Part One: The Rise of the "Activist" Investor

Robert explains the growth of "activist investors" through the career of one specific guy who also happens to be annoying as hell.

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Episode Transcript

Speaker 1 (00:01):
Also media, welcome back to Behind the Bastards, the podcast that.

Speaker 2 (00:08):
We're all listening to right now. You're listening to it
as a recorded thing that's been turned into an ear
product for your ear rear gestion, your digestion. And I'm
listening to it because I can't help but listen to
my own voice. It's a curse here to be cursed
with me on this glorious week. Obviously, my producer Sophie,

(00:32):
and the great Kim Kelly, author of the book Fight
Like Hell. Kim, you are a wonderful journalist. You focus
a lot on the labor movement, and you have a
new special edition of your book coming out soon, don't you.
I do.

Speaker 3 (00:45):
It just came out the Young Reader's edition of Fight
Like Hell, which is called Fight to Win Heroes of
American Labor. I thought it'd be really funny to call
it fight Like Heck, but they did not agree with me.

Speaker 2 (00:55):
No, No, that is a pretty good bit.

Speaker 3 (00:58):
So it's fight to Win. But it's is out. It's
like really cheap. It's in paperback. It's summer reading time.
Tell your teacher friends, tell your little radical children. It's
you know, it's out.

Speaker 2 (01:08):
I like Fight Like heck, in the summertime when the
weather is hot, you got labor, You got labor on
your mind?

Speaker 3 (01:14):
Yeah? Always.

Speaker 2 (01:21):
You know who else is a hero of American labor? Kill?

Speaker 1 (01:24):
Oh no, no, I'm kind of the opposite.

Speaker 3 (01:28):
I'm so curious about where you're gonna hit me with. Man.

Speaker 2 (01:31):
Yeah, you know, we we used to back when the
show was newer and we were like more on the
fly with everything. There was a degree to which like
I'd be like, Okay, I definitely am doing this topic
this week. Sophie would rack her brain try to figure out, like, Okay,
what guests you know is the is the like should
we pair with this? And we still do that sometimes,
but also just because of the size of the show,

(01:53):
We're booked so far in advance that sometimes I'm like, oh, okay,
we'll see how this topic goes with this guest. This
wasn't something I would have like artificially done. But this
pairing of topic and guest is exactly like it's it's
it's perfect because this week we are talking about activist
investors slash activist shareholders. Oh boy, specifically one of these guys.

(02:17):
We're talking about one specific kind of these guys who's
he's sort of the avatar of the activist shareholder, right,
And if do you know what that term means, Cam,
I'm sure you do.

Speaker 3 (02:29):
Activist show it's I mean it sounds sort of self explanatory, right,
like shareholder with a lot of fucking opinions.

Speaker 2 (02:36):
Yeah, yeah, basically right, like it's a it's it's a
it's someone or a group, because these are often like
a term for like a hedge fund. Basically will be
an activist shareholder in a situation where they're they're going
into a company and they very suddenly buy up a
sizable chunk of that business enough that they're able to
put somebody on the board or maybe even force the
company to take a new CEO. And they're called activist

(02:59):
because this in individual or this group that buys their
way into having influence in a company this way does
so because they have some sort of plan. Right. Generally,
they see, Okay, this company's someone's making these really obvious mistakes,
and I think if I fix just this couple of mistakes,
the company will become rapidly more valuable, and then we
can make a really quick profit, right because we buy

(03:22):
in when the stocks twenty dollars a share, we fix
a bunch of problems, the stock goes up to thirty
bucks a share, we cash out, and we make a
fuckload of money. Right. That's kind of like the most
basic version of what this is. Right, and this is
this is not like a super new thing, but the
term is on the newer end of things, right to

(03:45):
some extent, this is a term we've created to kind
of replace the old term that we were using for
people who were doing similar things. And the theory is
is that like an activist investor or an activist shareholder
should like like the fact that this exists is a
good thing, right, Like, that's the theory that because these
these individuals or groups that are quote unquote the activist

(04:08):
investors make companies stronger, right, Like, they go in and
they fix these kind of like low hanging fruit problems.
Sometimes they do much more extensive fixes, and the company
comes out the other side of it more profitable. Right,
that's the idea. That's how this is supposed to work.

Speaker 1 (04:23):
Right. This term almost trending like a few years back
when with the Disney when like what's his name Peltz
tried to take over the Disney board and do a
hostile takeover, and then they were calling him an activist investor,
and I was like, yeah, kind of just sounds like
a billionaire of it's like trying to get richer. Like
I don't really understand the activist part of it. Your

(04:44):
explanation now makes makes more sense. I didn't look into
it enough because I don't care about this man.

Speaker 2 (04:49):
But you know, they're literally activist because they literally have
a change or changes they want.

Speaker 3 (04:54):
No, it literally makes sense.

Speaker 2 (04:55):
Yeah, yeah, yeah.

Speaker 1 (04:57):
Interesting.

Speaker 2 (04:58):
And this again, this is a term that's kind of
become more common since the nineties, but there's a way
in which it's it's kind of an evolution of the
old corporate raider. And in a lot of ways, some
people will say that basically the term activist investor is
people plastering over the term corporate raider because that has
a lot of bad connotations. But if you remember some

(05:20):
episodes on Jack Welch, right, like the former Monster CEO
Jack Welch, like that, these are the guys who in
like the eighties, they got really famous for, like they'd
come in and they'd buy up a company or buy
their way into a company that was struggling or even
that just like wasn't as profitable as they thought it
should be, and then they would start selling off assets,

(05:41):
spinning off you know, whatever big business unit they could
and do a separate company to do an IPO to
get quick cash. Original company to the bone, exactly, exactly.

Speaker 3 (05:50):
Oh, I'm a vice refugee, like so many other journalists
out here, I remember how that works.

Speaker 2 (05:55):
At a certain point, we went from calling these people
corporate raiders to calling them activist investors. Now, theoretically it's
because they got nice. The activist investors are nicer than
corporate raiders. They're trying to leave something better behind, and
that's kind of the There's a bunch of different studies,
all of which are kind of similarly. I don't trust

(06:16):
the language that they use to sort of like uh
uh make the claims that they're making. But there's a
number of studies that will all argue, like, no, these
leave activist shareholders leave, you know. Afterwards, the companies that
we're working on much stronger. There's very different from corporate raiders.
They're not just laying off tons of people and like
causing you know, spinning off business units and doing all
of this, causing all of this chaos that makes them

(06:39):
personally make a profit and fux up a bunch of
people's lives. They're also creating stronger companies, and that's extremely
debatable whether or not that's a real change or if
people just started calling corporate raiders activist investors. Like, that's
kind of a big, big debate, so to speak. And
I think I there's degree which I think we started

(07:01):
using the term activist investor because in the nineties, corporate
raiders were like the bad guy in half of the movie, Like,
if you remember the fucking movie Hook, right, Robin Williams's
character is doing that job. He's like a corporate raider.
And the whole point is that the film compares that
to piracy, because like Peter Pitty, he's become a bad
person as he's entered the real world. So they were like,

(07:24):
we gotta get better pr Like there were the bad
guys in every movie in the mid nineties. We have
to like make a change.

Speaker 3 (07:31):
Everyone saw all the space they were not rooting for
the momps.

Speaker 2 (07:35):
Yeah, yeah, they're not, Like it just wasn't a cool
thing to be anymore. Right, So come the late nineties,
in the Internet age, the business guys don't want to
be called raiders anymore. So the sexy thing is to
find yourself at a stressed business and do like the business
equivalent of like renovate, with a goal of unlocking value
by getting rid of old failed management and pivoting away
from outdated business practices. And again, the reality is they're

(07:57):
still usually doing the same thing. They're like selling all off,
we're spinning off assets and conducting mass layoffs. But it
sounds unlocking value sounds a lot better in a press release. Yeah,
unlocking value.

