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Who is Bill Ackman?
While many investors were nursing losses due to the coronavirus sell off, hedge fund manager Bill Ackman was raking in billions. You may have seen his warning on the 27th March 2020 in an interview with CNBC where he warned that ‘hell is coming.’
His hedge fund Pershing Square Capital sold-off some of their holdings including a large position in Starbucks and placed a $27 million hedge to protect his $6.5 billion portfolio. For those who don’t know, a hedge is a way to protect yourself against financial loss. According to the Financial Times, Ackman bought credit protection on high yielding bonds to protect his portfolio that resulted in a profit of $2.6 billion. Ackman admitted that he considered selling off all his positions prior to placing the successful hedge. Let’s see how it all started for Ackman.
William Ackman was born in Chappaqua, a wealthy New York suburb in 1951. His father, Lawrence Ackman owned a commercial real estate financing firm Ackman Ziff Real Estate and his mother Ronnie Ackman served on the board of New York’s Lincoln Centre. Ackman is known for his arrogance betting his father $2000 he would score 800 in the SATs. The $2000 was all the money Ackman had saved up from household chores and his Bar Mitzvah. He scored 780, but his father dropped the bet. He later admitted ‘I was a bit of a cocky kid.’ More on this later.
After attending Horace Greeley High School, Ackman graduated from Harvard in 1988 with a degree in Social Studies and in 1992 received an MBA from Harvard Business school.
After graduating in 1992, Ackman read the Intelligent Investor by renowned value investor Benjamin Graham. Graham is also credited with teaching Warren Buffet his strategies. It was this book that prompted Ackman enter the investment world and found investment firm Gotham Partners with fellow Harvard Graduate David Berkowitz. He started the hedge fund with $250,000 from Marty Peretz, is professor at Harvard.
By 1998, Gotham had assets of $500 million under management. However, in 2002 Gotham got into hot water when the New York State Attorney General investigated the company’s trading practices. Gothan had written a positive…
