than they’d managed even before CalPERS pulled the plug. Universa wasn’t the only fund to benefit from the insanity of March 2020. There was, of course, Bill Ackman’s Pershing Square, which pocketed $2.6 billion. A tail-risk fund from Saba Capital, run by former Deutsche Bank trading whiz Boaz Weinstein, gained nearly 100 percent in March alone by betting against junk bonds. A fund managed by LongTail Alpha, the other tail-risk firm CalPERS had given money to, posted a return on invested premium—the amount of money it had placed on its bets—of nearly 1,000 percent (CalPERS was reportedly in the process of unwinding its LongTail position during the crash and may have derived a modest benefit from the position).

The Golden Passport: Harvard Business School, the Limits of Capitalism, and the Moral Failure of the MBA Elite by Duff McDonald

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, Albert Einstein, Apollo 13, barriers to entry, Bayesian statistics, Bear Stearns, Bernie Madoff, Bob Noyce, Bonfire of the Vanities, business cycle, business process, butterfly effect, capital asset pricing model, Capital in the Twenty-First Century by Thomas Piketty, Carl Icahn, Clayton Christensen, cloud computing, collateralized debt obligation, collective bargaining, commoditize, compensation consultant, corporate governance, corporate raider, corporate social responsibility, creative destruction, deskilling, discounted cash flows, disintermediation, disruptive innovation, Donald Trump, eat what you kill, Fairchild Semiconductor, family office, financial engineering, financial innovation, Frederick Winslow Taylor, full employment, George Gilder, glass ceiling, Glass-Steagall Act, global pandemic, Gordon Gekko, hiring and firing, Ida Tarbell, impact investing, income inequality, invisible hand, Jeff Bezos, job-hopping, John von Neumann, Joseph Schumpeter, junk bonds, Kenneth Arrow, Kickstarter, Kōnosuke Matsushita, London Whale, Long Term Capital Management, market fundamentalism, Menlo Park, Michael Milken, new economy, obamacare, oil shock, pattern recognition, performance metric, Pershing Square Capital Management, Peter Thiel, planned obsolescence, plutocrats, profit maximization, profit motive, pushing on a string, Ralph Nader, Ralph Waldo Emerson, RAND corporation, random walk, rent-seeking, Ronald Coase, Ronald Reagan, Sam Altman, Sand Hill Road, Saturday Night Live, scientific management, shareholder value, Sheryl Sandberg, Silicon Valley, Skype, Social Responsibility of Business Is to Increase Its Profits, Steve Jobs, Steve Jurvetson, survivorship bias, TED Talk, The Nature of the Firm, the scientific method, Thorstein Veblen, Tragedy of the Commons, union organizing, urban renewal, vertical integration, Vilfredo Pareto, War on Poverty, William Shockley: the traitorous eight, women in the workforce, Y Combinator

But the rest of them are nothing more than optimizers, that part of the machine that seeks to iron out (and profit from) the inflection points of financial value. Some become famous in their own right—consider the likes of hedge fund managers such as Seth Klarman, Ray Dalio, John Paulson, and Bill Ackman (’92)—but none of them are adding much value to anything but their own bank accounts. The story of HBS on Wall Street starts on a high note, when three plucky HBS grads decided to take on the establishment and ended up building an institution. It ends with the smugness of Bill Ackman of Pershing Square Capital Management, who has somehow convinced himself of the moral righteousness of forcing a short-term orientation on the CEOs of America, and Ray Dalio, the founder of Bridgewater Associates, who has managed to confuse the ability to make money with greater self-awareness and has compiled the more than 200 principles by which he lives for the edification of those who might have the good fortune of working for him.

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Ackman (’92), the activist hedge fund manager and head of Pershing Square Capital Management, represents the promise and the peril of HBS all at once. For would-be MBAs seeking wealth and success, he has a surplus of both, and is among the best hedge fund managers of his time. At the same time, the School’s narrow view of what constitutes success—that is, money—infects their view of everything, including their opinion of themselves. Many of the School’s graduates also drag morality into it, as if their success were somehow a result of their innate goodness rather than of their particular skills, situation, and luck. Bill Ackman is that, too.

