Part Two: The Rise of the "Activist" Investor

Robert concludes the story of the rise and fall of an activist investor we can now admit was just Bill Ackman all along.

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Episode Transcript

Speaker 1 (00:01):
Also media, Welcome back to Behind the Bastards, the only
podcast that this week is talking about Bill Ackman, the
patron saint of activist investors, with the Great Kim Kelly Kim,
Welcome back to the show. How are you doing, How
are you feeling.

Speaker 2 (00:21):
I'm good. I'm excited to talk more about this terrible man. Robert.

Speaker 3 (00:25):
You know what I realized in between part one and
part two. You know that very famous movie Pretty Woman,
Richard Gear's character, Yes, that's his job.

Speaker 1 (00:36):
Oh yeah, yeah, yeah, yeah, yeah, yeah, like that, Yeah,
that's exactly like Gear is, and and that was still
what it was, like the corporate raider thing. Yeah right,
like that's that's very much the point of the movie,
is that, like he's kind of a scumbag businessman.

Speaker 2 (00:49):
Yeah, the terminology is so much cooler, Like they should
have just kept doing that.

Speaker 1 (00:55):
Honestly, pirate.

Speaker 2 (00:57):
Yeah, yeah, are class et cetera. At least just own it.
If you're going to be a bastard, just be a bastard.

Speaker 1 (01:03):
Well, that was one of the more effective things about
A Hook is that, like, you know, Robin Williams's character,
who's like a grown up Peter Pan comes back and
like one of his old like friends is like, oh,
you're just like a pirate now, Like that's that's all
you're doing. There was a really good one of the
Monty Python movies, I think it was Meaning of Life
opens with like a good skit about basically that about

(01:26):
like a like a high c's accounting firm, like like
basically being like corporate pirates. It's very funny. Yeah, but
then then things at a certain point, they're not happy
being like evil monsters anymore, and they have to pretend
to be the making the world better. And that's kind
of like the Bill Ackman Kti boundary here is like

(01:47):
corporate raiders to activists. It's funny, you.

Speaker 2 (01:52):
Know, like they want to own everything, but they want
us to love them for it, and they get so
mad when we don't.

Speaker 1 (01:57):
They don't want to. They don't want us to act
like they're doing what they're doing. They want us to
act like they're doing us a favor. Right, And when
we ended last episode, we talked about how Bill's company
makes a shitload of money off this Canadian Pacific deal
that this guy Paul Hallal puts together, and kind of
during the same period where Hellal is executing this masterful

(02:19):
turnaround of Canadian Pacific, which is like often, like a
lot of people point out like this is about like
the chief perfect example of how well this kind of
thing can work, like an activist investing situation can work.
This is the best case scenario. While that's all happening,
Bill is miserably failing to do the same thing with
j C. Penny. Like at the same time as Paul

(02:41):
is having this huge success story for Pershing, Bill is
beginning to lead the company into a boondoggle with JC Penny.
And this is a very fun story. So Bill starts
acquiring shares of the legendary American retailer in twenty ten,

(03:03):
and he makes a big play with about nine hundred
million dollars of Pershing's money, and this earns him a
seat on the board. So he puts a little under
a billion dollars into j C. Pennies and he gets
on the board, right, And so now he's in a
position where he can start dictating and demanding the company
make some changes. So let's talk about j C. Pennies. Right,
You grew up around the same time I did. You

(03:24):
went to like JAZ Pennies to family photos, Right, oh,
pictures and shit.

Speaker 2 (03:29):
Christmas shopping with my grandma every year, school shopping. Before
I was like old enough to have opinions about the
clothes war, go to Pennies. I was getting winter coats
at Pennies with my grandma up until it closed.

Speaker 1 (03:42):
They got my mom and a book of fucking C
pons right to get like whatever, like the worst looking
bolt clothing that you could, You could, we could all
we could be dressed in like I didn't look good
back then. I'm not gonna lie.

Speaker 2 (03:54):
The Trey Hill Mall was the center of the universe.
Was from you at JC Pennies, go the mall, go
to Bertucci's, go the diner, just fucking Americana out. That
was the American dream and they took it from us.

Speaker 1 (04:09):
Set in Santa's lap, all that stuff. They being Bill right, specifically,
so J C. Pennies at the time that Bill gets involved,
because twenty ten is when he starts buying his way
in one of the biggest names in retail in the
US for generations. But by the Oughts, it's quite a
while ten or fifteen years at least into a period

(04:29):
of significant contraction. In nineteen eighty nine, J. C. Penny's
sales were about fifteen point three billion dollars. By the
mid nineteen nineties, it was closing in on nineteen billion
dollars a year, and in two thousand and six, the
highest revenue year, it almost crossed into twenty billion dollars.
And that sounds good, like that seems like it's making
more money every year. But if you were just for inflation,

(04:52):
that means in nineteen eighty nine the company made the
equivalent of twenty nine billion dollars as opposed to nineteen
point nine billion in two thousand, Right, So then twenty
years it's gone. It's contracted significantly in real terms. Right
as Joseph Ginte on the Internet, right, it's not people,

(05:12):
we've got the Internet, we've got better stores. JC Penny
just like didn't didn't handle that transition into the twenty
first century very well as Joseph Guinto. And also, you
know the fact that we have like fucking phone cameras
increasingly now and just easily portable digital cameras in two
thousand and six, that starts to eat into this part

(05:33):
of what brought people in. As you get your family photo,
we might as well do some shopping while we're here, right, Like,
all that stuff eats away at their role in society.
As Joseph Ginto explained in an article for d magazine,
by the time Ackman made his investment in twenty ten,
JC Penny had been effectively stagnant for more than two decades,
and inflation adjusted terms, the company had actually lost billions

(05:55):
of dollars worth of ground ground that its competitors now claimed.
So they're going bad by the time Bill gets himself involved.
And Bill has a plan to make j C. Pennies
great again. And that plan is to rip off Steve Jobs, right.
That's Bill's genius plan is I'm gonna do what Steve
Jobs just did at Apple, but I'm gonna do it
to j C. Pennies. And I'm gonna hope that shit works. Right. Oh,

(06:20):
I'll explain. To be specific, the first big activist change
that Ackman pushed through once he was in position is
to make the company shitcan its current CEO Mike Olman,
and Olman had he had presided over j C. Penny's
highest revenue year ever in two thousand and six, but
he had also been in charge for a lot of
j C. Pennies decline he was not a great CEO, right,

(06:41):
so getting Mike out, let's let's call it a neutral
probably a neutral, good decision for Bill to have made. Unfortunately,
his next move is to replace Mike with a ringer CEO.
And the CEO that Bill wants to put in there
is Ron Johnson. And in twenty eleven, Ron Johnson invented
the Apple Store. He is the guy that Steve put

(07:03):
in position when they didn't need when they needed to
create the Apple store. Ron is the guy who like
makes it right. So in twenty eleven, he's a pretty
hot commodity. Apple stores have been a huge success. Like,
no one can argue the guy was not good at
his job. Like the Apple Store worked very well. It
did the thing that it was supposed to do for Apple.

(07:23):
He was an enormous success. Business writer Bofniesch Patel describes
Ron as having quote built Apple's retail empire from scratch,
and as Patel noted, he thinks differently about retail than
anyone else. And that's why Steve Jobs liked him. Bill
likes Ron because Steve had liked Ron, right, And I
really don't think it went any deeper than that. I

(07:45):
think he's like, well, this guy created the Apple Store,
and the Apple Store is very worth money. Jac Penny
is doing bad. Apple Store guy, j C Pennies. J
C Pennies will be doing good right, Like that's I
think that's the limit that to which Bill is really
thinking this through.

Speaker 2 (08:01):
Just do the Apple Store for slacks? Essentially?

Speaker 1 (08:05):
What of the Apple Store for pants? That's Bill's business acumen.
That's the Harvard MBA at work. What off an Apple
store but for perfume that they spray in the air
as you walk by? So as soon as yeah, genius,

(08:25):
brilliant stuff. So Ron is now the CEO of j C.
Pennies and he sets to work doing what you'd expect
the Apple store guy to do if given control of
a brand like jay Z Pennies. He remodels everything all
of their stores to look a lot nicer and to
appeal to a high end clientele. You know how Apple
stores look, right, big glass storefronts, they have a lot

(08:47):
of tables, like very open floor plan, very souls old
but also high end like clean like modern. You know,
it's good for if you're going to be spent a
lot of money on a product like an Apple store
feels like a reliable storefront, Like I'm about just beend
three thousand dollars and that's a huge amount of money

(09:09):
for me on a laptop.