Speaker 3 (08:11):
That just sounds. Man, where did the Where's like the
evil school where people learn to say like evil pr school?
It's probably not journalism. They're somewhere they're learning these these
linguistic tricks.

Speaker 2 (08:24):
I wonder, Kim, because you know, like in our field
of work, periodically you're writing an article, your editor will
be like, oh, that was a great turn of phrase.
You did a really good job here. Maybe you'll even
like share it around and like a work slack if
like somebody, you know, one of your colleagues puts out
an article and you're really proud of it and everyone's like, wow,
that look at that. That was a really good sir,
That paragraph was really beautiful. That phrase you used was perfect.

(08:45):
I wonder if there's that kind of thing for like
monsters where they're like, holy shit, unlocking value. That's a
fucking mike. You nailed it, man, dude.

Speaker 3 (08:54):
I think that's just what LinkedIn is, Like, that's where
this is happening. Yeah, that's their that's their slack.

Speaker 2 (08:59):
Yeah, that's that's today the workshop for it, right. Yeah,
that's out in public where they where they pride each
other on coming up with new ghoulish ways to talk
about destroying people's lives. It's awesome.

Speaker 3 (09:11):
Yeah, it's you know, I love it. You love to
see it. It's great.

Speaker 2 (09:14):
And for a nice society idea of how like rapidly
activist investors take over and kind of like pushing over that,
it's so great. In nineteen ninety eight, according to Star
Tribune reporter Chris Series, in nineteen ninety eight, fewer than
twenty hedge funds in the US described themselves as activists.
The first of these guys got so much good pr

(09:36):
though and made so much money that the idea spread rapidly,
and by two thousand and eight, there were more than
two hundred hedge funds that described themselves as activists. Today,
more than forty five percent of companies on the S
and P five hundred have been targeted by activist investors
in one former and activist shareholders activist hedge funds and
one former another and one study I found suggested that
about sixty percent of the time when an activist shareholder

(09:59):
like buys their way into a company, businesses make changes
in response to demands from that activist shareholder or investor. Now,
why does this all matter? Right now? This matters because
while a lot of these activists sometimes they do like
make like, some of these things do work out. We're
talking about a couple of these cases where the company
does wind up stronger, where it was a situation where

(10:21):
some smart guy was like, oh, these people are making
a really dumb one, really dumb mistake, and if I
buy my way and enforce them to stop, they'll be
worth more. That does happen sometimes, but it's at least
as common for these activist investors to just kind of
slash and burn a functioning business for quick money. And

(10:41):
the problem is this whole thing, this idea of being
seen as an activist investor, is really appealing to a
specific sort of narcissistic tech guy who number one has
an infinite pile of money, and number two is pretty
sure he knows how to do everything better than the
people currently doing it. Right, Like you, we think, can
we think of any of those guys in the world

(11:02):
right now who things up recently?

Speaker 3 (11:05):
Again, they're just they're pumping them out in factory somewhere. Yeah.

Speaker 2 (11:09):
Yeah, And it's a deep, deep sickness that runs through
our society at this point. So obviously the guys who
think this way, as we've all seen living through this
in the United States, are wrong a huge percentage of
the time. Again, you can find a suspicious number of
studies that will show activist investing is good, but it's
always because, like well, if you average it out on
the long term overall, there's like a technically a long

(11:30):
term gains and stock price for a majority of these companies.
And that kind of leaves out the fact that looking
at it that way is a very incomplete measure of success.
Speaking of averages makes this process sound like less of
a roll of the dice than it is for people
in the companies being affected by these kind of takeovers.
And I'm going to quote now from a twenty fifteen

(11:51):
study by David Benoaugh and Vipl Munga published by The
Wall Street Journal. The Wall Street Journal examined that question
with a comprehensive look at what happens to large US
companies after an activist arrives. The conclusion activism often improves
the company's operational results, and nearly as often doesn't. Slightly
more than half or thirty eight of the situations in
the journal study led to better shareholder returns than industry

(12:12):
peers for the period studied after the activists went public.
In the end, the median campaign beat peers by just
under five percentage points. At the same time, companies in
the study slightly underperformed industry peers in terms of growth
and earnings and slightly beat them on profit margins. As
for capital, spending is a percent of operating cash flow
seen as a measure of reinvestment. Of the forty eight
companies in the study with good data for that measure,

(12:34):
twenty five raised spending or left it at the same level,
while twenty three lowered it. In other words, it's a
flip of the coin, like there's it's certainly there's not
strong evidence that this is like a good thing, or
that this usually works out, and when it does, it's
just because like, well there's a long term stock price
benefit that doesn't say anything about what life is like

(12:55):
for the workers, you know, No.

Speaker 3 (12:57):
All those benefits going not to the people that got
laid off.

Speaker 2 (13:01):
Yeah, exactly, this weaponizing math. It also leaves out the
fact that, like, there's some situations that go really well,
and there's some situations that go fucking catastrophically wrong because
some activists sticks their proverbial money dick into a situation
that they don't understand and makes everyone's life worse. And

(13:21):
probably no single man better embodies that whole picture of
the activist investor, both as success and as fuck up.
That Bill Ackman, that's who we're talking about really this week.

Speaker 3 (13:33):
Everybody, Oh Man, the Twitter guy, the Twitter guy.

Speaker 2 (13:37):
That's right, everybody.

Speaker 3 (13:40):
That'll be his legacy being a dickhead on Twitter.

Speaker 2 (13:42):
I needed to dress this up a little bit. I
wanted to do just an episode in Bill Ackman because
he's a huge dick and he's really annoying, right, and
I think he he was kind of wavering as to
whether or not I thought he was like a full bastard,
like somebody really deserved, like someone who's bad enough, not
just bad, but entertainingly bad, and to be covered, you know,
the way we do on the show. And one of

(14:04):
the things that kept me from doing it is that
Bill is incredibly online and super petty, and I just
don't want to deal with a fucking social media fight
with this fucking weirdo billionaire freak. It's just not worth
the hassle. So I figured what I'll do is all
broaden the scope of the episodes a little bit to
make this be about activist investors, and I'll try and

(14:24):
keep Bill's name out of the title so that if
he does like a find and replace thing, he won't
notice it immediately and I won't have to deal with
an annoying guy on the.

Speaker 3 (14:32):
Internet or me, oh my god, he've ruined my life
from right right.

Speaker 2 (14:38):
So we'll see. We'll see how long it takes Billali,
I think we're probably well under his threshold of giving
a fuck anytime.

Speaker 3 (14:46):
Do you think he googles himself?

Speaker 2 (14:49):
He must have people from that probably. I think he
does it himself a lot. But also I think he's
got a lot of fires to put out, so I
don't know that. I think we're high up on his
his list. We'll see, we'll see if we kind of
slide through the flack here or if we wind up
having to deal with an annoying, fucking guy on social media.
It's not the worst thing in the world. I just
wanted to make it a little bit less obvious that

(15:11):
we're just doing Bill Ackman episodes.

Speaker 3 (15:13):
Yeah right, I mean it worked with the whole obslification
of activist investors. It's an episode about them, not this
round specific gun.