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Says one alum: “You just need to look at Bill Ackman to see why women have traditionally been less forthcoming in HBS classrooms. Because there are far fewer of them that are willing to do that bullshit dance to score points.” All that said, the man seems to have figured something out. A failed bid to buy drugmaker Allergan in 2014 nevertheless led to $2 billion in gains when Allergan escaped his clutches through a merger with rival Actavis. By the end of 2014, Pershing Square was reportedly sitting on top of $18 billion. “A lot of people viewed 2013 as the end of Pershing Square,” he told Bloomberg at the time.

The Revolution That Wasn't: GameStop, Reddit, and the Fleecing of Small Investors by Spencer Jakab

4chan, activist fund / activist shareholder / activist investor, barriers to entry, behavioural economics, Bernie Madoff, Bernie Sanders, Big Tech, bitcoin, Black Swan, book value, buy and hold, classic study, cloud computing, coronavirus, COVID-19, crowdsourcing, cryptocurrency, data science, deal flow, democratizing finance, diversified portfolio, Dogecoin, Donald Trump, Elon Musk, Everybody Ought to Be Rich, fake news, family office, financial innovation, gamification, global macro, global pandemic, Google Glasses, Google Hangouts, Gordon Gekko, Hacker News, income inequality, index fund, invisible hand, Jeff Bezos, Jim Simons, John Bogle, lockdown, Long Term Capital Management, loss aversion, Marc Andreessen, margin call, Mark Zuckerberg, market bubble, Masayoshi Son, meme stock, Menlo Park, move fast and break things, Myron Scholes, PalmPilot, passive investing, payment for order flow, Pershing Square Capital Management, pets.com, plutocrats, profit maximization, profit motive, race to the bottom, random walk, Reminiscences of a Stock Operator, Renaissance Technologies, Richard Thaler, ride hailing / ride sharing, risk tolerance, road to serfdom, Robinhood: mobile stock trading app, Saturday Night Live, short selling, short squeeze, Silicon Valley, Silicon Valley billionaire, SoftBank, Steve Jobs, TikTok, Tony Hsieh, trickle-down economics, Vanguard fund, Vision Fund, WeWork, zero-sum game

A glance at the results put up by the two largest investment banks amid a sharp recession and a global pandemic tells the story: Goldman Sachs and Morgan Stanley made nearly $23 billion in combined revenue in their markets divisions for the first six months of 2020 alone, which was 54 percent more than a very healthy first half of 2019. The hedge fund manager William Ackman’s Pershing Square Holdings made a multibillion-dollar bet on the plunge and had its best year ever, gaining 70 percent.[8] Melvin Capital Management’s Gabe Plotkin, who would later become the main victim of the GameStop Revolution, practically printed money in 2020, personally taking home $846 million in compensation.

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But a brash outsider was convinced he could make a fortune by proving them wrong and used the internet to broadcast his thesis to anyone who would listen. He was patient and eventually proven right, forcing the hedge fund manager into a crushing loss. This isn’t the story of Gabe Plotkin versus Keith Gill—it was Bill Ackman and Andrew Left who duked it out in public over Valeant Pharmaceuticals four years earlier. A professional short seller, Left had identified what he correctly believed were improperly inflated sales at the Canadian company, once a hedge fund darling, made through a related mail-order pharmacy. In March 2017, Ackman finally threw in the towel, by which time Valeant had lost more than 90 percent of its value.

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We tend to look at financially successful people and place more weight on their investing acumen despite mountains of evidence that specific stock picks aren’t any good. Humans, to their detriment, are followers. My team at The Wall Street Journal tried to illustrate this in a lighthearted way by tracking the picks and pans from the speakers at the closely watched Sohn Investment Conference like David Einhorn, Bill Ackman, and, yes, Gabe Plotkin and Chamath Palihapitiya. We took inspiration from Burton Malkiel’s classic A Random Walk Down Wall Street, in which he writes that “a blindfolded monkey throwing darts at a newspaper’s financial pages could select a portfolio that would do just as well as one carefully selected by the experts.”[2] Instead of paying $5,000 for a seat at the conference to hear the stars’ pearls of wisdom, I walked over to the Modell’s Sporting Goods store on Forty-Second Street and bought a set of darts for $9.99.

