Why is Bill Ackman hated so much?

Been seeing his name pop up recently a ton on CNBC. The only thing I know about him is the $1 billion HLF short he had (HLF went up $6 today and they brought him up). I also saw the CEO of ADP talking a bit about him, seems like Ackman was trying to reserve seats on a board ahead of time or something. Ackman has donated a ton of money to Jewish organizations and has done other philanthropic work. But are there any specific reasons why the Street hates Ackman?

 

Well if you're long a stock he happens you suddenly short and distort you're gonna be pissed because it'll wipe out your gains until he exits. Lately his bark is worse than his bite.

26 Broadway where's your sense of humor?
 

Smart doesn't always equal returns in investing.

For example, it's pretty safe to say Herbalife was/is a pyramid scheme, but they are retooling and the market is waiting to see. There are a lot of other factors.

His shorts are bascially the opposite of angel investing, you find a good idea, do all the market research and vetting, but sometimes it just doesn't happen.

 

I like the guy. Confidence Game was a good book and he's right about Herbalife in that it's a scam company. Whether his short pays off is another thing, but he's not wrong about the company. Fuck MLM pyramid schemes.

Commercial Real Estate Developer
 
CRE:
I like the guy. Confidence Game was a good book and he's right about Herbalife in that it's a scam company. Whether his short pays off is another thing, but he's not wrong about the company. Fuck MLM pyramid schemes.

I don't understand why HLF and other MLMs haven't been shut down. Since they call it MLM I assume they can just walk.

 
dr_mantistoboggan_MD:
As a rather telling side note to this conversation, he has a YouTube video through the floating university titled, "William Ackman: Everything You Need to Know About Finance and Investing in Under an Hour". This video is what got me into finance, it was all downhill from there haha.

That video is gold. I watched it like 3 times before I started investing. Now I know how to finance a lemonade stand!

 

The story of Bill Ackman vs HLF is how I began to get serious about a finance career. It got me interested in learning what HF activism is, one thing led to another, and I was already deep in researching how to break into IB.

I have followed him with great interest since, both through his peak in late 2014 and the rock bottom he hit with Valeant. I idolized him for some time, but not anymore to be honest. I kind of like how he goes on his crusades from time to time (HLF and MBIA) but I think that his excessive stubbornness and overconfidence are to blame for his downfall. Overall, I think he's a very smart guy, but was very fortunate to have had the support of his rich family and solid connections. Things are much simpler when you have such a safety net in life.

 

I agree that he can be stubborn and over confident; however, I think sometimes the cards are stacked against him.

The narrative for most companies that people want to believe is that they will increase in value. Though I believe HLF use to be a pyramid scheme, the government allowed them to retool their company as opposed to condemning them. It's kinda like when a student at school messes up, the principal would rather give them detention then outright expel them.

The truth comes out Monday when they report earnings. It is crazy how easily he raised money though considering recent performance and even recent attitude.

Frank Sinatra - "Alcohol may be man's worst enemy, but the bible says love your enemy."
 
Pinkpoloshorts:

Doesn't seem to matter, just raised another multi-billion dollar single stock fund for investing in Air Products International. Guess investors are hoping he can recreate his success with the last single stock fund he had in Target. Oh wait...

I wonder who were the LPs in this Air Products gamble. Anyone here can shed some lights?

Too late for second-guessing Too late to go back to sleep.
 

When people complain that speculation is bad for markets, HLF is a good example. Fortunately one hedge fund is screwing another and this stock doesn't really effect the real economy.

I hate HLF and can't fathom how people can be on the long-side of a potential fraud. That said, I will stay away from it b.c. these guys are bringing it away from its intrinsic value.

 

What a good leftist, Soros is trying to make money off of a company that exploits minorities (such as a lot of Latino communities) by making them pay out the ass for powder they don't need. I don't expect to win but I am sooo rooting for Ackman.

 

the 5 - 6% is net of fees, and most funds are underperforming SPX this year by a wide margin, especially long / short equity. Logically you should underperform when markets are going up, and outperform when they are going down. 5 - 6% is bad but everybody has years where they underperform, I don't think you can condemn the guy based on a run of underperformance. (Caveat, no idea what his historical numbers are but I assume they must be alright)

secretariat:

the 5 - 6% is net of fees, and most funds are underperforming SPX this year by a wide margin, especially long / short equity. Logically you should underperform when markets are going up, and outperform when they are going down. 5 - 6% is bad but everybody has years where they underperform, I don't think you can condemn the guy based on a run of underperformance. (Caveat, no idea what his historical numbers are but I assume they must be alright)

Idk, most HFs are supposed to share on the upside (albeit in absolute terms yet it remains important to track major indexes) while limiting the downside... and potentially gaining during a bear market in some asset class. Underperforming equities by 15% is unacceptable, especially considering that equities are not overvalued (based on historical P/E).