Speaker 2 (15:24):
Yeah, yeah, not this one specific guy who's the most
annoying of the breed. Yes. William Albert Ackman was born
on May eleventh, nineteen sixty six, in Chappaqua, New York.
I think that's how it said, something like Hillaryville, probably
doing it a little wrong, Yeah, Hillaryville. Right, it's a
little hamlet about thirty miles north of the big city,

(15:45):
and today it's got about twenty five hundred and twenty
six hundred people live there. You know, it's not a
big town. But it also the fact that Bill grows
up here doesn't mean that he's like a small town
boy growing up close to the land. Right, This is this,
This is an affluent area that he grows up in,
and he grows up very affluent. Right, his family is
very comfortable. From the jump, Chris Series describes Bill as

(16:09):
coming up quote, the younger of two children, born to
a family steeped in the commercial real estate business. His father,
Lawrence Ackman, is chairman of Ackman Zif real Estate Group,
a New York based real estate financing firm. So he's
got not just does he come from like money, but
like to call dad's Bill's dad, Larry, a major figure

(16:29):
in finance, will be putting it like mildly. Larry is
a significant guy, right. He himself is the son of
Hermann Ackman, who is the founding partner of the real
estate group that makes the Acmens rich. So Bill is
like a third generation rich guy. Right. His grandpa starts
this real estate company that his dad runs, and they

(16:50):
are both very successful doing this. Larry becomes president of
his dad's business in nineteen sixty eight, two years after
Bill was born. He was made CEO in nineteen seventy seven,
when Bill would have been ten or eleven years old.
Simon Ziff, Larry's protege, describes Bill's father this way. He
lived his deals and knew them better than his clients
often did. He was an animal and never failed, so

(17:13):
he might see like kind of take from this. Bill
grows up with like something to He's going to grow
up with something to prove to his dad, right, his
dad is a like a legendary figure. And you can
kind of tell that Bill grows up in awe of
his father a little bit. Is sort of my interpretation
of things, if that makes sense.

Speaker 3 (17:32):
Family business, yeah, family business of exploitation and making money.
Like you can't you can't fuck it up. You can't
be the ekman that ruins the whole line, that sells
the bloodline.

Speaker 2 (17:43):
And you also, you know, mom, my dad, my grandpa,
Like my dad made money in my day in my
grandpa's business. Right, So my dad is a NEPO baby.
I'm a NEPO baby, but I don't necessarily want to
be a NEPO baby in the same industry, right, Maybe
I want to like break out and try to prove
that I'm like, you know, special too, that like I'm

(18:04):
not just a rich kid, you know, I really see
a lot of that in Bill's upbringing.

Speaker 3 (18:10):
Sure, yeah, a little rich the classic.

Speaker 2 (18:14):
Yeah yeah, yeah. And now By all accounts, Bill is
really close to his dad. He and Larry have a
good relationship. Basically, you know, Larry's the entire remainder of
Larry's life. I think he dies in twenty twenty two.
And Larry talks like a lot of Bill's childhood. He's
hearing stories from his dad about their family and about
like his dad's dad and their great grandfather, who is

(18:38):
like Abraham Ackman, the first member of the family to
move to America. He steeped in these stories about like
how hard his family members his ancestors had to work
to like become rich and successful. Per an article in Forward,
which is the website of a Jewish nonprofit, Here's how
Larry tells that story. My grandfather came to this country
at eighteen. In eighteen eighty seven, he left Russia to

(18:59):
avoid constr ruption into the Czar's Army, a twenty five
year service. My father used a little cart and rode
across the border on a horse to Austria. He learned
to sew and took a boat to the castle garden
in eighteen eighty seven, right like that's the we were
going to be conscripted to the Tsar's army and we
fled the country and my dad learned how to sew,
and he gradually made his way into the United States

(19:20):
where he started a business. You know, that's like the
family legend of the story, right, and it is a
very classic like immigrant story. Now, that article I quoted
from and forward was written about an event this like
Big Dinner that Bill and his dad Larry hosted in
twenty fifteen at the Center for Jewish History in New
York City, and based on some of the things Larry

(19:41):
said that night, because they talk a lot about their
their you know, Bill's upbringing, and Larry talks a lot
about the family. So this is a lot of my
information on kind of what I assume Bill is raised hearing.
I think these stories that Larry is telling this group
about his family have are a lot in part because
they say that this is like the kind of shit
that I was selling Bill when he was growing up, right,
I raised him on these stories. Here's a quote from

(20:04):
the Pershing Square Philanthropy website. Bill's grandfather, Herman, initially tried
to make a career as a songwriter, peddaling his tunes
on ten pan Alley said Larry he'd get one hundred
dollars a song and one hundred and fifty for a
great song, and he sold maybe ten or fifteen songs
in about five years until he could see this is
no way to make a living and went into his
uncle's real estate business services business based on one hundred

(20:25):
and forty ninth Street in the Bronx. His biggest hit,
put Your Arms Where They Belong, sold seven hundred and
fifty thousand records, So it's very good. That's weird. I
didn't expect that. Yeah, so his dad's dad does in between,
like so their great grandfather moves to the country, starts
a close factory. Grandfather grows up in it, but doesn't

(20:48):
want to do that business for himself, becomes a songwriter,
is weirdly successful for a while, and then gives that
up to get into the real estate business. And I
did find that song put your Arms for him because
I just sort of like it's not but I don't
want to. I was considering playing it because I think
it isn't very good. But the only version of it

(21:10):
I have is a recent recording from a lovely YouTube
account called sheet music Singer, And it's just like a
nice person who performs old sheet music, right, so you
can hear all these like old songs that the original
radio recordings probably don't still exist for So I don't
want to like shit. I don't want to shit on
that person's musical stylings. They're just trying to fulfill a
useful historical role. It's not their fault if the song

(21:32):
is bad. But the song is bad, right uh. And
I wasn't gonna spend a lot of time on it
until I saw words and music whereby lou Davis, Henry Santley,
and Herman Ackman. In other words, three dudes wrote this
song together. And now I got to read to you
how the song opens. I dreamed alone till Arm's unknown

(21:53):
embraced me and held me so sweetly, thrilled by your touch.
They taught me much, and now I'm yours completely. They
brought me love in a night twas a love that
is cold, love its sight, And I don't know how
you interpret that, but I read this as three men
that had a beautiful experience together and wrote a song
about it. And I think that's nice. I think that's lovely.

(22:15):
Brought me love in a night, Love in a night.

Speaker 3 (22:18):
I mean close working relationship. Lot of late nice. I
mean I really thought of ghosts, but I mean I
had to listen to more heavy metal and Tim Pannelly classics.

Speaker 2 (22:27):
So yeah, embraced me and helped me so sweetly. I
dreamed alone till arms unknown embraced me. That couldn't be
a ghosts, right, like maybe it's baby they got fucked
by ghosts.

Speaker 3 (22:37):
Scubas vibes like you don't know what's going.

Speaker 2 (22:39):
On back then, that's right either way, I thought it
was nice.

Speaker 3 (22:43):
It is nice, beautiful expression. You know, you gotta express
yourself again. Men, loneliness epidemic. You can't keep it all
fucked up.

Speaker 2 (22:50):
That's right. Put it out there, make it so much
spa instead of continuing to write beautiful songs about making
love to ghosts.

Speaker 3 (22:58):
Uh.

Speaker 2 (22:58):
The patriarch of the Actmen family starts a real estate
business and gets rich as shit, and we all have
to deal with Bill Ackman now as a result, which
is a bummer.

Speaker 3 (23:06):
What could have been? You know, he could have been
part of a family.

Speaker 2 (23:10):
He could have he could have he could have been
the Bob Dylan of I don't Bob, I guess at Dylan,
I don't know what he could have been Yeah, Bromp's
real estate Bob Dylan. So during that speech that I've
quoted from, Larry also talked about how when Bill was
a kid, he worked hard to drill good business ethics
into his son because his own father did the same

(23:31):
to him. This is what Larry recalled of, you know,
his own father, and how he was raised. Dad came
home and told stories about interesting clients worthy of a documentary.
He recalled Sarah Korin, an immigrant from Palestine and an
entrepreneurial lady. When she was a little girl in Palestine
and the fishmongers would run out of papers, she took
all of her schoolmates workshop papers and sold it to
the fishmongers. Sarah came to the US and went into

(23:52):
making second mortgages, owning properties, i e. The Delmonico building,
which she ended up selling to Donald Trump. So these
are the stories Larry grows up with, and these are
the stories that he tells Bill. Bill is hearing stories about, like, yeah,
the lady who sold the Delmonico Hotel to Donald Trump,
Like all of these hard scrabble tales of like refugees
who come from nothing and get crazy rich, like these

(24:16):
are this is the manna that he is like raised
with in his brain. And as far as I can tell,
Larry loves telling stories. And because he's also got a
head for business, these stories are always like business parables,
and so that's just like Bill's. We talk about kids
who are grow up raised by like Star Wars or
fucking Indiana Jones or whatever. Bill is raised on these

(24:37):
like stories of entrepreneurs getting rich and successful and like
changing their families' lives. Like that's his whole childhood millieu.

