YouSaid · the spoken record

Bill Ackman

lines on the record

257

first

2024-02-20

most recent

2024-02-20

sittings or episodes

1

sources

podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

1. “This is a business where you're going to make some mistakes. It was a big one. It was very reputationally damaging. The press was a total disaster. But I'm not a quitter. And actually, the key moments for us, we've never taken our core investment principles and actually really written them down. Something we talked about at meetings, you know, kind of our investment team meetings. I had to remember the team, I said, look, go find a big piece of granite and a chisel. Let's take those core principles. I want them like Moses' Ten Commandments. Okay, we're going to chisel them and then we're going to put it up on the wall. And once we produce those, we put one on everyone's desk. I said, look, if we ever again veer from the core principles, the baseball bat.”

   2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

2. “He knew that once I got that, they were not going to be able to succeed, and they went away. And that was the bottom. And then we've had an incredible run since then.”

   2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

3. “And I got that done. And that I knew was the moment, the turning point. And I resolved my divorce and divorces get easier to resolve when things are going badly. I was able to resolve that. We settled the litigation. I was buying blocks of our stock in the market. I remember a day I bought a big block of stock in the market. And I get a call from Gordon Singer, who is Paul Singer's son, who runs their London part of their business. He's like, Bill, was that you buying that block? I said, yes. And he's like, fuck.”

   2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

4. “I did something I'd never done before. I talked all before about you don't borrow money. I borrowed money. And I borrowed $300 million from JPMorgan in the middle of this mess. And I give JPMorgan enormous credit in seeing through it. And also, you know, I had been a good client over a long period of time. And it's like, you know, it's a handshake bank. And they bet that I would succeed. And I took that money to buy enough stock in my public company that could prevent an activist from taking over, effectively buy control of our little public company.”

   2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

5. “And I had met Nary Oxman right around this time. And I had fallen completely in love with her. And I was envisioning a world where I was bankrupt, a judge found me guilty of whatever. He sent me off to jail. We're not that judge because he was a civil judge, but another judge sues the SEC Department of Justice. And I find myself in this incredible mess. And I decided I didn't want things to end that way”

   2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

6. “A firm called Elliott Associates, which is run by a guy named Paul Singer, took a big position in our public company that was the bulk of our capital. And they shorted all the stocks that we owned, and they went along, probably went long the short that we were short. And they were making a bet that we'd be forced to liquidate. And then they would make money on, you know, our public company was trading at a discount to what all the securities were with. So they bought the public company, they shorted the securities. And then they came to see us and to try to be activists and force us to liquidate. And that sort of... So I thought this was going to be, I envisioned an end where. The divorce takes all of my resources. The permanent capital vehicle ends up getting liquidated. And another activist in my industry puts me out of business.”

   2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

7. “We had a public company that owned about a third of our portfolio that was called our version of Berkshire Hathaway. I tried to learn from Mr. Buffett over time. And it was so to speak permanent capital. The beauty of, the problem with hedge funds is people can take their money out every quarter. What Buffet has is. Where people want to take their money out, they sell the stock, but the money stays. So we set up a similar structure in October of 2014. And then a year later, Valiant happens. And then a year later, we're in the middle of the mess. And we're still in the mess, you know, like by kind of mid-2017, we've got litigation underway. And another activist investor.”

   2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

8. “So now we lose a ton of money on Valiant. My ex wife and I were talking about separating, getting divorced. I put that on hold because I didn't want to make a decision in the middle of this crisis. Things just kick getting worse. We were also sued. When you lose a lot of money, we didn't get sued by our investors, but we got sued by a shareholder because when the stock price goes down, shareholders sue. We'd done nothing wrong other than make a big mistake. But so you have litigation. Your investors are taking their money out. I'm in the middle of a divorce. The divorce starts to proceed. My ex-wife's lawyer's expectations of what my net worth was about three times what it actually was. And it was going lower in the middle of this. And I remember the lawyers saying, look, Bill, you know, invest in your net worth at X, but don't worry. We only want a third. But X was 3x. So a third was 100%. And then I had litigation. And actually never before publicly disclosed, and I'll share it with you now.”