Speaker 3 (09:11):
But it also has the energy of a place where
I want to buy said three thousand dollars item and
leave as fast as possible.

Speaker 1 (09:18):
Sure, yes, yes, you don't want to stay in the
Apple store, but you need to trust that the things
that they sell you at an Apple store will work. Right. Sure,
so he remodels jcpennies to like have a more high
end look. And here's how Patel summarizes Ron's first six
months of CEO. He has eliminated coupons and promotions, replacing
them with an everyday low price model. He's begun redesigning

(09:40):
stores into a town square format with branded mini boutiques.
It is a radical, expensive, simultaneous change on multiple fronts.
The early data is alarming. Same store sales are dropping,
are falling sharply, not just a blip, but a structural collapse.
Customers who had shopped at jcpenny for decades are not returning.
The store traffic numbers deteriorating every week, So six months

(10:03):
not a lot of time. They start turning these jcpennies
into town squares with boutiques, and they stop having Cuba.
It's really what they stop having cupons. People stop going
to jcpitnies immediately.

Speaker 2 (10:15):
That's not what pennies is about.

Speaker 1 (10:18):
No, no, you fucked it up, you moron.

Speaker 2 (10:21):
Nobody wants Apple Store for pants.

Speaker 1 (10:24):
No no, And that's the gist of the problem. Right.
Ron was very good at selling premium consumer tech products,
and an Apple Store is a good place to sell
a premium consumer tech product. Right. iPhones are ubiquitous devices,
but like most like most people own iPhones are not rich.
It's not like only people with money have iPhones. It's

(10:45):
a very normal thing to own. But for most people
who are not rich, a smartphone is going to be
the most expensive thing that you have on you on
a day to day basis, right, And like your smartphone
and your laptop, they're up there with like your car
and your house, is like the most of single things
that you own. So if you're going to be making
a purchase like that and you're not with a lot

(11:06):
of money, if you're someone who's making like a thousand
or a two thousand dollars purchase, then that's a huge
huge deal. You probably feel better doing that purchase at
a place that feels like premium and clean and functional. Right,
But that's not what you go to j C Pennies for, right,
And JAZ Pennies knows this from the jump. They're loyal

(11:26):
customer base. The people who keep j C Pennies in
business at this point in time are women aged thirty
five to fifty five wold whose households made between thirty
five thousand and one hundred thousand dollars. Right. These are
not people looking at for a premium experience. These are
people looking for a deal because they have to cut money.
They have a family, they don't have, they have to

(11:48):
stretch every dollar. They're not looking for a premium experience.

Speaker 2 (11:52):
You know, solid, reliable, affordable, mom friendly. That's Pennies exactly.
Like that's what we want, that's what the people want.

Speaker 1 (12:02):
And what brought me up. Pennies You can't And that's
like Ron's whole thing. His proudest move is that we've
brought more than one hundred different brand name boutiques to
sell their wares in these new town squares that we're designing.
And these include brands like Jonathan Adler he's braying, we've
got these three thousand dollars couches in JC Pennies now,
and it's like, but people don't want to buy a

(12:23):
three thousand dollars couch at JAC Pennies for no discount.
That's not why you go to Pennies. And people are
pointing this out at the time. According to d magazine quote,
if you said, and this is them interviewing an employee,
if you said our customers, she can't afford this or that,
you'd probably get fired, and says one headquarters employee. So
you didn't say anything, right, because this is what we're doing.

(12:46):
You know, it's the same thing like this AI shit.
If you bring in like, I don't know if this
works here, I don't know this is a good place
to be using this. I think this has actually made
our workflow worse. You can't say that. You're not allowed
to have that opinion, even though it's accurate, because because
the boss has said, we're doing this thing and it
has to be a good idea. Right.

Speaker 2 (13:04):
Meanwhile, the customers whose money you want, they go in,
they see a nice couch, they look, oh, I can't
afford that.

Speaker 1 (13:10):
Now, I can't afford they don't want to hear to
get socks, right, I'm trying to buy like a ship,
like back to school. Shit. I don't need a three
thousand dollars couch.

Speaker 2 (13:19):
I were Pennies coupon send me. I'm going to Annie
Ann's on the way out.

Speaker 1 (13:27):
You should know, like J C. Pennies, unless it's marked
down eighty percent, people aren't buying furniture at j C. Pennies.
The people who shop at Pennies get their furniture from
craigs Let's in two thousand and eleven.

Speaker 2 (13:39):
Right, I didn't know that they had furniture at Pennies.

Speaker 1 (13:44):
Nice stuff.

Speaker 2 (13:44):
We didn't go to that level.

Speaker 1 (13:50):
So, uh, the fair and square pricing is also a disaster.
That's the biggest catastrophe, the fact that they're and again
they don't Bill and I don't understand this at all.
They're like, well, but the prices aren't changing. We're just
not pretending, you know, by having these like oh now
we have a coupon, we're always giving you. No, that's
not that's not how people's brains work, right, And within

(14:11):
days of the change, as soon as they stop taking coupons,
customer's fucking riot. There's an immediate drop off in traffic,
and it says it says a lot about Bill how
much this surprised him. And here's a quote from Bill. Interestingly,
people seem to be happier buying something at fifty percent
off that costs fifty dollars as opposed to it being
marked forty dollars, and they're being no discount. And that's

(14:34):
how Bill interprets this. And you can you can see
he's like, Wow, people are dumb, right, That's the lesson
he takes is, oh, we failed because people are idiots
and they can't do math. And I thought people were smarter.
That's not really what's happened. And here's Joseph Ginto does
a good job of like explaining the error in Bill's thinking.

(14:54):
Buyers don't just want something that at fifty dollars that's
marked half off because they're stupid. They want to buy
something at half off because they don't trust that the
company's every day low price is in fact fair and square.
This is the American way of haggling. We doubt the
price tag, but we don't confront the seller. We simply
remain silent about our misgivings until a sale comes around,
and at JC Pennies, a sale always came around. In

(15:16):
twenty eleven, just zero point two percent of all products
sold at a jcpenny store were sold at full price.
That means Johnson's Fair and Square was a radical change
in strategy, and yet it was never tested with customers
before being rolled out nationwide and was not vetted in
advance by the board. So they have internal details that
show zero point two percent of our sales our full price,

(15:39):
ninety nine point eight percent of our sales are discounted
to some extent, and we're getting rid of discounts, and
they don't even test it. They don't even have like
a trial JC Pennies to see if this works and
makes people happier. They just do it. That's malpractice, right,
that's surprise.

Speaker 2 (15:58):
Oh my god. How the best way to de stabilize
a working class mother is to change literally anything she's expected.

Speaker 1 (16:06):
Yeah, It's like it's like if your kid turns sixteen
and you're like, all right, well, it's time for you
to learn how to drive. So I am putting you
in command of a shipping vessel in the uh like
heading through the straight up horror moves. Just just driver
straight through son, you got this. I'm gonna be I'm
not gonna be on the boat. But you you you
can handle this, Pilot three. You're smart, you know, like

(16:27):
it's just it's malpractice. It's deeply irresponsible, Oh my god.
And it's it's very funny to me that Acman's interpretation is, well,
people are dumb and they can't do math, And the
reality is, like, you didn't test this, you didn't check
to see how people would respond before you did this.
Everywhere people, your customers aren't the stupid ones. Bill, You're

(16:49):
a dummy. That's dumb.

Speaker 2 (16:53):
They have focus groups at the mall. Yeah, I've done that.

Speaker 1 (16:57):
I'm feel like twenty by god, like we did ab
testing on titles of articles for crack let alone, fucking
your entire sales strategy. So anyway, uh yeah, I think
Ackman and the fucking Apple store guy rushed to make
reckless changes and didn't follow any of the best practices
for doing that sort of thing, because hey, it worked

(17:17):
at Apple, how could we lose. We've got the guy
from Apple. Have you seen how much money Apple makes? Right?

Speaker 4 (17:23):
Because when I think JC Penny, I think Apple.

Speaker 2 (17:26):
Yeah, Apple absolutely the same thing.

Speaker 1 (17:30):
It's so they don't even I don't think Bill thinks
beyond it in any way. And when this completely fails,
he is caught so hard by surprise.

Speaker 5 (17:38):
Now.

Speaker 1 (17:38):
Ron Johnson, for his part, claims, initially after the first
six months, when the company's hemorrhaging money, this is just
like the pain inherent to transitioning to a more sustainable
business model. Customers are gonna come back in time, and
it'll be fine. We just got to stay steady as
she goes, and Ackman is like, We've got all full
faith behind you, Ron, We're backing you up to the hill.

