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This week’s issue dives into Bill Ackman’s journey from closing Gotham Partners to major wins, brutal setbacks with Herbalife and Valeant, his crisis time rebounds, and how he reshaped activist investing.

We also look at where Pershing Square stands now, and Ackman’s latest billion-dollar bets and side ventures.

Let’s get into it.

📚 Early Influences and Investment Framework

Ackman grew up in affluent Chappaqua, New York, where finance was dinner‑table talk. His father ran a major real‑estate finance firm.

By 14, he was shadowing closings and interrogating lawyers about how capital flowed through real estate waterfalls.

At Harvard Business School, he started putting theory to work - buying stocks with his own cash, watching price movements, eventually convincing a classmate to join him. That classmate became his first business partner.

His investing framework started taking shape. He split an early paycheck, half into the Vanguard 500, half into a Reebok call option. The index crawled. The option soared. He was hooked.

Then he read The Intelligent Investor. It didn’t spark new ideas, but gave language to what he already sensed: price doesn’t equal value, activity doesn’t equal insight, and time isn’t risk if you actually understand the business.

From day one, his filters were strict: simple businesses, recurring cash flows, and models that still made sense a decade later.

He liked franchises with pricing power, distribution moats, and repeat consumers, especially in businesses resilient to tech disruption.

And like Buffett, he saw temperament as an edge. Keeping cool in drawdowns. Holding cash when others couldn’t. Never risking what you can’t afford to lose.

📈 Gotham Partners and Pershing Square Capital

Ackman ran his first hedge fund, Gotham Partners, from 1992 to 2003, scaling it from a small base to around $500 million in assets.

The fund began with small-cap public investments, but gradually drifted into thinly traded stocks and private companies.

A core holding, Gotham Golf, absorbed increasing amounts of capital as its asset value declined, turning into a deadweight that strained the portfolio.

As liquidity dried up and a blocked merger plan triggered lawsuits, investor redemptions mounted. With no clean exit and no time left, Ackman was forced to shut Gotham down.

In 2004, Ackman launched Pershing Square Capital Management (“Pershing”). This time, the strategy was different: fewer positions, more public involvement, and higher conviction.

Above all, he prioritized activism over trading.

Some early wins included:

• Wendy’s spin-off of Tim Hortons, realizing around $200 million
• Backed General Growth Properties during bankruptcy, turning $60 million into $1.6 billion
• Took a stake in Canadian Pacific Railway, which returned $2.6 billion in profit

But not everything worked.

In 2007, Ackman proposed a REIT spin-off to unlock value from Target’s real estate. The board rejected it, and the side vehicle backing the trade lost over 90% as credit spreads widened.

Then came two of the toughest trades of his career…

🌱 Herbalife: Five Years in the Arena

In late 2012, Ackman announced a massive short in Herbalife, the multi-level marketing company. He called it a pyramid scheme, said it preyed on low-income communities and was structurally unsustainable.

He backed his claim with a 334-slide deck, live presentations, and frequent media appearances. From day one, the short was public.

He pressed regulators, met the FTC, and, per contemporaneous reports, funded Latino advocacy groups and logistics to surface distributor testimony, aiming to spur enforcement.

What began as a public short soon turned into a high-profile Wall Street spectacle.

Billionaire Carl Icahn took the other side of the trade, betting long on Herbalife. A personal rivalry flared. Their televised clashes - especially on CNBC - were filled with interruptions, name-calling, and thinly disguised hostility.

In July 2016, after years of lobbying by Ackman and growing regulatory scrutiny, the FTC reached a settlement with Herbalife: a $200 million fine and mandatory changes to its operations.

But the agency stopped short of labeling the company a pyramid scheme, a key part of Ackman's thesis.

Ackman eventually exited the short in 2018 after five bruising years and an estimated $760 million loss.

Meanwhile, Icahn built the position and exited in stages, reportedly netting about $1 billion.

The public loss battered Ackman’s reputation, and the perception hardened: he was chasing vindication, not returns. This perception was made worse by another simultaneous collapse: Valeant Pharmaceuticals.