   2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

9. “Pretty grim. It's actually much worse than that because I had a lot of stuff going on personally as well. And these things tend to be correlated. The Valiant mistake came at a time where I was contemplating my marriage. And I was also, you know, the problem with the hedge fund business is when you get to a certain scale, the CEO becomes like the chief marketing officer of the business. And I'm really an investor as opposed to a marketing guy. But when you have investors who give you a few hundred million dollars, they want to see you once a year, Bill. I'd love to see you for an hour. But if you've got a couple hundred of those, you find yourself on a plane to the Middle East, to Asia flying around the country. This is presume. And that takes you away from the investment process. You have to delegate more. That was a contributor to the valiant mistake.”

   2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

10. “Most of the other losses were what I would call mark-to-market losses that were temporary. But many people go out of business because, as I mentioned before, large move in a price, if investors are redeeming or you have leverage, it can put you out of business. And if people assumed if we got put out of business, we'd have to sell everything or cover our short position. And that would make the losses even worse. So Wall Street is kind of ruthless.”

    2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

11. “And by the way, that loss catalyzed other, what I call mark-to-market losses. So very high profile, huge number, disastrous press. Then people said, okay, Bill's going to go out of business. So we're going to bet against everything he's doing. And we know this entire portfolio because we only own 10 things. And we were short, a company called Herbalife, very famously. We've only really shorted two companies. The first one, there's a book, the second one, there's a movie. We no longer short companies. But so people pushed up the price of Herbalife, which is when you're a short seller, that's catastrophic. I can explain that. And then they also shorted the other stocks that we owned. And so that valiant loss led to an overall more than 30% loss in the value of our portfolio. The valiant loss was real and was crystallized. We ended up selling the position, taking that long.”

    2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

12. “The company made a series of decisions that were disastrous. And then we stepped in to try to solve the problem. It was the first time I ever joined a board and the mess was much larger than I realized from the outside. And then I was kind of stuck. And it was very much a confidence sensitive strategy because they built their business by acquiring pharmaceutical assets. And they often issued stock when they acquired targets. And so once the market lost confidence in management, the stock price got crushed and it impaired their ability to continue to acquire low costs. And we lost $4 billion. How's that for a big”

    2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

13. “Biggest loss of my career as a company called Valiant Pharmaceuticals. We made an investment in business that didn't meet our core principles. The problem in the pharmaceutical industry, and there are many problems, as I've learned, is it's a very volatile business, right? It's based on drug discovery. It's based on predicting the future revenues of a drug before it goes off patent, lots of complexities. And we thought we had found a pharmaceutical company we could own because of a very unusual founder in the way he approached this business. It was a company where another activist was on the board of directors of the company and kind of governing and overseeing the day-to-day decisions. And we ended up making a passive investment in the company. And up until this point in time, we really didn't make passive investments.”

    2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

14. “It's beneficial to have people who have an economic interest in the business and they care only about the success of that company as opposed to someone who, if you think about the venture business, getting into the best deals is more important than any one deal. And you see cases where the boards go along with, in some sense, cases bad behavior on the part of management because they want a reputation for being kind of a founder-friendly director. That's kind of problematic. You don't have the same issue in public company boards.”

    2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

15. “So, private venture backed companies. The boards tend to be very small, could be a handful of the venture investors and management. They're often rarely independent directors. It's just not an ideal structure.”

    2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

16. “Governance really matters. Boards of directors really matter. Giving the shareholders the right to have input at least once a year on the structure of the governance of companies. Private venture back boards are also not ideal. I'm an active investor and venturers. And there are some complicated issues that emerge in private sort of venture stage companies where board members have somewhat divergent incentives from the long-term owners of a business. What you see a lot in venture boards is they're presided over generally by venture capital investors who are big investors in the company. And oftentimes it's more important to them to give the public perception that they're good directors so they get the next best deal. If they get a reputation for kind of taking on management too aggressively, word will get out in the small community of founders and they'll miss the next Google. And so their interests are not just in that particular company. That's also one of the...”

    2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

17. “I understand it owns a big chunk of OpenAI. And the investors own sort of a capped interest where their upside is capped and they don't have representation on the board. And I think that was a setup for a problem. And that's clearly what happened here.”