(17:59):
Keep going, you know, we'll continue plowing forward. So months
more go by, and by the summer of twenty twelve,
sales are still down across the board. There's no sign
the customers are coming back, and Johnson starts to backtrack
on some of his most controversial moves. He reintroduces clearance
racks and sales to j C. Pennies, but he keeps

(18:20):
these expensive remodelings going without ever testing the plan on customers.
He never checks to see do they like the remodeled stores.
He just keeps spending insane amounts of money on it.
And now no one's showing up at j C. Pennies
anymore because he screwed that pooch already. At no point
were there any hints that his strategy might have a
chance of succeeding, but Ackman protected Johnson from calls to

(18:44):
replace him, and the work went on. In April of
twenty twelve, Johnson cut fifteen percent of the HQ staff
in Plano and fired thousands of employees nineteen thousand total layoffs.
He blamed the company's issues on these people, stating in
February of twenty thirteen to The Wall Street Jannal that
the Jcpennies headquarters staff and Plano had been overstaffed and unproductive.

(19:05):
Per D magazine as proof, they claimed that employees and
Plano had watched five million YouTube videos in a single month,
and that a third of the time headquarters employees spent
on the Internet was for purposes unrelated to work. And
that's really gross, vindictive ass covering. The only reason you
put something like that out as opposed to doing what
like normally you do, which is like, we have to
make these layoffs, and we're sorry to have to let

(19:27):
these talented people go, but that's just the way business works.
When you're like, no, they were just watching YouTube videos.
You're trying to explain why your strategies aren't still working,
and you're trying to blame it on these lazy people
at headquarters. It's not their fault. You ruin the company, right, Yeah.

Speaker 2 (19:42):
Going after the people that are probably being paid a
salary that makes it so that they often shop at
j C Pennies, Like you probably should have just asked
them what they thought in the first place. You wouldn't
have to let anybody go.

Speaker 1 (19:53):
Now if they said what they thought thought, they would
have got fired. So they stopped speaking up and just
watched YouTube videos while the companies circle the drain because
you clearly weren't gonna listen to them. So it's yeah,
it's a disaster. Ron gets let go not long after
this point. He's CEO for like a little less than
a year and a half. The board brings Ulmen back temporarily,

(20:16):
and Ackman calls for him to be fired again, even
as he's trying to like pull Pershing out from its
investments because all of its investments in AC Pennies are
bleeding money. Now. Howard Schultz, CEO of Starbucks and member
of the Pennies board. He's actually weirdly this is how
bad Bill Ackman is at what he's doing. Howard is
like a voice of reason here. So Schultz is on

(20:36):
the Pennies board and he makes the unprecedented almost decision
to publicly shit talk another board member. It's really bad
for your company's stock price if board members are talking
shit about each other while the company's going through crisis.
And the fact that Schultz does that says a lot
about how desperate the situation is. So this is what
Schultz says on CNBC. This is the truth. This is

(20:58):
not fiction. Bill Ackman was the primary engineer and architect
of recruiting Ron Johnson to the company. He and Ron
Johnson co authored a strategy that has fractured the company
and ruined the lives of thousands of jcpenny employees. Bill
Ackman has the blood on his hands for being the
architect and the recruiter of Ron Johnson and then the
co author of the strategy. Okay, Howard, why old for

(21:19):
Schultz to be the good guy here? But he's not wrong.

Speaker 2 (21:23):
I mean, where was that Howard Schultz? One of the
fucking workers at Starbucks unionized.

Speaker 1 (21:28):
Wow, well, thank god. Hey, hey, hey, you're not gonna
eat where he's shits. So Johnson's tenure at JC Pennies
lasted just seventeen months, but in that time, same store
sales fell by thirty percent and the company lost around
a billion dollars in cash, roughly equal to Pershing's investment

(21:49):
in the company. Ackman resigned from the board in August
of twenty thirteen after selling off his entire position, netting
a five hundred million dollar loss for his company at
the same time as Hellall's making bills. Now, at this point,
it shouldn't be surprising when I say Bill Ackman by
twenty twelve is as least as hated as he is

(22:09):
respected by his peers in the finance industry, right like
not shaq, When fucking Howard Schultz is talking shit about
you in public and you're on the same board, Yeah, man,
One hedge fund manager told Vanity Fair, there's a saying
in this business often wrong, never in doubt. Ackman personifies it.

(22:30):
He is very smart, but he lets you know it,
and he combines that with this sort of no bless
obliged that lots of people find offensive me generally not
on top of that, he's pointlessly, needlessly competitive every time
he opens his mouth. And then this person immediately asked Cohen,
the interviewer, the journalist behind that article, do you know
about the Ackman cycling trip with Dan loebe And I

(22:52):
can't wait to tell you this story about Bill Ackman,
but first we should tell the story of the people
who sponsor this podcast.

Speaker 2 (23:01):
I'm so excited.

Speaker 1 (23:03):
I am too.

Speaker 2 (23:04):
Yeah, I love when they fight, like rich Dude's fighting
is the best thing.

Speaker 1 (23:09):
Ah, And we're back. So, as you were saying, Kim,
these people, it's very funny, like because we're about to
talk about like a legendary story and a legendary like
rich guy Beef, because all of the people in this
story are like rich ghules to some extent. But there's

(23:33):
also there's the there's the ghouls who you can clearly
you can identify with some extent. Is like, well, this
is this is an intelligent person who's capable of like
looking at the world as it is and like seeing
things realistically, and there's this person who's narcissism has completely
blinded them to reality. And it's yeah, I love this tale.

(23:54):
So in the summer of twenty twelve, Bill Ackman decided
to go on a long cycling journey with a group
of very rich guy friends, or at least he's friends
of like one of them. I think these are mostly
friends of his buddy Dan Lobe, right. And Dan Lobe
is a triathlete who takes cycling very seriously. He's another
multimillionaire investor type, you know, finance dude, as are all

(24:15):
the guys in this cycling group. But they're also like
guys who take cycling seriously. Right, These guys are super rich,
but they're also like serious athletes, like Dan Lobe is
a competition triathlete. He does marathons. He's in really good shape,
and he knows how you handle a long bike ride. Right,
all of these guys do.

Speaker 2 (24:32):
But like, it's not exactly the wilderness to talk right, Right,
you can stop doing soda.

Speaker 1 (24:39):
But you have to you have to be reasonable about it.
If you ride at a reasonable pace, if you don't
go more than your body can handle, if you're like
you know, properly hydrating and fueling yourself, you can get
through something like this, okay, you know, even if this
isn't something you do regularly, but immediately as soon as
they start cycling, he rides out far in front of everybody,
going as fast as he can immediately as his hyper

(25:02):
competitive instincts, that's how Lobe describes it, drove him forward right,
So like he's he can't handle the idea of like, well,
these other guys who cycle all the time are better
at cycling than me. He has to beat them all.
He has to be the best. And so I'm going
to quote from Cohen's article here what comes next. As
he and Lobe approached Montalk, Lobe texted his friends who

(25:24):
wrote out to meet them from the opposite direction. The
etiquette would have been for Ackman and Lobe to slow
down and greet the other writers, but Acman just blew
by at top speed. The others fell in behind at first,
struggling to keep up with the alpha leader, but soon
enough Ackman faltered and mile thirty two Acman recalls, and
fell way behind the others. He was clearly bonking, as
they say in the cycling world, which is what happens

(25:45):
when a writer is dehydrated and his energy stores are
depleted while everyone else rode back to Lobes's East Hampton mansion.
One of Loebe's friends. David Tiger Williams, a respected cyclist
and trader, painstakingly guided Ackman, who by then could barely
pedal and was letting out primal screams of pain from
the cramps in his legs, back to Bridgehampton. I was
an unbelievable pain, Actman recalls, As one writer notes, I've

(26:07):
never had an experience where someone has gone from being
so aggressive on a bike to being so hopelessly unable
to even turn the petals. His mind wrote a check
that his body couldn't catch.

Speaker 2 (26:17):
I love it.

Speaker 1 (26:18):
I love it.

Speaker 3 (26:19):
Nice finance joke. Snaps for the finance joke. Well done,
it's beautiful, Oh my good, credible Jesus Christ.

Speaker 1 (26:28):
What almost screams like it's such a profound failure of humility,
of like basic humility of like, well, I can't do.

Speaker 2 (26:37):
That, weird like gay he's got.

Speaker 1 (26:41):
Everybody, he's got to be the best. Yeah, I can
do that. No you can't, Bill, you can't. That's fine,
you don't do this normally.

Speaker 2 (26:48):
I wish you could see a guy like that on
like Survivor or Alone.