Wait: The Art and Science of Delay by Frank Partnoy

algorithmic trading, Atul Gawande, behavioural economics, Bernie Madoff, Black Swan, blood diamond, Cass Sunstein, Checklist Manifesto, cognitive bias, collapse of Lehman Brothers, collateralized debt obligation, computerized trading, corporate governance, cotton gin, Daniel Kahneman / Amos Tversky, delayed gratification, Flash crash, Frederick Winslow Taylor, George Akerlof, Google Earth, Hernando de Soto, High speed trading, impulse control, income inequality, information asymmetry, Isaac Newton, Long Term Capital Management, Menlo Park, mental accounting, meta-analysis, MITM: man-in-the-middle, Nick Leeson, paper trading, Paul Graham, payday loans, Pershing Square Capital Management, Ralph Nader, Richard Thaler, risk tolerance, Robert Shiller, Ronald Reagan, Saturday Night Live, scientific management, six sigma, social discount rate, Spread Networks laid a new fibre optics cable between New York and Chicago, Stanford marshmallow experiment, statistical model, Steve Jobs, systems thinking, The Market for Lemons, the scientific method, The Wealth of Nations by Adam Smith, upwardly mobile, Walter Mischel, work culture

And although he has written that “lethargy bordering on sloth remains the cornerstone of our investment style,” he certainly isn’t lazy.8 He works all the time, reading financial statements and reports, preparing for his next big trade. But although Buffett is constantly working, he is not constantly buying and selling. He does not respond to everything he sees. Instead, he delays his reactions as much as possible. His short-term discount rate is low. He is focused on the long haul. Bill Ackman, the founder of the hedge fund Pershing Square Capital Management, is thirty-six years younger than Buffett, but he takes a similar approach. Ackman would be at the top of just about anyone’s list of the best investors of the last two decades. He is often controversial, especially among the managers of companies he criticizes, but he has consistently earned high returns for his investors and he now manages almost $10 billion.

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Likewise, although most investors have fared poorly in recent years, others have done quite well. There is Warren Buffett, of course. Some investors, such as Wilbur L. Ross Jr. and Ralph Whitworth, have reliably made money by purchasing significant stakes in underperforming companies and turning them around. Several hedge fund managers, such as Bill Ackman and Ray Dalio, have remained successful before, during, and after the recent crisis. These successful financial professionals are a diverse group, but they share one important characteristic: they are focused on the long term. Their investment horizon extends to years or even decades. They are capable of moving quickly, but they understand how to avoid dangerous short-term impulses.5 They can do what some financial executives call “seeing around corners.”

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The best investment strategies are those that harness the value of compounding returns, with the lowest possible fees. If we hire an investment “professional,” we should be sure to understand how that person makes money, and we should try to minimize our trading and be as patient as Warren Buffett and Bill Ackman. Since 2008, a group of master clinicians has held an annual conference on “Diagnostic Error in Medicine” (labeled DEM) to explore why doctors make mistakes and to try to improve medical decision-making generally. This new group of medical professionals is open to research and ideas that go well beyond traditional analytical thinking.

One Click: Jeff Bezos and the Rise of Amazon.com by Richard L. Brandt

Amazon Web Services, automated trading system, big-box store, call centre, cloud computing, deal flow, drop ship, Dynabook, Elon Musk, Free Software Foundation, inventory management, Jeff Bezos, Kevin Kelly, Kickstarter, Larry Ellison, Marc Andreessen, new economy, Pershing Square Capital Management, science of happiness, search inside the book, Silicon Valley, Silicon Valley startup, skunkworks, software patent, Steve Jobs, Stewart Brand, Tony Hsieh, two-pizza team, Whole Earth Catalog, Y2K

., the second largest bookstore chain, is suffering like a CEO with swine flu. It has lost a total of $605 million over the last four years. The company announced on December 30, 2010, that it would delay payments to some publishers while it tries to refinance its debt. In order to remain competitive, the second-largest shareholder of Borders stock, William Ackman of Pershing Square Capital Management, has proposed an unusual tactic: buying Barnes & Noble, a company more than twice its size. In December 2010, Ackman proposed a price of nearly $960 million, and said he was willing to help finance the deal. The hope was that combining two struggling companies would create the economies of scale to remain competitive by cutting costs.