    2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

18. “That was an incredible story. Look, governance really matters and the governance structure of open AI, I think, leaves something to be desired. I think Sam's point was this, and maybe Musk, Elon Musk's point, originally set up as a nonprofit. And it reminds me, actually, I invested in a nonprofit run by a former Facebook founder where he was going to create a Facebook-like entity for nonprofits to promote goodness in the world. And the problem was he couldn't hire the talent he wanted because he couldn't grant stock options. He couldn't pay market salaries. And ultimately, he ended up selling the business to a for-profit. So it taught me for-profit solutions to problems are much better than nonprofits. And here you had kind of a blend, right? It was set up as a nonprofit. But I think they found the same thing. They couldn't hire the talent they wanted without having a for-profit subsidiary. But the nonprofit entity”

    2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

19. “Haven't read the often right article, but the good news is we are often right, and I say we because we're a team, a small team, but fortunately very successful one. So our batting average as investors is extremely high. And the good news is our record's totally public. You can see everything we've ever done. But the press doesn't generally write about the success stories. They write about the failures. And so we've had some epic failures, you know, big losses. Good news is they've been a tiny minority of the cases. Now, no one likes to lose money. It's even worse to lose other people's money. And I've done that occasionally. The good news is if you stuck with us, you've done very well over a long time.”

    2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

20. “Was. I mean, the stock's up about 10 times, and it's an industrial company, it's a railroad. It's not like a growth, like, it's not Google. So it's a great story. And the company's now run by a guy named Keith Creel. And Keith, it was Hunter's protege. And in many ways, he's actually better than Hunterth. He's doing an incredible job. And the sad part here is we did very well. We tripled our money over several years. And then I went through a very challenging period because of a couple of bad investments. And we had to sell our Canadian Pacific to raise capital, to pay for investors who are leaving. But we had another opportunity to buy it back the last couple of years. And so we're now, again, a major owner of the company. But had we held on to original stock Would have been epic, if you will”

    2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

21. “We got 99% of the boat, and they offered us a deal when they begged us to take a deal. They said, look, we'll resign tonight so that we don't have to come to the meeting tomorrow. That's how embarrassed they were. That was kind of an interesting one.”

    2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

22. “And we rented the largest hall in Canada and we put up a presentation walking through, you know, here's Canada National, Here's Canadian Pacific, here's what they said, here's what they did. And we had Hunter get up, who was this incredibly charismatic guy from Tennessee, an amazing, you know, he's like a lion, incredibly deep voice, unbelievable track record, incredibly respected guy. It's like getting Michael Jordan to come out of retirement. Come run the company. And Hunter was incredible, and other Paul Lau, other members of my team were super engaged. The board, Canadians are known to be nice. So one of the problems we had is shareholders would never tell management or the board that they were losing. It was not until the night before the meeting when the vote came in that management realized that they lost.”

    2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

23. “At one point, I wrote an email saying, Look, let's come to peace on this thing. But if we don't, you're really forcing my hand and we're going to have to rent the largest hall in Toronto and invite all the shareholders, and it's going to be embarrassing for management. And I made reference to some nuclear winter. Let's not have it be a nuclear winter. And they thought they'd embarrass me by releasing the email, but it only inspired us.”

    2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

24. “And that was the concern because you have to file your materials by a certain day. You got to put together a slate. We needed a big slate because we knew that we had to replace basically all the directors. And then one, I spoke to a guy who was one of the wealthiest guys in Canada who was on the board at one point in time. And he said, Bill, I have an idea for you. There's this woman, Rebecca McDonald's. Why don't you give her a call? And I called Rebecca and she was the first woman to take a company public in Canada as CEO. And she was a kind of anti-establishment, not afraid to take on anything kind of person. And I called her. We had a great conversation. And she was in the Dominican Republic at her house, and I flew down to see her. And she said, yeah, I'm all in. And actually, once we got her, that enabled us to get others. And then we put together our slate.”

    2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

25. “The key is we had to, one, come up with a group of directors who would be willing to step into a battle. And we didn't want a bunch of New York directors or even American directors. We wanted Canadians. The problem was this was the most iconic company in Canada. And we wanted high-profile people. So we talked to all the high-profile people in Canada. Every one of them would say, Bill, you're entirely right. This thing is the worst road. It needs to be fixed. But, you know, I see John at the club. I see him at the Toronto Club. I can't, you know, I can't do this, but you're totally right.”

    2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

26. “And we brought him to the first meeting, and they wouldn't even meet with him. And they certainly wouldn't consider hiring him. And that led us to a proxy contest.”