Speaker 1 (26:51):
Yes, it's always beautiful. You do sometimes and those are
the best episodes. Yeah, I'm it's nearly always a cop
on the loan. It's always like someone who is like
a cop and came and like, oh, I'll be ready.
I'm ready to survive, and then they get scared because
it's scary.

Speaker 2 (27:06):
I'm watching The Arctic Circle one right now, and there
is a cop and I am just.

Speaker 1 (27:10):
Waiting, waiting for him to his mind to break.

Speaker 2 (27:15):
A couple more episodes.

Speaker 1 (27:16):
So by the time twenty twelve rolls around, Bill is
embroiled in this disaster with jcpenny and one of his
subordinates has a shocking million dollar hit, multi billion dollar
hit with Canadian Pacific, Right, And my interpretation is this
kind of eats a Bill Right that his last big
success in his company with someone else, and he has
this really public failure, embarrassing, embarrassing failure at jcpennies. Bill's

(27:40):
got an ego, and I think he fundamentally just needs
the limelight that comes with getting the credit for giant,
bold business moves, and he starts casting about for a
project to call his own. In twenty twelve, he settles
on a whale of one Herbalife. Herbalife is a multi
level marketing company that sells like drink powders and nutrition shakes,

(28:00):
a lot of nutrition products, Like what is a nutrition shake? Like,
what do you mean you're giving me food? Does that?
Are you saying you're selling food?

Speaker 2 (28:09):
You know all my girlfriends from high school, I'll tell
you that.

Speaker 1 (28:13):
Yeah, yeah, right, yeah, all the hunts.

Speaker 2 (28:14):
Out there, like before all the MLM like documentary conflicts
Herbalife Man erbal Life, it was massive.

Speaker 1 (28:22):
Yeah it's still I mean, I think it still is,
but yeah, it's still out there. Erbalife's critics will argue,
I think accurately that the real business for erbal Life
is convincing people to become erbal Life distributors, which they
are told is a great business that will change their
lives and make them financially independent. Roughly ninety percent of
distributors either lose money or just barely break even. Many
people argue that Erbalife isn't really a business and shouldn't

(28:44):
be treated like one. And Bill Ackman is one of
these people. He is in the right here in my opinion,
and it's to his credit. This is actually him deciding
to do like real activism as an activist investor. So
he has his company short Erbalife by a billion dollars, right,
which means that if things get worse for orbitlized erbal
LiF's bottom line to a certain extent, his company makes

(29:05):
a bunch of money, but the company has to like
really flatline for that to happen. And at the same time,
he does the Bill Ackman thing where he starts some
media blitz. He has this big press release stating out
laying out what things are the fraudulent elements of erbal
Life's business and saying like, I'm pushing to have you know,
my contacts and the federal government investigate erbal Life. These
are the crimes that I think they're involved in. The

(29:27):
company is clearly going to collapse in the near future.
And the thing the Bill is saying is he's trying
to short the company. He's not just saying I'm going
to short the company and I think there's stock value
will fall by this much. He's saying, I think it's
going to fall to zero. I'm betting to short the company,
but I want to destroy it, and I think it
is going to be destroyed because they're breaking the law

(29:49):
and the government is going to come after them like
in the near future.

Speaker 5 (29:52):
Right.

Speaker 1 (29:52):
That's the thing that Bill is putting out in the press,
and that's what he very much seems to believe. And
he comes into this wheeld all the tools of his trade. Right,
He's learned at this point you can boost or reduce
a stock price with strategically applied publicity, and he uses
these same skills to put downward pressure on erbal Life
stock value. He publicly brags that his goal is to destroy,

(30:14):
is to like, you know, reduce erbal Life stock price
to zero, in effect killing the company. And this is admirable,
like erbal Life's bad. I wish this had worked, and
it doesn't, and ultimately Bill risks everything here on a
belief that an ongoing US government investigation into erbal Life
will find the company irredeemably corrupt and criminal. Right. Bill

(30:35):
is a system loyal guy. The system has always worked
out well for him, and he does. It's so sad
because of all, for all that, I don't like this guy.
He clearly sees and recognizes how evil Herbalife is, that
it's just hurting people, it's destroying people's lives, it's robbing people,
and he he thinks, he's like, well, the right thing

(30:56):
to do is to use my financial power to kill
this company, and maybe I can. But he also has
this belief that, well, if what they're doing is criminal,
then as soon as the government finds out about it,
they'll stop it. Right, So that makes this a good
investment for me, right, And that's key. He's not just
an activist trying to do the right thing. He's trying

(31:18):
to make money doing the right thing. And he's betting
a billion dollars on the US government doing the right thing.
Oh my gosh, how do we think that's gonna work.

Speaker 2 (31:31):
Bless his heart, as they say in the South, Yeah.

Speaker 1 (31:34):
Bless his heart. So what Bill doesn't understand is that
erbal Life and it's Erbalife's friends own the system, or
at least large parts of it. In twenty thirteen alone,
erbal Life spent about two million dollars on federal lobbying.
But that only tells a small part of the story.

(31:54):
Robert Fitzpatrick, an activist with Pyramid Scheme Alert, calls the
association of all these different mlmbs and companies that are
on the edge or outright pyramid schemes that put money
into US politics, the pyramid lobby. This is like this
vast assortment of dark money groups and industry organizations that
exist quote not just to curry favoritism from lawmakers, but

(32:17):
to prevent its extinction. In other words, because everything that
these companies are doing ought to be illegal.

Speaker 2 (32:24):
Right.

Speaker 1 (32:25):
If they're actually being dealt with based on what they're
doing to people, they'll be shut down. So in order
to keep this industry from being wiped out, you have
to lobby to basically keep crime legal.

Speaker 2 (32:38):
Right.

Speaker 1 (32:39):
Like, That's kind of how the pyramid lobby works, right, And.

Speaker 2 (32:42):
Now that's a good evil name the pyramid lobby. It
it's like the Freemasons, Yeah, right, good works something spooky
And if Fitzpatrick works, the only way that the pyramid
lobby can prevent its extinction is to thwart law enforcement
in consumer protection, right, which should be protecting people from
peer mid schemes.

Speaker 1 (33:01):
I'm going to quote next from an article in the
Nation about MLM lobbying by Rick Pearlstein. Quote. The targets
for that campaign are almost exclusively Republicans. For MLM fraudsters
are a huge part of the conservative infrastructure. Of course,
in the case of the mighty de Vos family in Michigan,
the conservative infrastructure in the MLM industry almost entirely overlap.
Richard de Voss, Senior, number sixty on Forbes's twenty twelve

(33:23):
list of Wealthiest Americans, with an estimated net worth of
five billion dollars made ripping Americans off founded Amway, short
for American Way in nineteen fifty nine. In nineteen seventy nine,
the company was forced by the Federal Trade Commission to
tell distributors that over half its distributors do not make
money and that the average distributor made less than one
hundred dollars a month, a stricture they promptly violated. None

(33:44):
of that kept the Devace family from rising and Republican
and conservative politics after all. Between nineteen ninety one and
nineteen ninety seven, Common Cause documented Amway affiliated companies gave
four point four million in soft money to the Republican
National Committee, de Voss and his wife giving one million
in April nineteen ninety seven alone. In two thousand and
Amway gave one point three to eighty five million in
soft money to the RNC, just five hundred dollars less

(34:05):
than run and DeVos hosted a party starring Colin Powell
and his private yacht on his private yacht. At the
Republican National Convention in two thousand and four, DeVos and
his co founder Jay van Andel gave two million each
to the Fight with to the Right with Progress for
America five two seven, and in two thousand and six
his son tried and failed to win the Michigan governorship.
So there's a lot of money in the pyramid scheme lobby,

(34:27):
and they put a lot of it into politics, and
Ackman is not ready for this. Either he just doesn't
know this, or he doesn't think about this, or he
doesn't think it should matter because what they're doing is
so obviously a pyramid scheme, but legally it's not. Legally,
Rbalife is not a pyramid scheme. Legally, an MLM is
distinct from that, and Rbalife and their fellow businesses have

(34:50):
put a lot of lobbying dollars into making sure that's
the case. And so if you want to make the
if you're an actual activist, you would just be like, well,
but it's still wrong, and I'm going to fight because
it's wrong. Knowing that they have already bought the government
and that this is an uphill struggle and that it's
not a fair fight. Bill is not ready for that,
and so he's totally caught off guard when a lot

(35:12):
of heavy artillery comes to Rbalife's aid. There's this swarm
of counter activist investors. I guess you'd call him, right,
So he and his activist investors short the company buy
a billion dollars basically, and then these two billionaires Daniel
Loebe you know, the guy who had been part of
that bike right by right, his bike buddy, and Carl Icon,

(35:33):
who is an incredibly sketchy hedge fund billionaire. Right, So
these two guys get together on the other side of
this deal right to fuck Ackman basically, and they're like, okay,
if he's shorting it by a billion dollars, all we
have to do is pump a bunch of money buying
herbal Life stock to put up the stock value until

(35:54):
Ackman all of his like, his short basically fails and
he loses all of that money.