Off topic, but the days of Soros, Steindhardt, Robertson returns in their primes compounded for a decade appear to have disappeared. And I'm skeptical about the "markets became more inefficient" or "the global paradigm shift opportunities will never appear again" arguments. That may be true of RV or whatever "arbitrage" opportunities but a crowded market shouldn't necessarily impact global macro or long/short equity funds. As an industry I recall that HFs manage something like $3T, a figure that is less than SWFs and significantly less than the mutual fund industry. Now add in governments and central banks and HFs are still a rather small player in the markets (perhaps not for individual stocks but for asset classes as a whole). I don't understand the appeal of HFs anymore considering their fees and lack of alpha. Many seem like asset hoarders content with returning benchmark figures, and some can't even do that. And aren't HF returns becoming increasingly more correlated to the S&P?

Another frustrating point is that most HFs appear to have reversed the symmetry of risk... they're now skewed in favor of the downside. When you read interviews of successful PMs from the 1980s & 1990s they're all about cutting their loses and riding their winners. Now it seems that most HFs take crazy tail risks, risking blowing up, in the face of small profits ... call it eat like chickens and sh1t like elephants if you will. And from the people that I know in the industry, their firms all appear biased to RV type opportunities. I actually support the HF model because of the flexibility that it provides but would feel more comfortable investing money at a $500M fund than a $5B one, as the former would be more inclined for alpha provided that they had adequate risk management measures. And from 2/20 it should be something like 1/10. Opportunities aren't crowded but the participants are bloated, and more competition should reduce fees. And the PMs of this era can have this to be said about them... Steve Cohen = insider trader, Griffin = 50% drawdown, Paulson = one hit wonder (w/ awful followup investments in gold and BAC). Respect to David Shaw and James Simons though.

endoflunchtimerant

 

No perfect way of doing this, you can look at beta and sharpe (very imperfect though), some ls shops just run very low vol (let's say beta 0.3) high single digit return targets, 6pc post fees when sp is up 20pc isnt a disaster for these guys.

 
mb666:

When people complain that speculation is bad for markets, HLF is a good example. Fortunately one hedge fund is screwing another and this stock doesn't really effect the real economy.

I hate HLF and can't fathom how people can be on the long-side of a potential fraud. That said, I will stay away from it b.c. these guys are bringing it away from its intrinsic value.

"b.c. these guys are bringing it away from its intrinsic value" - this to me would present investment opportunity. If you have a view on the intrinsic value of the company and the market price is moving away from such, this should be a reason to put capital to work, not stay away.

 
mb666:

When people complain that speculation is bad for markets, HLF is a good example. Fortunately one hedge fund is screwing another and this stock doesn't really effect the real economy.

I hate HLF and can't fathom how people can be on the long-side of a potential fraud. That said, I will stay away from it b.c. these guys are bringing it away from its intrinsic value.

You should read a series of great posts by John Hempton. He makes a pretty convincing argument for why HLF isn't a fraud.
 
levered_M7:
mb666:

When people complain that speculation is bad for markets, HLF is a good example. Fortunately one hedge fund is screwing another and this stock doesn't really effect the real economy.

I hate HLF and can't fathom how people can be on the long-side of a potential fraud. That said, I will stay away from it b.c. these guys are bringing it away from its intrinsic value.

"b.c. these guys are bringing it away from its intrinsic value" - this to me would present investment opportunity. If you have a view on the intrinsic value of the company and the market price is moving away from such, this should be a reason to put capital to work, not stay away.

Bingo

 
levered_M7:
mb666:

When people complain that speculation is bad for markets, HLF is a good example. Fortunately one hedge fund is screwing another and this stock doesn't really effect the real economy.

I hate HLF and can't fathom how people can be on the long-side of a potential fraud. That said, I will stay away from it b.c. these guys are bringing it away from its intrinsic value.

"b.c. these guys are bringing it away from its intrinsic value" - this to me would present investment opportunity. If you have a view on the intrinsic value of the company and the market price is moving away from such, this should be a reason to put capital to work, not stay away.

Doesn't this depend if you're going long or short? If a firm is falling beneath its intrinsic value you can put capital to work and wait it out until the investment reaches intrinsic value again - but shorts don't work the same way due to market mechanics right?

 
contrariusprime:

He was underwater for awhile on MBIA too -- these kinds of these take time to play out, and the story isn't over...

Bingo, I wouldn't count him out just yet. But then again, he's never had to be on the other side of the likes of Soros/Icahn

Array
 
GreenwichForLife:
contrariusprime:

He was underwater for awhile on MBIA too -- these kinds of these take time to play out, and the story isn't over...

Bingo, I wouldn't count him out just yet. But then again, he's never had to be on the other side of the likes of Soros/Icahn

This is the big thing to me. He's not just fighting fundamentals or business flaws right now.

However, as you guys mentioned, these take a long time to play out and it isn't just Ackman (i.e. Einhorn vs. Allied Capital).

 

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