Speaker 3 (24:46):
Right, does ultra capitalist Grim's fairytale vibes right exactly?

Speaker 2 (24:51):
That's a very good way ultra capitalist Grim's fairy tales
in comparison, I haven't found anything at all about his
mom really, but like very little.

Speaker 3 (24:59):
That seems about right given the whole deal.

Speaker 2 (25:01):
Yeah, you don't hear a lot about Ronnie Posner, that's
his mom's maiden name. One account that I did come
across from Larry, so this is Larry talking about his wife,
is that she once collected thousands of signatures and lobbied
to convince their local government to extend a railroad line
in their hometown. After telling the story, Larry quipped, activism
is genetic referencing Bill. So again, I'm guessing that means

(25:26):
that she had a personal way that she benefited from
the radio or the railroad line being extended. I guess
what if she was just a.

Speaker 3 (25:32):
Real nice lady surrounded by all these demons trying to
get that nice.

Speaker 2 (25:36):
Well, no, no, maybe maybe she was. We'll never know.
But then it is telling like that's the way they
think about activism, and that's how Bill thinks about activism.
Activism is like a thing you do so that you
profit right one way or the other. I think that
is how he looks at it. Right now, you know
who does love to profit?

Speaker 3 (25:54):
Kim tell me everyone, no one, Billy.

Speaker 2 (25:59):
This pot cast. I mean Bill Ackman does love to
profit and of this podcast, which might be Bill Ackman
No way, no, no, I hope not. That would be awkward.
But possoble and we're back. So Bill grows up rich.

(26:22):
He's got access to the best resources available, one of
which is just living in Chippaqua. Right, this is a
good place to grow up. He attends Horace Greeley High School,
which is a public high school. In two thousand and eight,
it was ranked the number forty six high school in
the nation and the number seven high school among those
with open enrollment. Probably the best known story of Bill's

(26:42):
young life comes from his junior year in high school,
which is nineteen eighty four, and here's how it's explained
in a twenty thirteen Vanity Fair article by William Cohen.
He waged his father two thousand dollars that he would
score a perfect eight hundred on the verbal section of
the SAT. The gamble was everything Acman had saved up
from his barmitzv gift money and his allowance for doing
household chores. I was a little bit of a cocky kid,

(27:04):
he admits, with uncharacteristic understatement. Tall, athletic, handsome, with Cerulian eyes.
He was the kind of hyper ambitious kid other kids
love to hate, and just the type to make a
big wager with no margin for error. But on the
night before the SAT, his father took pity on him
and canceled the bet. I would have lost it. Actman
concedes he got a seven eighty on the verbal and
a seven to fifty on the math, one wrong on

(27:24):
the verbal and three wrong on the math. He muses,
I'm still convinced some of the questions were wrong. And
that says a lot.

Speaker 3 (27:34):
Man, he's probably not doing any favors for the throuleian
I community. No, like people already think we're Sola's. We
just got this guy just piling.

Speaker 2 (27:42):
On, fucking narcissist. And that's so Like everything you did
know about Bill Ackman as a person is that this
is the kind of guy who's honest. This is not
a joke, a honest to god. Reaction to hearing he
got questions wrong on his standardized test says well, the
questions must have been wrong, right, Like, that's Bill Ackman,

(28:03):
and you're gonna see this from him over and over again.
This reality is wrong. If it's not working the way
I said it was going to be, that's impossible. It
has to work the way I said it. The way
I predicted is the only way things could go. And
when things don't work out that way, he flips his
fucking shit. It's very funny, and that's gonna be. It's

(28:24):
also this need he has to make these bets with
no margin of error based on this like insane confidence
of his. It's gonna work out more often than it should,
but it also goes wrong a lot, and usually his
dad's not there to like let him off the hook.
That's an important thing to kind of note. I'm sure
his dad, his dad was trying to be a responsible

(28:45):
father here, but that's maybe the wrong lesson to teach
him is that you can make stipshit bets all the
time and nobody will like really call you on it
if you're wrong in a way that will hurt you.
Maybe that's not the right lesson for Bill to be
learning at this point life.

Speaker 3 (29:00):
I don't know, Oh my god, what a weird what
a weird family, What a weird way to like, Yeah,
what a weird kid? Like, I'm gonna bet my father,
who is an adult man, all the money I have
that I might.

Speaker 2 (29:11):
It is weird that you take that at all. That
is bizarre parenting, right.

Speaker 3 (29:17):
Yeah, Like my think of if I try to do
my dad didn't even know what My dad didn't barely
finish high school. We didn't know what the fuck was
going on in my school. Like, oh you got some numbers, right, great,
good for you kid.

Speaker 2 (29:27):
Like, yeah, I mean I'll take all your money. Yeah,
taking your mind like a bet is a really weird.
It's one thing to be like, okay, you know, I'll
give you get this or you know, I'll do this
for your allowance or whatever if you do if you
improve on your test score. I don't know. I'm not
against the idea of like trying to motivate a kid
or whatever, but gambling on with on the SATs with

(29:51):
them is insane. Like that's a really strange thing to
do with you chut, you're.

Speaker 3 (29:56):
That's not even like I don't even think it doesn't
seem like he's the a dad that was really from
all I've learned, he was like, all right, and make
sure you go in there and study, and like, yeah,
you know, go be a bookworm kid.

Speaker 2 (30:07):
He seems like a straight laced kind of guy, but
he's a gambler. You get that bit from him. Like
none of the stories about Larry or and Larry loved
to gamble, but I kind of think Larry was a
gambler because Bill's a gambler. And the fact that they're
doing this when he's a kid says a lot about
the relationship and about Larry.

Speaker 3 (30:24):
I think, yeah, Brandon nineteen eighties money, that's like.

Speaker 2 (30:28):
A lot of money. He's good, but still yeah, like wild.
So Bill graduates the year after this and he winds
up where you'd expect at Harvard Business School. I only
had a couple fun anecdotes from that period of Bill's life,
but one of them is pretty devastating, and it was
posted on the web page for the company that he owns.

(30:50):
Like this is something Bill allowed to be put out
as part of his like pr Basically, this is from
the Pershing Square that's his hedge fund, the Pershing Square
Philanthropy website. I can't believe he let pep, he let
this get published. According to Bill, Larry helped set him
up with the woman he married. Women in business school

(31:10):
had issues with dating men in business school. Bill said,
or maybe they just had issues with me. There's more
to the quote, but like, holy shit, I gotta take
a second. Maybe they just maybe Bill, maybe Gosh.

Speaker 3 (31:30):
Only said yeah self.

Speaker 2 (31:32):
All air things improved the day he got a fax
from dad, one of those curly things that was a
forward of a facts from one of his dad's clients
containing the phone number of a graduate design student at Harvard.
When Larry called later, Bill had already set up a
date with Karen. A couple of years later. Bill's dad
told him if he didn't propose soon he'd find a
nice guy who would. Dad's a good negotiator. Bill said,

(31:55):
that's how he meets his wife, his for life, beautiful love.