Speaker 2 (35:59):
Right, So thought they were friends.

Speaker 1 (36:02):
Absolutely not. Nobody likes this guy, and yeah, and that's
I'm not a finance guy, but that's all you need
to know. If Icon and his friends can keep erbal
Life stock up, Bill loses a shitload of money for
pershing right, And it becomes immediately once all of these
other guys start putting money into erbal Life, it becomes
very obvious to everyone watching that Bill is in trouble

(36:24):
that he might lose this because there's a lot of
money arrayed against him. Bill somehow can't see it.

Speaker 5 (36:30):
Now.

Speaker 1 (36:31):
There's a documentary about Acman's crusade against erbal Liife called
Betting on Zero. It's a good watch because if you
really when you watch it, you really get to see
how arrogant Bill is. At the start, he's very insistent
that this is going to work. Erbal Life will die
and the US government will punish them and his short
will work. Right, you get a good example of his

(36:52):
rhetoric and his self confidence. And the clip that Sovie's
about to play this is from an interview that Bloomberg conducted, right,
and this is by the point at which he's being
interviewed for this, his company has already lost half a
billion dollars on this failed short. So this is him
being interviewed by Bloomberg.

Speaker 4 (37:11):
Some other investors and they are able to put together
an LBO. What is that going to mean for you?

Speaker 5 (37:16):
More opportunity for us to be short the company. I
mean for a couple of things. Number One, in order
for the company to be taken private, they need to
get out of the financial statements. Then they need to
be able to borrow money. And if you think about
the proposition from a lender or an underwriter of a
bond issue, I mean, this would be a big deal. Right,
So the stock today has let's say a seven billion
dollar market cap at eight billion dollar something close to
an eight billion dollar enterprise value. Let's assume they paid

(37:37):
nine and a half or ten billion to offer a
premium to shareholders. Right, they'd have to borrow five billion,
six billion dollars of a major LBO. They have to
raise five billion dollars of equity capital. I'm not sure
Carl is really a big believer or these in this
business on a very long term basis. But let's assume
they could find the equity capital. That ma'd be very
difficult to borrow the money, assuming they could issue bonds

(37:58):
to do it. And we were forced out of the
ten because the company was taking private. We'd replaced the
position with credit. The fault swaps, and we keep going on.

Speaker 1 (38:05):
This is not so, He's again, it can't go wrong,
Like they can't raise the money, There's no way they
could do it. It's impossible for this to right, Like,
there's no not a hint in his mind that all
even half a billion dollars down after failing at j C.
Pennies in a major way, not a doubt in his
mind that this is going to work out. It's remarkable
that kind of confidence. And again, guys, I hate my

(38:28):
enjoyment of this, of him being like really arrogant and wrong,
is ruined by the fact that he is in the right.
I wish he'd killed Erbalife. That would have been awesome, right.

Speaker 2 (38:38):
Like, yeah, using your evil money for good.

Speaker 1 (38:41):
Yeah. Yeah. But that's the thing though, it's never quite
even that because Bill Bill had hoped to knock Erbalife
out of commission via the strength of his own financial power,
but he also wanted to get even richer doing it.
And when that it is to his I'll say this
when he when there's initial difficulties, when it becomes clear

(39:02):
this is not going to be easy, he does start
getting close with a lot of activists, like long time,
and these are mostly activists in the Hispanic community who
have been fighting Erbalife for a long time because erbal
life does a lot of damage to Hispanic families, right,
They a lot of people get conned into erbal life
and they lose everything. Right, So, these long standing activists
who have been pushing for change, Bill, you know, starts

(39:22):
working with them. He does some joint events, and you
can really see in the documentary that after this first
series of blows and he's down half a billion, he's
fucking exhausted and like kind of shell shocked by it.
And these longtime activists are not at all surprised or
concerned because they're activists. They know that you're losing ninety
nine percent of the time. That's the business, right, That's

(39:45):
what activism is is losing most every time until you win.
And Bill isn't really he doesn't have what it takes
to do that. Like, he doesn't. He can't. He can't
handle it. He can't take those hits. He's just not
ready for it. He has gotten armor for it, he's
got No, he can't. He can't handle the fact that like,

(40:07):
yes it's unfair and yes you're going to lose. And unfortunately,
because this is all tied into like a financial bet,
he also can't afford to lose past a certain point, right,
because it's other people's investment money that he's doing this
with that he's losing. And yeah, Bill does, and Bill

(40:27):
did say because back when he was planning to make
a billion dollars doing this, he did repeatedly talk about
donating any of his profits because he didn't want to
make He called it blood money. He's like, I don't
want to make money off of this personally, and I
believe him. I actually don't doubt that he would have
donated any of his personal profits. However, as The New
York Times noted, the clients who invest in his hedge fund, however,
would still benefit enormously. So there's no point at which

(40:47):
he doesn't have a financial angle here, right, And that's
part of why he's not going to have much long
term appetite to really keep fighting this. I found a
good New York Times article from around that period that
discusses how Bill used his influence, particularly with Democratic Representative
Linda Sanchez of California, and he lobbies her to send
a letter to the FTC demanding an investigation of herbal life.

(41:09):
For the Times, corporate money is forever finding new ways
to influence government. But mister Ackman's campaign to take this
fight to the end of the yearth using every weapon
in the arsenal that Washington offers in an attempt to
bring ruin to one company is a novel one. Fusing
the financial markets with the political system to pressure state
and federal regulators to investigate rbal life and act that
alone could cause it stock to dive. His team has

(41:30):
helped organize protests, news conferences, and letter writing campaigns in California, Nevada, Connecticut,
New York, and Illinois, although several of the people who
signed the letters to state and federal officials say they
do not remember sending them. An investigation by The New
York Times is found out, So maybe a little sketch
there too.

Speaker 2 (41:47):
Wow, real grass routs organizing right there.

Speaker 1 (41:51):
Real real grassroots stuff. Now. Ultimately, the weight of hedge
fund guys wanting to see Bill Fayle was greater than
the weight of money and govern much scrutiny that Bill
could bring to bear on herbal life, and this is
unfortunate that he loses. I do wish that he had
won here, but it's worth exploring because the reason he
loses is that a lot of other rich assholes are

(42:12):
willing to go to war with him and risk their
own money because they feel like they can beat him
and take his money right. And to look into that
a little bit more, I want to quote from that
article for Vanity Fair that Cohen wrote, it's Acman's perceived
arrogance that gets to his critics. The story I hear
from everybody is that one can't help but be intrigued
by the guy just because he's somewhat larger than life.

(42:34):
But then one realizes he's just pompous and arrogant and
seems to have been born without the gene that perceives
and measures risk. He seems to look at other members
of society, even legends such as Carl Icon, as some
sort of subspecies that disgusted, annoyed. Look on his face
when confronted by the masses beneath him is like what
you'd expect to see from someone confronted by a homeless
person who hasn't showered in weeks. You can almost see
him puckering his nostrils so he doesn't have to smell

(42:55):
these inferior creatures. And that's interesting that other like psychopathic
and Carl Icon this guy defends Carl as an icon.
Carl is a bad person. We'll do an episode on
him at some point. The fact that he's the issue
these guys have is that, well, he doesn't like us either.
He treats us like we're beneath him too, not just
poor people, but other rich people who he doesn't think

(43:18):
are are like as good a people as him. He's
he's a real dick to.

Speaker 2 (43:23):
Man. I mean, there's no solidarity amongst thieves, but they
really don't like that one specific guy.

Speaker 1 (43:29):
No, some of the thieves have solidarity against this specific
fief or no honor amongst.

Speaker 2 (43:35):
Either way, Like you gotta be a real jag off
to like to fail out of the rich Jagoff club.

Speaker 1 (43:43):
Yeah, it's fascinating. So this all culminates in a giant
fight between Carl Icon and Bill Ackman on CNBC in
twenty thirteen. And so he's gonna play a very short
segment of this very remarkable clip. You don't often get
to see two billionaires embarrassing each other like on live TV.
It's very funny. We're just going to play you a
brief little segment of it.

Speaker 5 (44:05):
This is Bill thing called me up and he literally said,
you know, Bill, we can be friends now.

Speaker 1 (44:09):
I definely said that I want to be friends with
with you.

