Career
He commenced his career in the real-estate business, working for his father at a commercial real-estate mortgage brokerage in New York, ‘Ackman Brothers & Singer Inc.,’ where he served as the chairman.
In 1992, he, along with his Harvard classmate David P. Berkowitz, established ‘Gotham Partners,’ an investment firm that made small investments in public companies. He served as a co-investment manager at ‘Gotham LP,’ ‘Gotham III LP’ and ‘Gotham Partners International’ from 1993 to 2003.
He joined hands with the New York City-based American conglomerate and investment holding company ‘Leucadia National’ in 1995, to bid for ‘Rockefeller Center.’ Although the deal did not materialize, this move attracted the investors’ attention toward ‘Gotham Partners.’ This resulted in the firm gathering an impressive clientele, leading to US$ 500 million in assets by 1998.
By 2002, ‘Gotham Partners’ was entrenched in litigation, with many people having stakes in the companies where ‘Gotham’ also made investments. Ackman had to finally liquidate the funds of the firm in 2003, owing to bad debts.
While a probe was being made on Ackman’s trading by the State of New York and federal authorities, he commenced a research in 2002 that focused on challenging the AAA rating of the financial services company ‘MBIA.’ He was charged for copying statements of 725,000 pages regarding the financial services company in his law firm's compliance with a subpoena.
He contended that ‘MBIA’ was legally barred from trading “credit default swap” (CDS) protection worth billions of dollars that the financial services company had sold against different mortgage-backed “collateralized debit obligations” (CDOs) through another corporation, known as ‘LaCrosse Financial Products,’ which was described by ‘MBIA’ as an "orphaned transformer."
Soon, he purchased ‘CDS’ against corporate debts of ‘MBIA,’ and as ‘MBIA’ crashed during the financial crisis of 2008, he made a fortune by selling the swaps. Reportedly, he made an effort to caution the investors, regulators, and rating agencies regarding the high-risk business models of ‘MBIA.’ ‘Bloomberg News’ reporter Christine Richard wrote a book, titled ‘Confidence Game,’ on Ackman’s battle with ‘MBIA.’
Meanwhile, he was involved in a dispute with American businessman, investor, and philanthropist Carl Icahn in 2003, regarding a deal involving ‘Hallwood Realty.’ The feud resulted in a lawsuit that eventually ended in favor of Ackman after eight years. The court directed Icahn to pay US$ 9 million to Ackman.
In 2004, he founded the American hedge-fund management company ‘Pershing Square Capital Management’ with US$ 54 million. The company was funded by him and his ex-business partner, ‘Leucadia National.’
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Ackman serves as the CEO and the portfolio manager of ‘Pershing,’ which conducts in-house research and employs long and short strategies to make investments in public-equity markets around the world.
‘Pershing’ purchased a substantial amount of the shares of the fast-food chain ‘Wendy's International’ and forced it to sell its doughnut chain, ‘Tim Hortons.’ In September 2006, the ‘Tim Hortons’ chain was spun off by ‘Wendy's’ through an IPO, thereby raising US$ 670 million for the investors of ‘Wendy's.’ A discord regarding the executive succession led Ackman to sell his shares, which garnered him considerable profit and resulted in a major collapse of the company’s stock prices.
‘Pershing’ acquired a 10% stake in ‘Target Corporation’ in December 2007 and presently owns a 7.8% stake. A 38% stake was held by his funds in the ‘Borders Group’ in December 2010.
The fund management company revealed a 7.4% stake in ‘General Growth Properties’ (GGP) on January 9, 2009, thereby making it the second-largest shareholder after ‘Brookfield Asset Management.’
‘Pershing’ began acquiring shares of CPR in 2011 and indicated in a 13D regulatory filing on October 28 that year, stating that it has a 12.2% stake in ‘CPR.’ The fund management company then increased its holding to 14.2%, thereby becoming the largest shareholder of ‘CPR.’ Ackman then suggested a replacement of the chief executive of CPR, Fred Green, and eventually got involved in a proxy fight with the railway company, which resulted in E. Hunter Harrison becoming its new CEO on June 29, 2012.
Other investments of ‘Pershing’ include substantial ownership stakes in ‘J.C. Penney’ in 2010 and a 1% stake in ‘Procter & Gamble,’ which reduced by late 2013. ‘Pershing’ also acquired a 9.9% stake in ‘Chipotle Mexican Grill’ in September 2016.
Ackman also manages the funds of the British investment trust ‘Pershing Square Holdings,’ which was launched by ‘Pershing’ in December 2012. It makes long-term investments in North American companies.
‘Pershing’ took a $1-billion short position in ‘Herbalife,’ a developer and marketer of weight-loss and vitamin supplements. Soon, Ackman came up with a research report in December 2012, criticizing the multi-level marketing business model of the corporation, describing it as a “pyramid scheme.”
Although ‘Herbalife’ denied such allegations, it came under the probe of the ‘US Federal Trade Commission’ and the state of Illinois in March 2014. That year, Ackman spent US$ 50 million on a public-relations campaign against the corporation.
‘Herbalife’ settled the matter with the ‘US Federal Trade Commission’ in July 2016 by agreeing to alter its business model and to pay its distributors an amount of US$ 200 million.
The 2016 presidential election in the US saw him endorsing Michael Bloomberg as a potential candidate in the presidential race. He is also known for his generous donations to Democratic organizations, such as the ‘Democratic Senatorial Campaign Committee,’ and to Democratic candidates, such as Robert Menendez and Richard Blumenthal.
