Ackman Says He Is Done With Activist Short Selling
‘We have permanently retired from this line of work,’ he says in Pershing Square’s annual report, noting it makes jobs easier, more fun and improves quality of life
William Ackman said he is saying goodbye to the activist short-selling game.
Mr. Ackman, the founder and chief executive of Pershing Square Capital Management, which previously engaged in a yearslong battle against Herbalife Nutrition Ltd., said his fund will be less vocal about its positions and more cordial with the companies he invests in.
“Despite our limited participation in this investment strategy, it has generated enormous media attention for Pershing Square,” Mr. Ackman said in his firm’s annual report. “In addition to massive amounts of media hits, our two short activist investments managed to inspire a book and a movie.”
“Fortunately for all of us, and as importantly for our reputation as a supportive constructive owner, we have permanently retired from this line of work,” Mr. Ackman said.
Mr. Ackman made his name as a corporate rabble-rouser. Pershing Square at one point was one of the biggest activist funds in the world before suffering four straight years of losses amid poor wagers on drugmaker Valeant and supplement marketer Herbalife.
Pershing Square is now back near its peak size again. Its publicly traded fund—a decent proxy for the hedge fund that manages the money of Mr. Ackman, his employees and institutional investors—gained 70% in 2020 and 27% last year.
Mr. Ackman said his firm’s interactions with companies over the past five years have been “cordial, constructive, and productive,” a stance that he said he intends to maintain.
“It makes our job easier and more fun, and our quality of life better,” Mr. Ackman said. “So, if it is helpful to call this quieter approach Pershing Square 3.0, let it hereby be so anointed.”
The comments in Pershing Square’s annual letter come after Mr. Ackman previously signaled he would be taking a quieter approach to investing. In 2019, Mr. Ackman told investors he was staying away from companies that were hard to understand. He also said he was returning to the basics of investment analysis and would attempt to stay out of the media spotlight.
It is a contrast from the five-year, $1 billion short bet he spearheaded years ago against Herbalife, one that pegged him against activist investor Carl Icahn who had built a stake in the nutritional products company. At one point they got into a 30-minute argument on live television, in which Mr. Ackman questioned Mr. Icahn’s memory and Mr. Icahn called him a loser.
Short sellers borrow shares and sell them, with a plan to repurchase them at lower prices and pocket the difference.
Mr. Ackman largely exited his Herbalife position in 2018, and likely lost hundreds of millions of dollars. He also suffered a roughly $4 billion loss in his highly publicized investment in drug company Valeant.
“We exited because we believed that the capital could better be deployed in other opportunities, particularly when one considered the opportunity cost of our time,” Mr. Ackman said in the letter. “The aphorism that you ‘don’t need to make it back the way you lost it’ has always resonated with us.”
Mr. Ackman’s move comes as there were 126 activist short-seller campaigns last year, according to research firm Insightia, the fewest since the firm began tracking the data in 2013, and down from 156 in 2020 and 170 in the year prior to that.
Pershing Square has recently taken positions in companies such as Netflix Inc. and Canadian Pacific Railway. In its annual letter, Pershing said it was confident in the longer-term outlook for Netflix but cautioned it expected near-term variability in the company’s results.
About 30% of Pershing Square’s equity portfolio is invested in music and video streaming, including Universal Music Group NV, the firm said, while 26% is invested in restaurant companies such as Domino’s Pizza Inc. and Chipotle Mexican Grill Inc.
Pershing said 15% of its equity portfolio is invested in home improvement retailer Lowe’s Cos.
“We expect that each of these companies will grow their revenues and profitability over the long term, regardless of recent events and the various other challenges that the world will face over the short, intermediate, and long-term,” Mr. Ackman said.