Speaker 3 (31:59):
Story from a from a fat so his dad just
bought him a lady. He was like, son, you're striking out.
Let's we gotta get to your girlfriend.

Speaker 2 (32:07):
Like new relations.

Speaker 3 (32:09):
Pullsome strings, Karen, sounds like a nice goal. Just get
it done.

Speaker 2 (32:13):
I gotta say, you hear about a lot of nepo babies.
You don't hear about a lot of nepo like a
husband's like you like nepotism got you married? Like that's
that's something else.

Speaker 3 (32:22):
That's very that's very like vintage. That's very like royal,
like nineteenth century before the whole romantic love, very business arrangement.
Marriage does business arrangements. Larry was thinking, that's that old school,
old world mentality coming out like a woman, we'll get
you one.

Speaker 2 (32:39):
Yeah, and I I should probably have a little bit
of like okay, Bill was probably joking a little bit
with or maybe they just had issues with me. But
I can't help but read that as like him thinking
about that for the first time, where he's like, yeah,
you know, women in business school never date men in
business school, and then he's like thinking back to all
the guys and he saw like dating women in business
school and was like, well, maybe it was just me.

(33:01):
Maybe that's not a thing, but.

Speaker 3 (33:04):
I'm sure you saw it. Is like, well, I'm too special,
Like they just they couldn't handle me. I'm the golden boy.

Speaker 2 (33:09):
It's important to eventually self reflect on things. So I
guess he did kind of. We'll give him a point
for that. Oh, I don't have any I wish we
had more good anecdotes from Bill's like youth in childhood,
but yeah, that does imply a lot. Anyway. He graduates
Harvard with his BA in nineteen eighty eight. His undergraduate

(33:30):
thesis is titled Scaling the Ivy Wall, the Jewish and
Asian Experience in Harvard Admissions, and the paper starts with
him comparing the experience is that Jews had trying to
gain admittance to Harvard in the twenties with the experience
that Asian students had had trying to do the same
in the nineteen eighties. And we've talked a lot of
the show about how like if you ever get a

(33:51):
chance to like read a novel that a political pundit
you dislike has written, or like I guess has written,
you should do it because it's like a window into
their soul. That's sort of the same with a thesis.
You can tell a lot about where a young person's
head is at with a paper like this. And I'm
going to start here's a quote from Bill's thesis. As

(34:12):
one of the oldest and perhaps the most notable of
this country's academic institutions, Harvard represents the gateway to elite
status and to making it in modern day American society.
One need only look at the disproportionate numbers of presidents,
Nobel laureates and chairman of Fortune five hundred companies who've
graduated from Harvard to understand the power of the Harvard degree.
As a result, admission to Harvard has become the target
of groups seeking upward mobility. And from that you can

(34:36):
really see that's why Bill goes to Harvard is because
he wants to get guaranteed a spot in the elite. Right,
this isn't he's not and he never pretends that he
has a particular intellectual interest, right that this is always
about access. It's always about making the right connections and
friends to him, you know, which at least he's honest

(34:56):
about that, I guess. And his thesis is comparing He
outlines how back in the twenties, there's like this massive
sore in the number of Jewish undergraduates admitted to Harvard,
and it causes a bunch of problems because, like it
pisses off the gentiles, and Harvard's president changes admission requirements
to restrict Jewish admission because he saw a lot of
Jewish students as unassimilable. And his argument was that, like,

(35:19):
if we keep letting more of them in, they'll break
up the sense of elite identity among Harvard graduates and
there won't be this feeling of like we're all part
of the upper crust together, right. And there's this attempt
to talk about it in a woke way where he's like,
and that'll make people more anti Semitic, right, Like, let
if we let too many Jewish people into Harvard, it'll

(35:40):
ruin the upper class and that will make people even
more racist against them. Right. So Ackman is laying all
this out as hypocritical, right, And he accuses the administration
of believing the image of the Harvard man would be
diminished by the inference of too many Jews. He builds
up to an incredible point, Why does Harvard feel compelled
to admit minorities? It appears that Harvard is more concerned

(36:02):
with the campus mosaic than with what the colors of
the campus spectrum actually represent. Considering the original intentions of
affirmative Action and other such programs to admit the societally disadvantaged,
Harvard's policies do not seem to be directed to confirm
the spirit of such legislation. Many of the minorities on
campus are not disadvantaged. If Harvard were truly concerned with
a disadvantaged student rather than with its desire to maintain

(36:23):
a positive public image for the media, we would see
recruitment of more students from disadvantaged backgrounds, regardless of their color.
Why is there no recruitment for disadvantaged Poles, Italians and
underprivileged Jews for that matter. Whose definition of diversity is
Harvard applying? So he's concerned about this from the beginning.
After getting into Harvard, He's like, why aren't they letting

(36:44):
it enough like poor white people. And again it's like
a rich white kid getting admitted to Harvard. That's a
fascinating thing to take issue with. It really says a
lot about him. Yeah, yeah, Like it's such a weird grievance, Like, well,
you're literally just like a rich kid who got into Harvard.

(37:06):
Why are you concerned that, like they're not letting enough
poor white kids, they're letting too many like rich non
white kids into Harvard.

Speaker 3 (37:14):
Where is this coming from? How many not rich white people?
Does he even know?

Speaker 2 (37:18):
Right?

Speaker 3 (37:19):
What a strange thing to surface, Like, I'll tell you what.

Speaker 2 (37:22):
The real shows me. That is hanging around a lot
of kids who are complaining that there's too many non
white kids at Harvard. That's what I guess from that.
Why else would you take issue with that sort of
thing specifically? So, Ackman concludes that Harvard admits different groups
of people for different benefits athletes because it makes the
alumni happy, legacies because it gets them donations, and minorities

(37:43):
because they've been pressured by the government or public protest. So,
and he argues, like Harvard's this is entirely self interested
morality by Harvard. And that's true, it is entirely self
interested morality by Harvard. But Bill doesn't point this out
to condemn it. Here's how Puck newswriter Will Youam Cohen
describes what Bill learns here. Quote, change at Harvard all

(38:05):
comes down to pressure, according to Acman. So that's the
reason he lays this out. Is not the point he's
building to isn't and this is wrong. The point he's
building to is And so that's how you get Harvard
to make changes is you? You? You just like all
you have to do is pressure them, and you can
get them to stop or start allowing members of a

(38:27):
specific group. So it's interesting he's already thinking as an undergraduate,
what would it take to stop Harvard from admitting as
many people that I don't think should be here? How
can I alter who gets into Harvard? That's really interesting
to me that he's thinking about that from this point, like.

Speaker 3 (38:44):
The genesis the kernel of what he was gonna become.

Speaker 2 (38:48):
Yeah, this is going to be really relevant much later.
But yeah, as you said, say Kim, like that's this
is like decades later that he actually has a chance
to do something about Harvard admissions.

Speaker 3 (38:58):
I mean, like I said, activism runs in the blood,
or runs in the family.

Speaker 2 (39:01):
And runs in the blood. Yeah.

Speaker 3 (39:03):
Wow, maybe his mom was evil.

Speaker 2 (39:06):
Yeah, I don't know. I found literally nothing else about her.
After graduation, Bill went to work briefly for his father's company,
so he he spends like a summer working, you know,
at the family real estate firm. The Vanity Fair piece
I quoted from earlier describes this as simply a stint
working for his father at the family's commercial mortgage real
estate business. But the article in forward describing that Acman

(39:27):
family dinner event quotes Bill talking about this part of
his life. Quote Bill Ackman recalled, I couldn't get a
job when I graduated from Harvard, so I went to
work for my dad. That makes it a little sadder,
But at least Bill's admitting that, right, like a little sad.
I don't know.

Speaker 3 (39:44):
Geez.