100 Baggers: Stocks That Return 100-To-1 and How to Find Them by Christopher W Mayer

Alan Greenspan, asset light, bank run, Bear Stearns, Bernie Madoff, book value, business cycle, buy and hold, Carl Icahn, cloud computing, disintermediation, Dissolution of the Soviet Union, dumpster diving, Edward Thorp, Henry Singleton, hindsight bias, housing crisis, index fund, Jeff Bezos, market bubble, Network effects, new economy, oil shock, passive investing, peak oil, Pershing Square Capital Management, shareholder value, Silicon Valley, SimCity, Stanford marshmallow experiment, Steve Jobs, stock buybacks, survivorship bias, Teledyne, The Great Moderation, The Wisdom of Crowds, tontine

The stock seems to be on sale now, off 30 percent from its high. • Mike Pearson, Valeant Pharmaceuticals (VRX). This one is controversial. There are some vocal critics who think Valeant’s business model is all sizzle and no steak. They also dispute the accounting and chafe at the share price. On the other hand, I heard Bill Ackman of Pershing Square cogently defend it at a Grant’s Conference. He cited growing cash earnings and the logic of Pearson’s deal making. • NVR Inc. (NVR). This is the clear Outsider among homebuilders. Murray Stahl at Horizon-Kinetics wrote about it late in 2013. He summed up its outstanding features: NVR is somewhat of an oddity within the homebuilding industry.

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(LNG) Hayman: Kyle Bass 6 positions 46% in General Motors (GM) 21% in Nationstar Mortgage (NSM) ESL Investments: Eddie Lampert 4 positions 55% in Sears Holdings (SHLD) 24% in AutoNation (AN) Pabrai Funds: Mohnish Pabrai 7 positions 24% in Horsehead (ZINC) 22% in General Motors (GM) Fairfax: Prem Watsa 98% of portfolio in 10 positions 35% in Resolute Forest (RFP) 31% in Blackberry (BBRY) Pershing Square: Bill Ackman 7 positions 40% in Allergan (AGN) 20% in Can. Pacific Railway (CP) Fairholme: Bruce Berkowitz 8 positions 22% in Back of America (BAC) 13% in Sears Holdings (SHLD) WL Ross & Co: Wilbur Ross 4 positions 54% in Navigator Holdings (NVGS) 17% in EXCO Resources (XCO) 114 100-BAGGERS Now, I doubt any of them is actually going through the trouble of plugging numbers in the edge/odds formula I showed you before.

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Akre was cheerful and relaxed; he never checked his phone. He was full of wise words on investing, and funny too. He talked about Phelps and about 100-baggers. He talked about books read and lessons learned. This is the way great investors talk. Believe me, I’ve met a bunch of them, from Ackman to Wanger. (Bill Ackman of Pershing Square fame you probably know. Ralph Wanger you may not. He ran the top-performing Acorn Fund for a lot of years and wrote a fine book about investing titled A Zebra in Lion Country.) You might find it instructive what we didn’t talk about: • We didn’t talk about the Fed. • We didn’t talk about the overall market. • We didn’t talk about the dollar.

Nobody's Fool: Why We Get Taken in and What We Can Do About It by Daniel Simons, Christopher Chabris

Abraham Wald, Airbnb, artificial general intelligence, Bernie Madoff, bitcoin, Bitcoin "FTX", blockchain, Boston Dynamics, butterfly effect, call centre, Carmen Reinhart, Cass Sunstein, ChatGPT, Checklist Manifesto, choice architecture, computer vision, contact tracing, coronavirus, COVID-19, cryptocurrency, DALL-E, data science, disinformation, Donald Trump, Elon Musk, en.wikipedia.org, fake news, false flag, financial thriller, forensic accounting, framing effect, George Akerlof, global pandemic, index fund, information asymmetry, information security, Internet Archive, Jeffrey Epstein, Jim Simons, John von Neumann, Keith Raniere, Kenneth Rogoff, London Whale, lone genius, longitudinal study, loss aversion, Mark Zuckerberg, meta-analysis, moral panic, multilevel marketing, Nelson Mandela, pattern recognition, Pershing Square Capital Management, pets.com, placebo effect, Ponzi scheme, power law, publication bias, randomized controlled trial, replication crisis, risk tolerance, Robert Shiller, Ronald Reagan, Rubik’s Cube, Sam Bankman-Fried, Satoshi Nakamoto, Saturday Night Live, Sharpe ratio, short selling, side hustle, Silicon Valley, Silicon Valley startup, Skype, smart transportation, sovereign wealth fund, statistical model, stem cell, Steve Jobs, sunk-cost fallacy, survivorship bias, systematic bias, TED Talk, transcontinental railway, WikiLeaks, Y2K