    2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

27. “Basically, you know, same country, same regions. Tracks weren't that far apart. But it was a really important company. And being on this board was like an honorary thing. And everyone on the board was an icon of Canada, the chairman of the Royal Bank of Canada, the head of the most important grain, privately held grain company. It was sort of an important collection of big-time Canadian executives. Here we were probably about 13 years ago. And still maybe 44-year-old from New York, not a Canadian, basically saying this is the worst run railroad in North America. And we bought 12% of the railroad at a really low price. And we brought with us to our first meeting the greatest railroader ever, a guy named Hunter Harrison, who had turned around Canadian National. So we'd like, okay, we've got a great asset. We've got the greatest railroad CEO of all time. He's come out of retirement to step in and run the railroad.”

    2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

28. “The Canadian Pacific proxy contest. So Canadian Pacific was considered the most iconic company in Canada. It literally built the country because the rail that got built over Canada is what united the various provinces into a country. And then over time, the railroad business is a pretty good business, they built a ton of hotels. They owned a lot of real estate. And it became this massive conglomerate. But it was horribly mismanaged for decades. By the time we got involved, it was by far the worst run railroad in North America. They had the lowest profit margins. They had the lowest growth rate. Every quarter management would make excuses, generally about the weather as to why they underperform versus. And there there's a direct competitor, company called Canadian National, Hazorel goes right across the country. Canadian Pacific would constantly be complaining about the weather.”

    2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

29. “At the end of the day, it's actually very good on a board to have someone. There are many examples over time and some handful of high profile ones where the board fought tooth and nail to keep the activists off the board. And then once the activist got on the board, they said, you know, the guy's not so bad after all, the shareholders voted them on. He's got some decent ideas. And let's all work together to have this work out. And so there are very few cases where after the contest, when the, and by the way, sometimes you have to replace the entire board. We've done that. But in most cases, you got a couple of seats on the board. And it's just, you know, you want to build a board comprised of diverse points of view. And that's how you get to the truth.”

    2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

30. “Of course, you know, there'll be articles about the dirty days where they would go through your trash and make sure that you're not sleeping around and things like this. But that's okay. I'm subject. I can survive extreme scrutiny because I've been through this for a long time.”

    2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

31. “Whereas mudslinging and the other side puts out false information about you. You have to respond. And they're spending the shareholders' money. So they have sort of unlimited resources. And you're spending your and your investors' money when you're a small firm, finite resources so they can outspend you, they can sue you, they can try to jigger the mechanics in such a way that you're going to lose. There's some unfortunate stuff that's happened in the past, you know, manipulative stuff.”

    2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

32. “Once shareholders could actually dislodge board members and they could lose their seats, and that's really the rise of shareholder activism, boards started taking their responsibilities much more seriously because directors are typically, you know, there are many cases they're retired CEOs. This is kind of how they're making a living in the later part of their career. They sit on four boards. They collect a million half dollars a year in director's fees. If they get thrown off the board by the shareholders, that's embarrassing, obviously. And it affects their ability to get on other boards. So, you know, again, incentives, as I said earlier, drive all human behavior. The incentives directors, they want to preserve their board seats. So if you have a director, now the director's on board serve in various roles. The most vulnerable ones are ones who, for example, chair a compensation committee. And if they put in a bad plan or they overpaid management, they're subject to attack by shareholders. But these contests are not dissimilar to political contests.”

    2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

33. “The battle comes when they don't want you going And a lot of that has to do with, I would say, pride, normal human kind of stuff. A lot of times a board of an underperforming company doesn't want to admit that they've underperformed. And boards of directors 20 years ago, when we started Pershing Square, were pretty cushy jobs. Sit on a board of a company. You play golf with the CEO at night golf courses. You make a few hundred thousand dollars a year to go to four meetings. It was kind of a rubber stamp world. where boards at the end of the day the CEO really ran the show.”

    2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

34. “The materials they sent to shareholders, those rules were written in a way that were very unfavorable and very difficult to get in the door. Those rules have been changed very recently where the company now has to include a candidate, really all the candidates in the materials they send to shareholders so the shareholders pick the best ones. When we applied or we applied, when we ran proxy contests in the past, that was not the case. And so you have to spend a lot of money, mostly mailing fees and all kinds of other legal and other expenses to let everyone know you're running, like running a political campaign. And then you've got to run around and meet with the big shareholders, fly around the country, explain your case to them. And then there's a shareholder meeting. And if you get a majority of the votes, you get on.”