Speaker 2 (39:44):
While he's working on his NBA, Bill gets onto the
rowing team for Harvard's Business School. His team decides to
pick shirts that year with dollar signs on the oars.
According to Vanity Fair, at the annual Head of the
Charles Race, spectators booed the HBS crew votes, causing Ackman
to defend the decorations in an opinion column in The Harvest,
the Business school newspaper. Let's face up to what Harvard

(40:07):
Business School represents. He wrote, we spend ninety percent of
our studies at HBS pursuing the maximization of the dollar.
Why shouldn't our uniforms just be dollar signs? Because it's tacky?
Because actually, Bill, even when people are just kind of
self interestedly concerned about money and don't have other interests,
they feel bad about that at least, like you should,

(40:29):
wow wild.

Speaker 3 (40:30):
What he really loves saying the quiet parts of things
out loud? I mean, like, why are people mad at me?
Everyone thinks this?

Speaker 2 (40:38):
Why are people why don't people like this? And it's
like it because it's almost as if he feels like
because he's so smart, if somebody is like offended or
think something bad that he did, it's just because they
didn't think about it, right, So if he explains how
they ought to think about it, then they won't find
it gross. And like no, no, no, I know, like Bill,
what you said there, I don't disagree with, Yes, Harvard

(41:00):
Business School does represent max soullessly maximizing the dollar. I agree.
I don't misunderstand that it's just gross and like even
if that's what you want to do for a living,
you should aspire to be slightly more than that, like
in your extra curricular life. You know, the sat answers
were wrong exactly. So one of Bill's best friends at

(41:23):
Harvard was David Berkowitz. This David Burkowitz is an engineering undergrant,
not the son of Sam killer I was.

Speaker 3 (41:29):
Gonna say, that's an entirely different episode direction we're going,
and I'm here for it.

Speaker 2 (41:35):
I'm not gonna say Bill Ackman isn't friends with this
the real son of Sam Killings. No, I'm not gonna
say I can prove that this David Berkowitz didn't do
the Son of Sam Killings. I can't prove that, can you, Sophie?
Can you?

Speaker 3 (41:48):
Kim? No?

Speaker 1 (41:50):
I probably just don't know.

Speaker 2 (41:52):
The burden of proof is on this David Berkowitz to
prove that he did not shoot a bunch of people
in parked cars in the seventies. I just I remember
I watched the Spike Lee movie about the Son of
Sam Killings recently.

Speaker 3 (42:05):
Well, yeah, perfect shut out Spike.

Speaker 2 (42:09):
Yeah, what a weird film. No, No, one doesn't quite
like Spike.

Speaker 3 (42:13):
That's true.

Speaker 2 (42:16):
So during that dinner event that Ackman hosted, Larry and
Bill talked about what happened after he gets his NBA, right,
So at this event, Bill's talking through like he graduates
from Harvard the second time he gets his NBA. I
worked for you for two years, he said to his
father across the stage, then went to business school, and
you wanted me to come back, and I came back
for one week, then chose to go on my own.

(42:38):
So that's what Bill claims at this public event. But
then his dad is like, that's not how it happened
and says, you told me in your second year at Harvard,
I'm coming back. I'm looking forward to it, and son,
I was looking forward to it. Then you met David
burkele Wits at Harvard Business School and created a hedge fund.
So in his dad's version of events, he like is
set to come back to work and just sort of
bounces to start this hedge fund. It's weird to me.

(43:01):
Maybe Bill just forgot, maybe his dad had it wrong,
But I kind of think Bill felt the need to
like craft a slightly different version of this story right
wherein he comes back and he's working for his dad
at the family business a second time and it just
doesn't feel right and he has to make the change
because that's a little more cinematic. I kind of think

(43:22):
that's what Bill is doing here.

Speaker 3 (43:24):
It makes him look a little bit more of like
an autonomous being. Like I came back and was like, no, Dad,
I gotta go out on my own, my own man. Now.

Speaker 2 (43:32):
Yeah, yeah, it's just I think a little more convenient
of a narrative for him. So anyway, after graduation, Ackman
and Berkowitz created their first hedge fund, Gotham Partners. Their
first office was, according to William Cohen, a windowless office
in midtown Manhattan. Now, despite that this was not a
scrappy startup running on fumes, these guys, their first business

(43:54):
is not like hard up or anything. Per Cohen's piece.
Starting with two hudred and fifty thousand dollars from Marty Perez,
a college professor of Acmans and then the editor and
owner of the New Republic and the father of Vanity Fair,
contributing era editor of Gina Peretz, they raised three million dollars.
We did incredibly well for five years, Acman recalls. Most importantly,

(44:15):
in two thousand and two, Ackman made a huge bet
that MBIA, Inc. The publicly traded municipal bond insurer was
fatally overvalued. The company protested that Ackman was trying to
manipulate at stock price. Both the SEC and Elliot Spitzer,
then the New York State Attorney General investigated not to
put it to him politely, Spitzer told the New York
Observer in twenty eleven, but we put Ackman through the ringer,

(44:36):
so no charges are ever filed. But this isn't quite
a nothing burger, right. There's never any like conviction here.
But this is a little bit more than Cohen describes
it as being. I want to read a different say.

Speaker 1 (44:50):
I just want to say, Elliot Spitzer.

Speaker 2 (44:52):
Spitz, we love him. We'll talk about Elliott one of
these days on his own here. But again, this whole
incident isn't quite as much of a nothing burger as
that description by Cohen makes it same. And I'm going
to read another description of what happened. In the Minnesota
Star Tribune. The investment firm wrote an article praising a company,

(45:13):
pre Paid Legal Services, then sold its stock. Ackman said
he liquidated Prepaid stock as well as all of its
public investments, because he was winding down his fund. So
the allegation is that his fund writes an article praising
this company, which then boosts its stock, and he then
immediately sells the stock, and that that's like stock manipulation, right,

(45:35):
which Bill does a lot of similar stuff like this,
and it's not illegal, but it's kind of sketchy, right,
But this is very much in line with how Bill.
Bill's whole thing is putting a bunch of shit out
into the media to like start whatever kind of stock
movement up or down he needs to start happening in

(45:55):
order to make his bets work, right. He like this
is him starting to figure out if you're going to
be this kind of guy who you're trying to slide
into a company and buy up a big chunk of
it and then force it to make changes that you
can make a profit, it's not enough. It's not just
about making being an activist investor and convincing the company
to make changes. It's about putting stuff out into the

(46:16):
media so that people buying stocks see, oh, someone has
a brilliant idea and they're fixing this company that's probably
undervalued because it's making a mistake. And Bill understands from
the beginning it's just as important what you can get
people to believe in the media is what you're actually
doing to the company. That's not entirely about how much
you can make the company function better. It's about what

(46:39):
can you get people to believe you're doing to this company,
because that can move the stock on its own. And
sometimes that's all you need to do is just push
a narrative into the media so that folks start acting
from there. And Bill is thinking about this from the
start of his career. He's from the beginning manipulating media
coverage in order to drive stock value in a way

(47:00):
that helps him. And that's always going to be a
thing that he does. It's a thing he's going to
be good at and really bad at at varying points
in his life. Right and again, he doesn't break any
laws here, but the fact that he is in the
crosshairs and being investigated for a while is tough on him.
He would later say, people look at you funny. I
learned that it takes a lifetime to build a reputation

(47:21):
and someone can destroy it in a few days. And
we'll put a pin in that he's gona But at
this point things are going well. It's the early two thousands.
Bill is correctly predicted that Mbia is about to collapse,
and it does fall apart not long after. He makes
a big bet he basically like shorts it, right, and
he and his investors make about one point four billion

(47:42):
dollars from this correct prediction that Mbia was about to
fall apart. Well, yeah, this is a lot of money,
and Bill is going to just make more money from
this point on, right, Like this is from here on
out his company and he are always going to have
a huge amount of cash to play with, you know,
whether or not he's like winning or losing. Like the

(48:03):
kind of momentum that you get with a win like
this right kind of makes it impossible to stop, or
at least it means that he's gonna have to fail
a lot in order to stop having enough money to
keep gambling.