Farmer Mac was a US government–backed company like Freddie Mac and Fannie Mae, which buy home mortgages. Buffett and other savvy investors owned Freddie and Fannie shares. Spier bought shares in Farmer and excitedly told some of his hedge-fund friends about his discovery, hoping they would “go long” on the stock as he had.30 A few weeks later, he heard from one of them. Bill Ackman, the founder of Pershing Square Capital Management, invited Spier to his office to discuss the Farmer Mac idea. Upon arriving, Spier saw that Ackman had a shelf filled with annual reports and other documents from Farmer, annotated with sticky notes and highlighter. Ackman had asked far more questions than Spier, and the answers had led Ackman to the opposite conclusion: Farmer Mac was in deep trouble and likely to fail spectacularly.

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But what does it really tell us? Most fields have no standards for how much diligence is due, let alone what qualifies as diligence in the first place. Even in finance, where due diligence can be legally or contractually required, it often has no specific meaning—as Guy Spier realized when he saw how Bill Ackman’s version compared to his own. Experienced venture capitalists also get carried away and invest heavily in trendy industries without sufficient investigation beforehand. Absent a clear definition of what someone means by due diligence, we should interpret this response as meaning “We believe this,” and we should follow up by asking exactly what evidence led to their conclusions.

The Antisocial Network: The GameStop Short Squeeze and the Ragtag Group of Amateur Traders That Brought Wall Street to Its Knees by Ben Mezrich

4chan, Asperger Syndrome, Bayesian statistics, bitcoin, Carl Icahn, contact tracing, data science, democratizing finance, Dogecoin, Donald Trump, Elon Musk, fake news, gamification, global pandemic, Google Hangouts, Hyperloop, meme stock, Menlo Park, payment for order flow, Pershing Square Capital Management, Robinhood: mobile stock trading app, security theater, short selling, short squeeze, Silicon Valley, Silicon Valley startup, social distancing, Tesla Model S, too big to fail, Two Sigma, value at risk, wealth creators

Most famously, in 2008, a surprise takeover attempt of the German automaker Volkswagen by rival Porsche drove Volkswagen’s stock price up by a factor of 5—briefly making it the most valuable company in the world—in two quick days of trading, as short selling funds struggled to cover their positions. Similarly, a battle between two hedge fund titans—Bill Ackman, of Pershing Square Capital Management, and Carl Icahn—led to a squeeze involving supplement maker—and alleged pyramid marketer—Herbalife, which cost Ackman a reported $1 billion. And perhaps the first widely reported short squeeze dated back a century, to 1923, when grocery magnate Clarence Saunders successfully decimated short sellers who had targeted his nascent chain of Piggly Wiggly grocery stores.

Flash Boys: A Wall Street Revolt by Michael Lewis

automated trading system, bash_history, Berlin Wall, Bernie Madoff, collateralized debt obligation, computerized markets, drone strike, Dutch auction, Fall of the Berlin Wall, financial intermediation, Flash crash, High speed trading, information security, latency arbitrage, National best bid and offer, pattern recognition, payment for order flow, Pershing Square Capital Management, proprietary trading, risk tolerance, Rubik’s Cube, Sergey Aleynikov, Small Order Execution System, Spread Networks laid a new fibre optics cable between New York and Chicago, the new new thing, too big to fail, trade route, transaction costs, Vanguard fund

Not the big mutual funds, Fidelity and Vanguard. Not the big money management firms like T. Rowe Price and Janus Capital. Not even the most sophisticated hedge funds. The legendary investor David Einhorn, for instance, was shocked; so was Dan Loeb, another prominent hedge fund manager. Bill Ackman ran a famous hedge fund, Pershing Square, that often made bids for large chunks of companies. In the two years before Brad turned up in his office to explain what was happening, Ackman had started to suspect that people might be using the information about his trades to trade ahead of him. “I felt that there was a leak every time,” says Ackman.

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A few weeks later Brad flew to Canada and sold his bosses on the idea of an RBC-led stock exchange. Then, in the fall of 2011, he canvassed a handful of the world’s biggest money managers (Janus Capital, T. Rowe Price, BlackRock, Wellington, Southeastern Asset Management) and some of its most influential hedge fund managers (David Einhorn, Bill Ackman, Daniel Loeb). They all had the same reaction. They loved the idea of a stock exchange that protected investors from Wall Street’s predators. They also thought that a new stock exchange, to be credibly independent of Wall Street, could not be created by a Wall Street bank. Not even a bank as nice as RBC.