    2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

35. “So a boar can always admit a member at any time in their discretion for a U.S. company. Maybe there's some jurisdiction where you need a shareholder vote, but in most cases, a board can vote on any director that they want. If the board doesn't invite you to the party, you have to apply to be a member in effect, and that process is called basically, is this the process of ultimately running a slate for a meeting where you propose a number of, any shareholder can propose to be on a board of a company if they own one share of stock in the business. And getting your name in the company's”

    2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

36. “Than we did. And they outsmarted us on that one in a way. So I said, okay, I'm going to go hire this guy the next time around.”

    2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

37. “Most of the world's knowledge has already been written somewhere. You just got to read the right books and also had great lawyers, built up some great relationships. We work with Salvin and Cromwell. And the lawyer there named Joe Shanker, who I met earlier in my career. Pershing score is actually my second act in the hedge fund business. I started a fund called Gotham Partners when I was 26. One of my early investments was a company called Rockefeller Center Properties that was heading for bankruptcy. And the lawyer on the other side representing Goldman Sachs was a guy named Joe Shenker. So he was like an obvious phone call because he had yet another real estate bankruptcy. And that one we did very well, but I missed the big opportunity. And I suffered severe psychological torture every time I walked by Rockford Center because we could have made, we knew more about that property than anyone else, but I knew less about deal making and didn't have the resources. And I was 28 years old or 27. And they hired a better lawyer.”

    2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

38. “And I learned. And sometimes it's very helpful not to be a practitioner, an expert in something, because you get used to the conventional wisdom. And so we just, you know, abstractly read the step back and look at the facts. And it was just a really interesting setup for one of the best investments we ever made.”

    2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

39. “The same thing. You just do the work. We got a lot of pushback from our investors, actually, because we had never invested in a bankrupt company before. It's a field called distressed investing. And they're dedicated distressed investors. And we weren't considered one of them. So Bill, what are you doing? You don't know anything about distressed investing. You don't know anything about bankruptcy investing But I can read.”

    2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

40. “I invest all of my money in the company. And he was a New York City taxi driver, and he invested like fifty thousand dollars or something like this at sixty cents a share. And he was still holding it. And he went into retirement and he made, you know, 50 times his money. And, you know, those are the moments that you feel pretty good about investing.”

    2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

41. “I got a lot nice. Thank you notes, which you get on occasion in this business, believe it or not. And then one day I get a voicemail. This is when there was something called voicemail. Probably a few years later. And it's a guy with a very thick Jamaican accent. A message for Bill Ackman. So I return all my calls, call the guy back. Like, hi, it's Bill Ackman. I'm just returning your call. He says, Oh, Mr. Ackman. Thank you so much for calling me. I said, oh, how can I help? He says, I wanted to thank you. I said, what do you mean? He said, I saw you on CNBC a couple years ago, and you were talking about this general growth. And the stock, I said, where was the stock at the time? He said, at 60 cents or something like this. And I bought a lot of stock. I'm like, well, how much did you invest?”

    2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

42. “And the shareholders kept the vast majority of their investment. All the creditors got their face amount of their investment, par plus a crude interest. And it was a great outcome. All the employees kept their jobs. The mall stayed open. There was no liquidation in the bankruptcy system worked the way it should. I was in court all the time. And the first meeting with the judge, the judge was like, look, this would never have happened were it not for a financial crisis. And once the judge said, I knew we were going to be fine. Because the company really not done anything fundamentally wrong, maybe a little too aggressive in how they borrowed money. And stock went from 34 cents to $31 a share. And actually, fun little anecdote. We made a lot of people a lot of money who followed us into it.”

    2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

43. “Next thing you know, I'm invited to on the board of the company, and the board is talking about the old equity of general growth. Old equity is what you talk about, the shareholders are getting wiped out. I said, no, no, no. This board represents the current equity of the company. I'm a major shareholder. John's a major shareholder. There's plenty of asset value here. This company should be able to restructure for the benefit of shareholders. Led a restructuring for the benefic shareholders. And it took, let's say, eight months. And the company emerged from Chapter 11. We made an incremental investment into the company.”