Speaker 1 (48:16):
Right.

Speaker 2 (48:17):
But Bill's initial relationship with his first partner, Berkowitz falls
apart around this time, and over the course of like
two thousand and three two thousand and four, he winds
things up at Gotham and in two thousand and four
he meets several men that he takes on his business partners,
and they start Pershing Square, a capital management firm or
hedge fund based in New York City, and we'll talk

(48:40):
about that and a lot more, but first here's some ads.

Speaker 1 (48:50):
Just to say it is incredible how these rich assholes
decide to name their businesses.

Speaker 2 (48:57):
Yeah, I mean persons. Guess it's like a kind of
a bland, banal name.

Speaker 1 (49:03):
You know, it makes but Gotham you think you're Batman
a little on the nose.

Speaker 2 (49:09):
Right, No, I mean that's just a nickname for New
York too, right, Yeah, but yes, it's probably Batman for them.

Speaker 3 (49:15):
Yeah. I feel like most people just in like the world,
they hear Gothamy, like, oh Batman. I don't think people
are remembering the historic roots of it. There's like, oh
that's probably evil.

Speaker 2 (49:25):
Yeah, now it probably was a Batman ta how.

Speaker 3 (49:28):
Many bad I mean, so I'm thinking about Batman continue.

Speaker 2 (49:32):
Yeah for a time. Success follows Bill in two thousand
and five. Has fund acquired enough of a Steak and
Windy's that Bill got to do the activist thing and Wendy's,
and he decides that, like, what Wendy's really needs to
do is spin off Tim Horton's, which is this like
Canadian coffee house fast food style an institution. Yeah, yeah,

(49:56):
like both Yeah, very popular, little bit of like honestly
a little bit of like waffle House vibes too. It's
like a whole thing in Canada. And he is successful
in getting Wendy's to spend Tim Hortons off into its
own like independent company. The board fights him at first,
but they ultimately cave and when Tim Hortons has its IPO,
it's a huge success and it met six hundred and

(50:17):
seventy million dollars for his investors in two thousand and six. So,
and this is where we talk about, is our activist
investors good or bad for companies? There's certainly an argument
to maybe that they're good for quote unquote the economy, right,
depending on how you count that. But it's debatable as
to like, you know, obviously this is a successful investment

(50:39):
for him and his company. They make a lot of money.
Is this good for Windy's in the long run, that's
a lot more debatable. For the Minnesota Star Tribune, Though
Acman's investment in Windy's nearly doubled in value, the stock
has since led to just twenty four dollars a share,
below the thirty seven dollars a share price Acman paid
some investors argue that by removing one of its fastest
growing units, Ackman left Wendy's in worse shape as little

(51:02):
more than a second rate burger chain. So again, what
is spinning off Tim Horton's really create in terms of value?
It creates this short term because you're creating a new
company doing an IPO, you can make a shitload of
money if you're you know, Bill Ackman in this. But
is there a gain to the world in tim Horton's

(51:22):
being a separate, spun up company or is it more
maybe tim Hortons does a little better, but Wendy's is
doing worse and people are losing jobs as a result
of that. Right, And for his.

Speaker 3 (51:32):
Part, there's no consideration of like humanity in all of this,
the investors, but like, yeah, what about like you probably
had to close a lot of locations. That's a lot
of people's jobs.

Speaker 2 (51:43):
Yeah, and Wendy's again, their stock price collapses not long
after they fucking cash out, And for his part, Ackman
blames the stock slide on the fact that the Wendy's
board refused to take his advice on who to hire
a CEO and instead picked a woman, Carrie Anderson, and
he apparently disliked Carrie so much that he liquidated Pershing's
entire stake after she got hired, which is right before

(52:05):
the stock value collapses, and may have, you know, helped
to spark the stock collapse. And by this point Bill
is enough of a name that him on like selling
a bunch of stock, could spark a selloff, and him
investing can drive a stock to sore, right, So it's possible.
One thing you could conclude from this is that he

(52:26):
makes a bunch of money spinning this off, and then
when the company makes a lady he doesn't like CEO,
he sells off his shit and Windy's is left in
a much weaker position than they had been. And it's
just kind of a result of Bill's arbitrary in nature,
you know. And it just who's better off? Shareholders and
fucking people invested in Pershing are Bill's better off? Is

(52:48):
the world? I don't think so?

Speaker 3 (52:50):
Thank god?

Speaker 2 (52:52):
Yeah. Now again, depending on your attitude, how you think
about business, you could look at this as Bill being
brilliant or Bill being a fuck up. You know, that's
a moral question. What I can say for sure is
that Bill does not stop and reflect on whether or
not what he made was the right call. He made money,
and that means he gets to keep rolling more dice.
Here's the Star Tribune describing one of Bill's next big

(53:14):
activist investments. One of Ackman's next targets was Surridian Corporation,
the Bloomington human resources firm. Ackman recalled his first meeting
with Catherine Marinello, Sarridian CEO, as frightening and one of
the worst meetings of my career. Ackman said that Marinello,
who who noted, wore inexpensive jewelry and clothes to the meeting,
spoke at length about her plans to grow the company
through acquisitions, an idea he opposed. He also recalls that

(53:37):
Marinello said she already had enough money and that her
strategy for growing the company was not driven by a
desire for personal enrichment, and Bill is like offended by that.
He's like, can you believe she doesn't just want to
make as much money as possible? And she's wearing cheap
clothes and cheap jewelry. Like God, this is the worst
meeting of my life. I had to sit next to

(53:57):
a lady who wasn't dressed like a rich person, like
it's really how he kind of describes it, like.

Speaker 3 (54:04):
An affront to everything he stands for.

Speaker 2 (54:07):
Yeah, oh really, and like the level of fear, like
she says she has enough money, like God for.

Speaker 3 (54:15):
That moment, that deep, bottomless pit inside of him. He
glimpsed it and was like, oh.

Speaker 2 (54:20):
Oh, there's more that's not I can't be right, that
can't be right.

Speaker 3 (54:23):
The voids stared back for a minute, and he did
not like that.

Speaker 2 (54:26):
No, no, no, I'm not going to stare into that
void anymore. I should also note here this is just
the second case this, but so far we have in
short order two specific instances of like Bill developing irreconcilable
differences with female executives. Might be worth making a note
of that.

Speaker 3 (54:43):
I mean, the man who bought Wendy's is not a
feminist icon.

Speaker 2 (54:46):
It's not wannocking poor Wendy.

Speaker 3 (54:50):
Very funny. What did she do to him?

Speaker 2 (54:52):
Yeah, here's what Bill said about Catherine. She was proud
of the fact that she had no economic ambition. That's
disconcerting to a shareholder. And I guess so, yeah, but
I don't know that she had no economic ambition. She
might just have not felt the need to like obsess
over maximizing short term profits and expensive like the long
term health of her company. That might have been how

(55:14):
she would have framed it. I don't know. Bill so
Acman owned about fifteen percent of the board, and he
pushed to get his people onto it, and his goal was,
I think, to convince them to spin off the most
profitable division into a separate company. Right again, it's like
they're always people always say, oh, activist investors totally different
from these like corporate raiders who just come in and

(55:35):
like strip a company for parts. Okay, well what do
they do whenever they, you know, buy their way into
a new company, Well, they strip it for parts. You know,
they spin off the most profitable division into a separate
company to make a bunch of money off the IPO.
It's like, wow, really creative, you really you really identified
a problem no one else could see that they hadn't
done the thing that everybody does when they're stripping a

(55:55):
company for parts. Yet Anyway, it seems like from what
I can tell, Bill loses the fight. Right he's trying
to convince them to spin off the company's most profitable division.
But this CEO that he hates because she's not money
folks enough fights back on him, and the company takes
its own device, you know, advice, and a company does
basically like what Marinello you know, thinks is the right

(56:19):
idea and sells itself to a private equity firm for
thirty six dollars to share. Now, this guarantees Bill and
his investors a huge return. They make like a fifty
percent return on investment because of the move this lady makes.
And it's not exactly not being obsessed with profit to
sell your company to private equity like what she's doing.
But Bill is livid because it's too low. He could

(56:41):
have gotten more. And I just think this is him
having issues with a woman doing the thing that he
was wanted to do. I think if Bill had walked
the company through a fifty percent return here, he would
have crowed that this was a big win. But because
they don't do it the way he wants to and
this woman gets her way instead and it still works
out really well for him, I think Bill gets pissed.
That's my interpretation. Maybe so unfair, but that's my rate

(57:05):
of this.