Speaker 2 (44:12):
Bill.

Speaker 1 (44:12):
Okay, let's talk with lies. Would you do on Earth?
I listened, fun admitted he called me and said he
wanted to be friends. Actually, after this, we're gonna be
a Bill. That's Bill being like Carl called me and
said I would be I didn't say that to you.

Speaker 2 (44:27):
What on Earth? It's incredible, It's so funny.

Speaker 1 (44:34):
My god. It wouldn't take years for Bill to give
up on his crusade against Herbalife. But the short summary
is that he did lose badly in the end. Yeah.
On November of twenty seventeen, Herbal Live stock ended up
fifty one percent UH year over year, which is really
bad if you're shorting them. This inspired Acman to cut

(44:55):
his short position and convert it to a put position,
but that doesn't really work either, and guft does nineteen,
he dumps all of his remaining positions, effectively acknowledging that
his one billion dollar bet had been a failure. Herbal
Life stock with up six point three percent at the news. Yeah,
and we'll talk about what happens next for old Bill,
But first, what happens next for you is these heads

(45:24):
and we're back. I do feel bad that Bill lost
against Herbalife, like I wanted him to kill him.

Speaker 2 (45:29):
But yeah, it's like, who do you root for? You?

Speaker 1 (45:33):
Like, I would have been happy in this case if
he'd made a billion dollars fucking up Herbalife, but he doesn't.
He kind of does the opposite. He made it stronger,
He makes it stronger. Kind of. Yeah, bad news Again,
you can't in this case, you can't use the master's
tools to dismantle the master. Right, that's a flaw, not

(45:53):
a fully not a statement I always agree with, but
certainly in this case it's proven true. So I'm not
going to spend all of the rest of these episodes
listing all of Bill's hits and failures, right, because he
does have a lot of other hits. He's not just
fuck ups. He makes a lot of money activist investing
in Chipotle. He also loses a bunch of money. He makes,

(46:13):
like a two hundred million dollar investment in to Borders,
which failure fails spectacularly because like they file for bankruptcy
not long after, and Bill acknowledges this investment as a
big mistake. But right after making the investment in twenty ten,
he got on CNBC's Fast Money and said, I think
the company is stabilized. The stock trades as if it's
going bankrupt, but we don't see that as a likely behavior.

(46:35):
I think Borders is much more attractive risk reward than
Barnes and Noble. Ultimately, I think the industry may consolidate,
the two companies may become one. And that again very
telling of Bill that he's like, well, the stock's acting
like the company is going bankrupt. Probably not gonna happen, though,
good place to put park two hundred million dollars.

Speaker 2 (46:52):
This man has killed every company my grandmother loves.

Speaker 1 (46:56):
It's funny. Yeah so. And the fact that none of
that because that articles from twenty ten, when Bill's record
was much better. But the fact that none of his
predictions here are right makes something I found at the
end of that CNBC article very funny. For a donation
of a thousand dollars, you could be among a small
group of two hundred people who have the opportunity to

(47:16):
gain investment insights directly from Bill Ackman during the Harbor
Investment conference. Oh boy, wish i'd gotten some of those
and those insights.

Speaker 2 (47:26):
Damn, what a scam.

Speaker 1 (47:29):
So by the time we started approaching the Trump years,
the bloom is firmly off the rows in terms of
Bill's reputation as an investor. Now he's still a multi billionaire.
He's worth eight or nine billion dollars. His fund is
still worth a lot of money. He has a lot
of successes. It's not like he always fails. There's always
successes alongside the failures. But his big hits are about

(47:50):
as numerous as his big failures. Central to each of
these is Bill's fundamental unwillingness to acknowledge the possibility that
he might ever be wrong. Herbal life was definitely gonna
hit zero. Ron Johnson was for sure the right guy
to fix JC Pitny Borders can't go bankrupt, you know.
In early twenty fifteen, Ackman's hedge funds started putting money

(48:11):
on Valiant Pharmaceuticals. Their business was acquiring small drug companies,
firing people, and then jacking up the price of medication,
and Ackman thought this was a great idea awesome business
to be in. Per an article published on LinkedIn, he
believed Valiant represented the future of pharmaceutical efficiency, cutting out
traditional research and development expenses in favor of acquisitions and

(48:34):
pricing power. Yeah, why actually figure out how to make drugs? Well,
we can just cut up companies that are active actually
doing research and selling them for scrap. The only thing
I do now. Long story short, everything goes wrong with
this investment. The as soon as Bill puts money down,
the SECC starts scrutinizing Valiant for price gouging, and Bill

(48:57):
when people are like, hey, should we pull our money out?
This could be an shot, Bill refuses to see it
as a problem. He doubles down, increasing his stake and
Valiant even as the stock tumbles. It's a classic case
of over confidence and just like there's it's this this
psychological trap these guys find themselves and where they're like, no,
the market's got a correct, it's got a correct, it's
got a correct, and they just never get shit their

(49:19):
shit together. In the course of a year, Valiant stock
goes from two hundred and fifty bucks a share to
ten dollars a share, Pershing Square loses like four billion dollars,
and Bill's reputation takes a hit from which it has
not quite recovered. But by twenty nineteen, he was in
the black again, posting a fifty eight point one percent
return that year. So again another massive fuck up and

(49:40):
failure to see things. But overall, in part because he's
working at a big fund, he has employees like hill
All who are making good decisions. The company overall is
doing really well. That's not unrelated from all of Bill's decisions.
But you've seen now he's made a lot of fuck
ups too. Right for Bill, redemption for all of his
fits would come during what was for everyone else a

(50:02):
very bad year twenty twenty. In the spring of that year,
not long after the first US cases of COVID nineteen
were confirmed, Bill began positioning him himself to basically short
the US economy. Over the course of ten days, he
bought a bunch of credit default swaps on corporate bonds.
These are agreements where the seller pays the buyer if
a specific debt defaults. They're a bet on things getting

(50:24):
worse very quickly. As Ackman later said, there was this
massive storm coming. We could see the storm, but everyone
else was playing on a beach. It only cost US
twenty seven million dollars. Ten days later, it became worth
two point six billion dollars. We took that money in
March of twenty twenty with the market down thirty percent,
and we bought stocks. So Bill and Pershing make a

(50:46):
fortune betting correctly on economic disruption caused by the pandemic.
But Bill doesn't just put his money there. He uses
his pr savvy to stoke as much fear and certainty
in doubt as possible on the market. At least that's
what some people will argue. On March eighteenth, which is
about a week into him starting to make these investments,
he posts this long Twitter thread addressed to President Trump.

(51:08):
Mister President, the only answer is to shut down the
economy for the next the country for the next thirty days,
and close the borders. Tell all Americans that you are
putting us on an extended spring break at home with family.
Keep only essential services open. The government pays wages until
we reopen, and shortly thereafter, he gave an interview with
CNBC in which he warned hell is coming. As Brian
Baker wrote in an article for MSN, Ackman had essentially

(51:31):
bet on the US economy undergoing a mass of short
term shock due to the lockdown, and some belief his
messaging induced further panic. And this is kind of morally
nothing Bill said is wrong. Like that is accurate, right,
both in terms of what Trump should have done, simp
kind of what he did, and also true in terms
of like, yeah, hell was in fact coming for large

(51:52):
segments of the US economy in that period, and it's
not wrong to say that or urge a lockdown, but
doing to do that his win, You've shorted the economy
as part of an investment strategy. Maybe that you know evil, right,
some people, Yeah, you can't.

Speaker 2 (52:14):
You can't be saying something that's a little bit right
or a little bit helpful doesn't mean all of the
evil doesn't doesn't cancel it out, or.

Speaker 1 (52:23):
Or the fact that you're doing it to make money,
not because like you want the country to do the
right thing right, as Brian Baker wrote and then msn article.
One of Ackman's many critics was Galaxy Digital CEO Mike Novograts,
who reacted to Ackman's CNBC interview with a request for
the network please get Akman off CNBC before people start
jumping off bridges. Stephanie Rooley, a former banker and MSNBC correspondent,

(52:47):
called Acman's rhetoric, wildly irresponsible in putting on that grand
show while he was getting choked up and talking about
his father, he caused the markets to puke, and he
caused the circuit breakers to trigger, she told The Guardian,
adding that it was perplexing to see act caused such
a scene since he was very well respected. I'm not
emotional about investments, Acman Wance shared with The New York Times.
Investing is something where you just have to be purely

(53:08):
rational and not let emotion affect your decision making, just
the facts. And that all makes me think, Yeah, Bill
kind of was trying to stoke. He was not wrong,
but he was also specifically wanted to stir things up
because it would be good for these investments he'd made.