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And people were already coming to their aid, and bracing for the war. Out there, anything was possible. _____________ * The first round of investors included Greenlight Capital, Capital Group, Brandes Investment Partners, Senator Investment Group, Scoggin Capital Management, Belfer Management, Pershing Square, and Third Point Partners. † In the interest of clarity, they’d hoped to preserve the full name, but they discovered a problem doing so when they set out to create an Internet address: investorsexchange.com. To avoid that confusion, they created another. ‡ The market order is the first and simplest type.

The Art of Execution: How the World's Best Investors Get It Wrong and Still Make Millions by Lee Freeman-Shor

Alan Greenspan, behavioural economics, Black Swan, buy and hold, Carl Icahn, cognitive bias, collapse of Lehman Brothers, credit crunch, Daniel Kahneman / Amos Tversky, diversified portfolio, family office, I think there is a world market for maybe five computers, index fund, Isaac Newton, Jeff Bezos, Long Term Capital Management, loss aversion, Market Wizards by Jack D. Schwager, Pershing Square Capital Management, Richard Thaler, Robert Shiller, rolodex, Skype, South Sea Bubble, Stanford marshmallow experiment, Steve Jobs, technology bubble, The Wisdom of Crowds, too big to fail, tulip mania, world market for maybe five computers, zero-sum game

“As a result of over diversification their returns get watered down. Diversification covers up ignorance. Active managers have not done enough research into any of their companies. If managers have 200 positions, do you think they know what is going on at any one of these companies at this moment?” – Bill Ackman, Pershing Square “The average mutual fund that holds 150 names goes that far out on the spectrum more for business reasons than for performance reasons. This is a profession where managers focus a lot on the question: what mistake would it take to get me fired? The answer usually centres on underperformance by a certain amount, so they develop a strategy to minimize the probability of that outcome

How Boards Work: And How They Can Work Better in a Chaotic World by Dambisa Moyo

"Friedman doctrine" OR "shareholder theory", activist fund / activist shareholder / activist investor, Airbnb, algorithmic trading, Amazon Web Services, AOL-Time Warner, asset allocation, barriers to entry, Ben Horowitz, Big Tech, bitcoin, Black Lives Matter, blockchain, Boeing 737 MAX, Bretton Woods, business cycle, business process, buy and hold, call centre, capital controls, carbon footprint, collapse of Lehman Brothers, coronavirus, corporate governance, corporate social responsibility, COVID-19, creative destruction, cryptocurrency, deglobalization, don't be evil, Donald Trump, fake news, financial engineering, gender pay gap, geopolitical risk, George Floyd, gig economy, glass ceiling, global pandemic, global supply chain, hiring and firing, income inequality, index fund, intangible asset, Intergovernmental Panel on Climate Change (IPCC), Jeff Bezos, knowledge economy, labor-force participation, long term incentive plan, low interest rates, Lyft, money: store of value / unit of account / medium of exchange, multilevel marketing, Network effects, new economy, old-boy network, Pareto efficiency, passive investing, Pershing Square Capital Management, proprietary trading, remote working, Ronald Coase, Savings and loan crisis, search costs, shareholder value, Shoshana Zuboff, Silicon Valley, social distancing, Social Responsibility of Business Is to Increase Its Profits, SoftBank, sovereign wealth fund, surveillance capitalism, The Nature of the Firm, Tim Cook: Apple, too big to fail, trade route, Travis Kalanick, uber lyft, Vanguard fund, Washington Consensus, WeWork, women in the workforce, work culture

In July 2018, food group Nestlé was called to task by an activist investor, Third Point Management’s Dan Loeb, who accused the company of being “insular, complacent, and overly bureaucratic” and of “missing too many trends.” He proposed the company sell assets in noncore areas such as frozen foods and confectionary. Nestlé pushed back, emphasizing its decade-long record of strong shareholder returns. Even more famous is the tussle between Pershing Square activist Bill Ackman and Herbalife, the multilevel marketing company. Ackman took a short position on the stock and launched an aggressive public campaign, claiming that the company was a predatory pyramid scheme and arguing that its value would fall to zero. The revelation of Ackman’s short position in 2012 prompted Herbalife CEO Michael Johnson to call up business news channel CNBC to defend the company and attack Ackman, kicking off a five-year battle.