💊 Valeant: The Cost of Concentration

In 2014, Ackman took a long position in Valeant Pharmaceuticals, a roll-up pharma firm known for acquiring other drug-makers and raising prices. The idea was simple: cut R&D, buy cash flows, and expand margins.

At first, it worked. The stock ripped. Pershing built a 9% stake through swaps and equity.

But then, a few problems surfaced…

Valeant was accused of using specialty pharmacies to artificially boost revenue. Congress opened inquiries. Media scrutiny intensified. Short-sellers circled.

Ackman backed the company. He joined the board and defended the CEO, Michael Pearson, even as the stock was down 50%.

By 2016, Valeant had lost over 90% of its value. Revenue dropped. Leverage ballooned. Management changed.

At last, Pershing's position lost over $4 billion.

Valeant exposed the weak points in Ackman’s investment approach: putting too much money into a single bet, refusing to change his mind when things went wrong, and getting too close to the company’s management.

Ackman later described the Valeant investment as “humbling”, and admitted he should have sold his shares sooner.

💸 The Rebuild: Insurance and Timing

Not every investment lost money.

After Herbalife and Valeant, Ackman didn’t disappear. He just stopped broadcasting.

In early 2020, as COVID fears spread, he made a new kind of bet.

Pershing Square bought $27 million worth of credit protection on investment grade and high yield bonds. It was not an activist play. It was insurance. A straight bet that markets were mispricing risk.

Ackman went on CNBC and warned, “Hell is coming.” Days later, markets plunged. The position returned $2.6 billion in under a month.

Then he did it again. This time he bet that the Fed was underestimating inflation, and started buying interest rate swaps. Another $2 billion gain.

No proxy fight. No board seat. No media circus.

Ackman had traded campaign-style activism for opportunistic macro bets…and it paid off.

📉 The Mechanics and Evolution of Activist Investing

Ackman didn’t invent activist investing, but he reframed it. In Pershing’s early years, the playbook was aggressive - public letters, proxy battles, blunt-force campaigns.

But over time, as his hit rate improved, boards began letting him in rather than shutting him out.

The model evolved. Less yelling, more compounding. Today, Pershing’s style focuses on research-backed persuasion: pushing boards with data rather than threats.

If the business is fixable and the thesis sound, he’ll advocate for change. If not, he walks away.

Ackman frames activism as a counterweight in a passive world. With index funds sitting on most shareholder votes, someone has to challenge status quo governance.

His argument: good activists force hard decisions that entrenched management won’t take.

Still, he draws limits. Some activists push for short-term boosts through cost cuts, asset sales, or buybacks. Pershing backs moves that can scale sustainably.

For the most part, the goal is not noise, but rather alignment. Supporting management when the vision is credible, and stepping in only when long-term value is getting ignored.

📊 Where Is Pershing Square Today?

Pershing manages nearly $20 billion. Some of its largest disclosed positions included Alphabet, Uber, Hilton, and Brookfield

Ackman’s interest in Pershing Square funds is worth $2.5 billion, and his personal net worth estimated at $9.5 billion according to Ackman himself.

In 2024, Pershing sold a 10% stake of its management company to a pension consortium for $1.05 billion, valuing the general partner (GP) at roughly 10x EBITDA.

Following this raise, Bill Ackman will certainly be active. In fact, he’s already placing $900 million bets on creating the next Berkshire Hathaway.

As Pershing Square embarks on bold billion-dollar bets, Ackman is also making headlines with his pro tennis debut - still chasing edge, just on a different court.

Enjoy these breakdowns? Let me know what else you'd like to see featured — more investor, firm histories, or deep-dives on strategic shifts.

Until next time,
PE Bro

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Disclaimer: The events and facts in this piece were compiled using a range of reputable, publicly available sources. While I strive for accuracy, I can't verify every detail firsthand. This should be read as a well-researched overview, not an official history or statement from Bill Ackman, Pershing Square, or any of its affiliates.