Speaker 2 (53:26):
You laid out of him doing that.

Speaker 1 (53:28):
He does that a bunch. Yeah, it's it's not a
conspiracy theory, really when that's how he got rich.

Speaker 2 (53:34):
Yeah, like a preferred tactic one, Mike say.

Speaker 1 (53:37):
That's how he makes his money. So Bill had previously
been someone that you couldn't accuse. At least one thing
we can say about him up to this point. Not
a right wing hardliner going after herbal life is not
a conservative thing to do. Right, that's actually arguably a
progressive thing to do, not necessarily the way he did it,
but we'll give some credit there. But during the Biden

(53:58):
years he goes on a right word lurch that seems
somewhat out of place given his enmity to a major
Republican party donor, and a lot of it is explicable.
A lot of his right word tilt in the latter
Biden years is explicable by the fact that on October seventh,
twenty twenty three, Hamas carries out a massive raid on Israel. Right,
we all know about what happened there and what happens,

(54:21):
what's that, what's continued to happen. And Ackman is a
huge supporter of Israel, right he is. He has taken
the most israel Hawk approach and interpretation of everything that's
happened ever since. Right, that is the kind of guy
that he is. Here. And when students on college campuses
started protesting Israeli atrocities in response to the ex October

(54:41):
seventh attacks, Bill got activated. Right what particularly tips him off? Number,
I mean, he's just very he's obviously horrified at the
raid itself, and then he supports Israel's response, and when
it becomes clear that a lot of Americans don't and
that the kind of media shield that Israel has enjoyed
and a lot of its responses and a lot of
like the violence that Hits carried out over the years

(55:02):
is failing, right, especially as things escalate to outright genocide,
he does actman cannot take that right like that. That
is not a thing that he likes to see. And
it's particularly all of these college student protesters that drive
him crazy. He is livid at the fact that there
are protests on the Harvard campus, and he demands publicly
that Harvard name any students who quote blame Israel for

(55:26):
the attack, so that he and other CEOs wouldn't inadvertently
hire any of them. Yeah, the big news, right, And
Harvard like does it for one thing? They don't have
data on that, like right, Like, yeah, how would they know?

Speaker 2 (55:44):
Hey, this is why you never sign up for protest.

Speaker 1 (55:46):
Kids, right, right? So when Harvard refuses, he grows angrier.
Per an article in New York Magazine by Kevin Dugan,
his attacks against the university started picking up steam following
the December fifth congressional hearing, with the presidents of Harvard,
the University of Pennsylvania, and the Massachusetts Institute of Technology.
During questioning from Representative Elise Stefanic of New York, Harvard
President Claudine Gay didn't explicitly agree that calling for genocide

(56:09):
against Jewish people would violate Harvard's speech standards. She said
it was personally opponent to her and later apologized. Ackman
then amplified Stefanic and conservative activist Christopher Ruffo in attacking Gay,
as well as Liz McGill of U penn and Sally
Cornboll of MIT for equivocating about anti Semitism on campus.
In this, Ackman was not quite a leader in the crusade,

(56:30):
but a strong supporting member of the team in demanding
the resignations of all three presidents. And I'm not going
to relitigate the Claudine Gay plagiarism controversy thing here because honestly,
I just don't find it that interesting. It should never
have really been that big a deal, right. Harvard initially
promised to support her, but Ackman stayed on the attack,
arguing that she had plagiarized or failed to properly cite

(56:52):
sources more than fifty times and Gay had made some mistakes.
She submitted corrections to at least three of her papers.
I don't care to go to bat four or to
condemn her for a bunch of like mild malfeasance to
moderate malfeasance in her college years. I just don't care
all that much. He also, but Bill does. Bill is

(57:12):
really obsessive about this, and he also tweets at length
about Mark Gorenberg, MIT's chairman, for reasons that are a
little less clear, because Mark's not really involved in a
college you know, protest controversy thing. But Bill has issues
with Mark's wife, per Kevin Dugan writing for Vanity Fair.
The connection here is at Gorenberg's wife, Katherine Stickney, is

(57:35):
the founder of Parity dot org, a nonprofit that advocates
for women in business to actman. Though parody dot org
is part of the larger problem on college campuses, which
have taken on diversity, equity and inclusion management philosophies. Under DEI,
one's degree of oppression is determined based on where one
resides in a so called intersectional pyramid of oppression, where White's,
Jews and Asians are deemed oppressors and a subset of

(57:57):
people of color, LGBTQ people, and or women are deemed
to be oppressed, Ackman wrote, and Acman's a gital tweet
about Gorenberg. He insinuated that Gorednberg had improperly used MIT
to fund Stickney's organization. He noted the parody dot org
reported no revenues and received all of its funding through
it T associated funds. In short, this does not look
like a legitimate nonprofit. Rather, it looks like a sinecure

(58:20):
for the wife of the chairman of n i T.
He wrote in a follow up tweet. So he's going
hardcore and anti DEI after and you know, hardcore into
protests on campus, anti semitism on campus. He really hates
the fact that this guy's wife is working for like
an organization that's trying to improve equity's he's getting into

(58:40):
all of these weird right wing like not.

Speaker 2 (58:43):
Really he doesn't like that. Yeah, that's like a hard
line and it is.

Speaker 1 (58:48):
This is very you can draw line to that. You
can draw line to his earlier issues at Harvard. While
he's writing his you know, his thesis there now, Ackman
ultimately backtracks on some of his allegations against Gore and
Berg's wife, but he continues accusing Gordnberg of tax fraud.
And this doesn't really work out in the long run,
but you know it does. In some of these cases

(59:09):
they do succeed. Bill and his fellow oligarch succeed in
getting several college presidents shit can, including Gay. Although Bill
is really unhappy that she doesn't get fired by the university,
she's still employed as a professor. Writing for The Atlantic,
Kurt Anderson describes what happened next when former President Gay
was hired. I knew little about her, but I was
instinctually happy for Harvard and the Black community. Acmann posted

(59:32):
while on holiday in the Caribbean, the day after he'd
helped force her out over her plagiarism, but now, given
her handling of the Harvard Auntie Israel protests, he'd realized
that she was not qualified, having been chosen by a
board looking for a DEI approved candidate. And by the way,
in light of the amount natured degree of plagiarism that
had surfaced in her work, why wasn't she also booted
from her tenure to Harvard professorship the very next day?

(59:55):
Business Insider, So this is the day after she's fired.
He can't let up on this. He's got to keep
on this woman trying to get her career entirely destroyed
because she had the temerity to be like a woman
who wasn't mean enough to people he didn't like. And
the day after this happens, Business Insider publishes an article
of their own, And this one was an this is

(01:00:16):
another plagiarism investigation. This one was into plagiarism by an
artist slash technologist who was also a former MIT professor
named Narry Oxman. Nary Oxman just happened to be Bill
Ackman's wife. This is his most recent wife.

Speaker 2 (01:00:31):
What happened to Karen?

Speaker 1 (01:00:33):
Not in the picture anymore. We've got Narry in here now,
she got it. I try to we're generally talking about
people's families here, but this is unavoidable because this is
a big part of the Bill Ackman story. Now, the
reality is that Narry Oxman's plagiarism was, in my opinion,
about as serious as Claudine Gays, and that I no
one reasonable should care about this all that much. On
its own. These were all pretty minor examples of people

(01:00:55):
screwing up and being lazy right. But where Ackman had
seen Gay's mistake is damning, he sees his wife's as defensible.
And this is what's funny, Right. I think Business in
Center was right to publish this. If none of this
had happened, if Ackman hadn't gone after Gay, I would
say this article would have been in bad taste. But
because Akman makes himself in this antiplagiers am activist, it's

(01:01:16):
pretty relevant that his wife does the same thing that
Gay did.

Speaker 2 (01:01:20):
Right, that's almost cinematic, like that's yeah, that feels made up,
like it's too perfect, except I'm sure they came with
the receipts.

Speaker 1 (01:01:30):
Yeah, And I gotta continue with a quote from that
Vanity Fair article here. His invented euphemisms include this is
talk about how he defends his wife. His invented euphemisms
include clerical errors. He invents a statistical metric as well.
Because only a few of the twenty seven hundred and
seventy four paragraphs in her thesis contained text copied from
elsewhere without quotation marks, she had an error rate of

(01:01:50):
point one percent, which is pretty darn good, and her
airr rate per sentences even better. Yet, a person ince
basis she doesn't plagiar eye all that much, and he's
writing like five thousand word essays that he's like publishing,
defending his wife and talking thousands of words talking about
his wife's plagiarism, but how it's not bad, but it

(01:02:12):
just looks terrible for her because your husband's the thing. Exactly.
If your husband's putting out a six thousand word article
every day about like how your plagiarism is defensible, doesn't
make you look like a good academic, unfortunately, when.