    2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

44. “Kind of met her in a social context when I was like 25 or something. And she said, Look, I'm really glad to see you here. And if there's anything I can do to help you, call me. I said, sure. We kept trying to get on the board of the company. They wouldn't invite us on. Couldn't really run a proxy contest, you know, not with a company going bankrupt. And their advisors actually were Goldman Sachs, and they're like, you don't want the fox in the henhouse. And they were listening to their advisors. So I called Maddie up and I said, Maddie, I need to get on the board of the company to help. She says, You know what? I will call my cousin and I'll get a done Like, you know, she calls back a few hours later. You'll be going on to the board. I don't know what she said.”

    2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

45. “And I was a shareholder activist four years into Pershing Square and no one had any idea what we were doing. They thought we were crazy. Every day we go into the market and we'd buy this penny stock and we'd file what's called a 13D every 1% increase in our stake. And people just thought we were crazy. We're buying stock in a company that's going to go bankrupt. Bill, you're going to lose all your money. Run. And I said, well, bankruptcy code says that it was more asset value than liabilities. We should be fine. And the key moment, if you're looking for fun moments, is there's a woman named Maddie Buxbaum, who is from the Buxbaum family, and her cousin, John, was chairman of the board, CEO of the company. And I said, as she calls me after we disclose our stake in the company, she's like, Billy Ackman, I'm really glad to see you here. And I met her, like, I don't think it was a date, but I...”

    2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

46. “And that was the bet we made. And so we stepped into the market and we bought 25% of the company in the open market. We had to pay up. It started at 34 cents. I think that we're $300 million. So it was at $100 million value. By the time we were done, we paid it an average of $60 million for 25% of the business, so about $240 million for the equity of the company. And then we had to get on the board to convince the director of the right thing to do. And the board was in complete panic, didn't know what to do, spending a ton of money on advisors.”

    2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

47. “Examine the bankruptcy code. It's precisely designed for a situation like this where it's kind of this resting place you can go to kind of restructure your business. Now the problem was that every other company that had gone bankrupt, the shareholders got wiped out. And so the market seeing every previous example, the shareholders got wiped out. The assumption is the stock is going to go to zero. But that's not what the bankruptcy code says. What the bankruptcy code says is that the value gets apportioned based on value. And if you could prove to a judge that there was the assets worth more than a liability, then the shareholders actually get to keep their investment in the company.”

    2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

48. “Owned, I think about 25% of the company, and they had a $5 billion of stock that was worth $25 billion or something by the time we bought a stake in the business. And what interested me was I thought the assets were worth substantially more than the liabilities. The company had $27 billion of debt and had $100 million value of the equity down from like $20 billion. And one, that's sort of an interesting place to start with a stock down 99%. But the fundamental drivers of the mall business are occupancy, how occupied are the malls, occupancy was up year on year between 07 and 2008, interestingly. Net operating income, which is kind of a measure of cash flow from the malls, that was up year on year. So kind of the underlying fundamentals were doing fine. The only problem they had is they had billions of dollars of debt that they had to repay. They couldn't repay. And if you kind of...”

    2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

49. “Again, we talk about disruption. Malls have been disrupted in many ways. And general growth stock, the company, the CFO in particular, was very aggressive in the way that he borrowed money. And he borrowed money from a kind of Wall Street, not long-term mortgages, but generally relatively short-term mortgages. It was pretty aggressive as the value went up. He would borrow more and more against the assets. And that helped the short-term results of the business. The problem was during the financial crisis, the market for what's called CMBS, commercial mortgage-backed securities basically shut. And the company, because its debt was relatively short-term, had a lot of big maturities coming up that they had no ability to refinance. And the market said, oh my God, the lenders are going to foreclose and the shareholders going to get wiped, the company's going to go bankrupt, they're going to get wiped out. The stock went from $63 a share to 34 cents. And there was a family, the bucksbound family.”

    2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source

50. “Sure. So this was at the time of the financial crisis circa november two thousand eight. What real estate's always been a kind of sector that I've been interested in. I began my career in the real estate business working for my dad, actually, ranging mortgages for real estate developers. So I have kind of deep ties and interest in the business. And general growth was the second largest shopping mall company in the country. Simon Properties, many people have heard of. General growth was number two. They own some of the best malls in the country. And at that time, people thought of shopping malls as these non-disruptible things.”

    2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source