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No company is too big, too complex, or too regulated to avoid being the target of an activist; virtually every industry has seen activists gain board seats. Some well-known corporations that have engaged with activist investors include food producer Nestlé, with Third Point; confectionary maker Mondelēz, with Trian; and retailer JCPenney, with the hedge fund Pershing Square. I directly experienced the interventions of an activist company, Sherborne Investors, while serving on the board of Barclays. Sherborne’s approach faced much regulatory scrutiny and media attention, and in many respects was a source of board consternation. However, a board’s engagement with activists does not necessarily have to be adversarial.

What Went Wrong: How the 1% Hijacked the American Middle Class . . . And What Other Countries Got Right by George R. Tyler

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, 8-hour work day, active measures, activist fund / activist shareholder / activist investor, affirmative action, Affordable Care Act / Obamacare, Alan Greenspan, bank run, banking crisis, Basel III, Bear Stearns, behavioural economics, benefit corporation, Black Swan, blood diamond, blue-collar work, Bolshevik threat, bonus culture, British Empire, business cycle, business process, buy and hold, capital controls, Carmen Reinhart, carried interest, cognitive dissonance, collateralized debt obligation, collective bargaining, commoditize, company town, compensation consultant, corporate governance, corporate personhood, corporate raider, corporate social responsibility, creative destruction, credit crunch, crony capitalism, crowdsourcing, currency manipulation / currency intervention, David Brooks, David Graeber, David Ricardo: comparative advantage, declining real wages, deindustrialization, Diane Coyle, disruptive innovation, Double Irish / Dutch Sandwich, eurozone crisis, financial deregulation, financial engineering, financial innovation, fixed income, Ford Model T, Francis Fukuyama: the end of history, full employment, George Akerlof, George Gilder, Gini coefficient, Glass-Steagall Act, Gordon Gekko, Greenspan put, hiring and firing, Ida Tarbell, income inequality, independent contractor, invisible hand, job satisfaction, John Markoff, joint-stock company, Joseph Schumpeter, junk bonds, Kenneth Rogoff, labor-force participation, laissez-faire capitalism, lake wobegon effect, light touch regulation, Long Term Capital Management, low interest rates, manufacturing employment, market clearing, market fundamentalism, Martin Wolf, minimum wage unemployment, mittelstand, Money creation, moral hazard, Myron Scholes, Naomi Klein, Northern Rock, obamacare, offshore financial centre, Paul Samuelson, Paul Volcker talking about ATMs, pension reform, performance metric, Pershing Square Capital Management, pirate software, plutocrats, Ponzi scheme, precariat, price stability, profit maximization, profit motive, prosperity theology / prosperity gospel / gospel of success, purchasing power parity, race to the bottom, Ralph Nader, rent-seeking, reshoring, Richard Thaler, rising living standards, road to serfdom, Robert Gordon, Robert Shiller, rolling blackouts, Ronald Reagan, Sand Hill Road, Savings and loan crisis, shareholder value, Silicon Valley, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, sovereign wealth fund, Steve Ballmer, Steve Jobs, stock buybacks, subprime mortgage crisis, The Chicago School, The Spirit Level, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, transcontinental railway, transfer pricing, trickle-down economics, tulip mania, Tyler Cowen, Tyler Cowen: Great Stagnation, union organizing, Upton Sinclair, upwardly mobile, women in the workforce, working poor, zero-sum game

Supervisory oversight of CEOs has historically been weak in America, where boards have traditionally been widely held to be ineffective.15 But the opportunity for windfalls during the Reagan era caused traditional supine board governance to deteriorate even further. Too many CEOs are able to pick their own boards: board elections feature a management-selected list of candidates, with critics facing daunting expense and administrative barriers to landing positions on the ballot. Only rich corporate raiders like William A. Ackman of Pershing Square Capital Management can compete. Journalist Ian Austen explains: “We forget how unusual the corporate election system is in a democracy. Ninety-nine percent of the time, shareholders are not given a choice as to who they wish to represent them on the board of directors.”16 Firm performance would benefit from visionary and even contentious boards rather than incurious ones.