Speaker 3 (57:05):
Yeah, broad with her cheap jewelry making decisions that benefit me.
How dare she?

Speaker 2 (57:12):
Yeah, how fucking dare she?

Speaker 1 (57:14):
So likely misogynistic on top of racist? Got it? Got it?

Speaker 2 (57:18):
Maybe maybe maybe maybe.

Speaker 1 (57:21):
Allegedly maybe maybe he said me think racist.

Speaker 2 (57:24):
He's just really concerned with fucking not enough poor white
people getting into Harvard as opposed to rich non white people.

Speaker 3 (57:32):
I mean, big advocate for the Polish community.

Speaker 2 (57:35):
I guess, big advocate for poor Polish guy. It's Bill Ackman.

Speaker 3 (57:39):
I'm sure he was very familiar with that community living
in Chappaqua.

Speaker 2 (57:42):
Yeah, yeah, yeah so. By some accounts, Bill's most impressive
and significant success as an activist investor was his two
thousand and eight move to take a big claim in
General Growth Properties, or GGP. This was a risky move
because GGP was in the business of owning and operating
a fuckload of malls. Right, this is a company that
owns a bunch of malls, and come the aunts. Malls

(58:04):
aren't doing great. Right, It's not the best time in
the world for the for malls. You know, I think
we can remember that trend starting to happen, and it
makes it matters worse. General Growth was operated and owned
at the behest of the Bucks Bombs, which were one
of the oldest and moneyed families in the United States. Right,
the bucks Bombs get into this more than a half

(58:25):
a century ago. They start this company, and the last
of the family to act as CEO, John bucksbaumb presided
over a staggering ninety seven percent drop in stock value.
He is a fail son of all fail sons.

Speaker 1 (58:38):
What I have, Like, I have like a visceral twitch
every time you say bucks bombs, Like yeah, Like.

Speaker 2 (58:46):
Yeah, that's a rich asshole name right there. Yeah, it's
like a beautiful blue blood like fail family name.

Speaker 3 (58:53):
But it also sounds like something you buy at the
cash register at the liquor store at the.

Speaker 1 (58:56):
Same time, perfect, like rich asshole sitcom characters bombs.

Speaker 2 (59:01):
Yeah, the bucks bombs Yet is a good name for
like a yeah, like a bond bond, like a chocolate treaty.

Speaker 3 (59:08):
Yeah, or like a buzzball crossover situation.

Speaker 2 (59:11):
Totally so yeah, John buzz fail bombed, he buzz bombs.

Speaker 1 (59:17):
Yeah.

Speaker 2 (59:17):
When he takes over the family business, they're twenty five
percent stake in GGP is worth three point two billion, uh,
and by the end of his tenure it's worth one
hundred and sixteen million. Like, oh no, he's really bad.
At this, So Bill sees this company is flailing, it's
clearly not being managed well, and GGP is like the

(59:40):
perfect This is like an ideal situation for an activist investor,
because what you really do have here is a company
that actually has and Bill accurately sees their fundamentals aren't bad.
They own a bunch of real estate, They own like
a bunch of businesses that are functioning. The issue is
that they're managed by idiots who have packed on a
shitload of debt for very shady, stupid reasons, and it's

(01:00:01):
made it impossible for the company to function. Right. So
this is a case where Bill actually accurately sees, Oh,
I actually could just come in here, fix a couple
of things and make the company worth a lot more.
And so I'm not gonna bore everyone with a long
economics explainer. This is a case where what Bill does
works well and the whole activist investor thing is as
big a success as it can really be. Bill's fund

(01:00:23):
inject some investment money into the company to kind of
rebuild some stuff, The creditors get paid off, and the
company goes through bankruptcy without liquidating properties or laying doing
mass layoffs. The stock price rebounds from thirty four cents
to share it to more than thirty dollars to share
in a pretty short period of time, and Bill and
Pershing Square makeoff like bandits and can arguably be said

(01:00:45):
to have done some good. At the same time, they
avoid layoffs, so people keep their jobs. This is everything
working as well as it possibly can. Right. This is
not going to be every investment that we see Bill
come into, right, but this is going to be like
you know, some of them.

Speaker 1 (01:01:02):
Sometimes it does work incredible, it.

Speaker 2 (01:01:05):
Doesn't work every time, but it is going to work
kind of one more time. Although this next big success
is a success of Bill's company, but he doesn't have
anything to do with it. So in twenty eleven, Pershing
Square makes a hostile acquisition of a bunch of stock
for Canadians Pacific Railway, and they execute what BuzzFeed reporter
Mariah Summers called one of the greatest activist investing campaigns

(01:01:27):
in history, adding more than twenty five billion dollars in
value over just two years. And again, this is a
very successful investment that Bill's company makes, and it really
does turn things around for this Canadian railway company. Bill
is not behind it. He is not the guy planning this.
The mind behind all this is a guy, a Pershing
Square executive named Paul Hillall, who spotted our structural issues

(01:01:51):
and how the company was like working and drew up
a proposal to fix those issues, picked the CEO candidate
and like masterminded like the rebound of this whole company.
And during the same period of time where Hellal is
executing this masterful turnaround of Canadian Pacific, one of these
the great activist investor case studies in all time, Bill
is failing miserably to do exactly the same thing to

(01:02:15):
one of the most storied names in American retail, JC
Penny Company. And we're going to talk about how Bill
helps to kill J C. Pennies. But first we're gonna
end this episode and let Kim pluck heer pluggables.

Speaker 1 (01:02:29):
Oay, do you want to tell our viewers and listeners
about your books?

Speaker 3 (01:02:34):
Kim, Yeah, Oh, that's right, plural I have well. I
mentioned the kid's book like Why Am a precocious eight
up to fourteen young Reader's Edition. It's basically like a
radical labor history book for young people, and it's a
spinoff I guess of my first book, which is It's

(01:02:55):
Back There Somewhere, Fight Like Hell, The Untold History of
America and Labor, which is basically like a marginalized people's
history of labor in the US. It's specifically focused on
women workers, black workers, Indigenous workers, Latino workers, Asian workers,
sex workers, andcarcerated workers, basically every type of worker you

(01:03:17):
can think of who doesn't necessarily get top billing when
the media talks about labor or unions. There's not that
many white guys with hard hats who have bad politics
in there. I will say, there's lots of other labor
books that have that if you want some of that,
But my book's a little different. And I'm working on
another book right now which is also very different because

(01:03:38):
it's still about labor but also is about the circus.

Speaker 2 (01:03:44):
Ooh excellent, Yeah, the sideshow. Well. Check out Kim's books.
Check out Kim, and check out part two of these episodes,
where we continue with the tale of Bill Ackman helping
to murder J. C. Pitties All added more. Oh my God,
whenever when We're done, go away Bye.

Speaker 1 (01:04:08):
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(01:04:30):
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