Speaker 2 (01:02:30):
The lady doth protest too much. Except the lady is
your wacky, rich husband, whoever inhtes.

Speaker 1 (01:02:35):
A little bit so defending her fifteen Sorry, I'm gonna
continue with that quote, defending her fifteen uncredited cut and
pastes of passages from Wikipedia, of all sources, the pathos
and comedy are extreme. I am sure that when Nary
wrote her dissertation, she was thirty three. She thought that
there was nothing wrong with using Wikipedia as a dictionary,
he writes the day after the story broke. In his later,

(01:02:56):
longer apology, he reveals what he thinks is a gotcha
loophole that exonerates her completely. The good news is that
their lawyers use the Wayback Machine to discover that MIT's
Academic Integrity Handbook did not require citation or even mentioned
Wikipedia until twenty thirteen, four years after Narry wrote her dissertation. Yeah, man,
not worry. That sounds good. That makes your wife sound

(01:03:17):
like a serious thinker. Good work, buddy, jeez, really just
help out. And again, do I think this is all
the worst stuff in the world worthy of like multiple
investigative pieces of journalism. No, but you kind of argued
that this was, and so the fact that people are
doing this to your wife now kind of turned about

(01:03:38):
his fair play.

Speaker 2 (01:03:39):
Bill.

Speaker 1 (01:03:40):
So Bill had been reached out to for comment before
the article was published, and he blamed week WiFi for
being unable to respond in time. The Business Insider journalists
had extended their deadline, but Ackman and Oxman couldn't make
it because it would have required postponing their flight and
their private jet to do so, and he complains that
this is unfair. Bill takes to Twitter to defend his wife,
and of course she assumed the number one trending topic

(01:04:03):
because her husband will not stop tweeting about her platures
and allegations in a very funny way.

Speaker 2 (01:04:08):
Wow, you know they have Wi FI in those private tests,
so that's nonsense.

Speaker 1 (01:04:13):
It's nonsense. And one of his early posts he bragged
that none of Business Insiders Reporting would interview with Nary's
success because she made the brilliant decision to leave academia
in some part due to her marriage with me. She
made the good financial decision to marry a billionaire, so
it doesn't really hurt her that she's being dragged through
the mud here. Also, she already raised a lot of

(01:04:36):
money for her own startup, so she's doing fine. Then
he turns around, after saying none of this has hurt
us at all, he turns around and says, Business Insiders
Reporting has been catastrophically damaging to my wife. He threatens
legal action. He goes to like the people who own
the company that owns like he's trying to do everything
he can to get these articles retracted, to get Business

(01:04:57):
Insider to pull the piece, to do damage to these
report like he so wants this to go away, and
no one's willing to play ball with him, Like even
the people who like should be on his side, because
like their other trumpy business people aren't willing to go
to bat with him to purge this article about his wife.

Speaker 2 (01:05:15):
He's too annoying.

Speaker 1 (01:05:16):
He's too annoying, and he's just like again, you can't
both say this doesn't do any damage to us at all,
and also I want to be able to sue for damages.
He claims business insiders campaign to destroy Nary could have
literally killed her, and then insists she only survived because
of profound love and support for me. My wife would
have died because of how me and your article was

(01:05:37):
if I wasn't such a good husband.

Speaker 2 (01:05:40):
Your mean tweets were actually bombs loved into our family home.
You have to give me more.

Speaker 1 (01:05:46):
Money as well. So Bill took time in this whole
embarrassing episode to lick elon Musk's boots, posting we should
all be grateful that X is owned by Musk. He
insisted that he and Narry would not have been able
to respond in such a rapid fashion without Musk's free
speech absolutism, and then he drops this chestnut. The code

(01:06:07):
of the road was that you can attack the protagonist
as much as you want, but not his wife and
his kids. First off, Bill, you're not the protagonist. I'm
sorry man. And second, you attack fucking that guy to
my Ta's wife for no reason man. In the twenty
twenty four election, Bill Ackman officially endorsed Donald Trump, completing

(01:06:28):
his transition to Maga guy. And the year and change
since or two years or so since, he has remade
himself into a total stooge of the administration. In February
of twenty twenty six, he made he was like the
Epstein files have become a macarthy era thing, Like it's
recis McCarthy stage. Innocent people are being slanted. We got
to stop looking into the Epstein file. Right more recently,

(01:06:52):
like literally just like in a March, Like at the
end of March, he made a public statement that like
this is the best time ever to buy quality stock
because of how much damage has been under the global
economy because of Trump's new Iran war. Great time to
get in the stocks.

Speaker 2 (01:07:06):
Well, is he up too, He's doing something Speaking of
that war.

Speaker 1 (01:07:09):
Immediately after Trump launched his new war with Iran, Bill
declared it would be a very good war. Per News Break,
Iran has been I think a major funder of anti
American protests and kind of otherwise, Ackman told reporters Sarah Eisen,
I think the war is a very good one. The
war is a very good one. She repeated, it's very unpopular,
though Ackman predicted its near conclusion. I think we're almost done,

(01:07:31):
he said. I think it's weeks as opposed to many months,
a few months as opposed to it's not years. This
is towards the tail end of a war. On whether
the war has made the Acman think differently about investment
opportunities in the Middle East, he said, the Middle East
has been reset in a very positive way. It's not
been good to be a terrorist in the last couple
of years. The greatest enemies of democracy have been set
back in a dramatic way. It makes this so funny

(01:07:54):
to me is that on February eleventh, not all that
long before Trump started the war, Bill had his annual
invent Yes Your Day, and he told everybody, I don't
foresee any like black Swan type events on the horizon.
They're going to bring about an opportunity for cheap, asymmetric trades,
Like there's not going to be a sudden massive change
to like oil futures that we could take advantage of.
Nothing like that's going to happen. And then two weeks later,

(01:08:17):
oil futures jump forty percent, and Bill totally fails to
cash it. Right, This is like a COVID level market disruption,
and he completely fails to make a buck off of it.
Because he's now completely been taken over by the ideological stuff.
He can't actually look at the world as it is
and make good decisions anymore. It all has to fit
into this ideological schema that he's gotten trapped in, so

(01:08:39):
he can't actually identify real weaknesses and opportunities anymore. It
was why I'm not going through all of his He
tried to launch like a fucking investment fund that was
a catastrophic, like twenty five billion dollar failure, and he's
trying to relaunch it now at like a lower cap
and it's not going to work. Like I think, Bill

(01:09:00):
is still rich and always will be. You know, he's
not going to suffer for this. Other than that, I
don't think he's capable of really seeing the world in
the way that he used to be able to to
make the good business decisions he was, because he's become
completely caught up in the ideology of it all, like
he's not actually looking at reality more. And that's where

(01:09:20):
we'll end the story for now what a guy?

Speaker 2 (01:09:24):
Yeah, the business, he lost his business, mojo. Now he's
just a jag off.

Speaker 1 (01:09:28):
Now he's just a jag off. Yeah. Anyway, that's the
tale of the activist investor. How are we feeling?

Speaker 2 (01:09:35):
I learned a lot, good man. I'm so because I've
seen this this, you know, Tom Fuller on Twitter's like
who's this guy? Like, who's this jag off? But just
the decades of build up to him becoming this specific
flavor of jag off, it really makes it so much
sweeter to see him fail and to now know that
I should actively be rooting against.

Speaker 1 (01:09:56):
Him, against him.

Speaker 3 (01:09:58):
Absolutely, Yes, Kim, you want to plug your books one
more time for the audience here before we head out.

Speaker 2 (01:10:07):
Sure, if you were listening to this and wondering what
were the workers up to? How are they doing? You
might enjoy the books I've written about workers. Just the
young adult or the young reader's edition of my book
just came out. It's called Fight to Win for ages
like eight and up. It's really cute, very diverse, inclusive

(01:10:28):
of all these things that Bill Ackman does not like
in book form for your young rebels and radicals and
a few years ago, I wrote a grown up book
called Fight Like Hell. The Untold History of American Labor
just kind of like excellent, a people's history of labor
in America. And I think it's pretty good. It's still
out there. Get it from the library. I don't care.

Speaker 1 (01:10:49):
Yeah, absolutely, all right, everybody check out Kim's book and
check out, well, don't check out Bill Lackman. Pay very
little attention to Bill Lackman. Actually that's the best bed.
All right, bye, everybody, bye.

Speaker 4 (01:11:07):
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(01:11:28):
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