Long Bill Ackman Interview.

[tede02]

I really enjoyed this. Covered a lot of subjects. The story about crossing swords with Icahn in the 90s was surprising. If Ackman's side of the story is true, that was a really B.S. play by Icahn, just blatantly breaching a contract and trying to outlast him in the courts. I don't understand why people would want to do business like that. Also was interesting to hear Ackman mention that Elliot tried to push his public vehicle into liquidation for their own profit when things were going bad with Valeant and Herbalife. That is pretty brutal. 

 

 

 

[blakehampton]

Indeed, it’s a great interview.

 

I have heard people in the past mention that they don’t like Ackman and I never understood why. I know at least he’s a great investor, not quite sure as a human being though.

[Gmthebeau]

Ackman is no saint so I would not feel sorry for him because some other cutthroats went after him.  This is the same guy who went on TV, cried hell is coming, while trying to crash the markets to profit.

[thepupil]

16 minutes ago, Gmthebeau said:

Ackman is no saint so I would not feel sorry for him because some other cutthroats went after him.  This is the same guy who went on TV, cried hell is coming, while trying to crash the markets to profit.

 

the timeline of this incident is inaccurate.

 

the narrative around the "hell is coming" interview is false. 

 

Ackman was aggressively getting longer of stocks in March and monetizing his hedge (half of which already had been sold by the time of the CNBC interview). as someone who was buying his fund monitoring the net exposure,  I was a little taken aback at how quickly and aggressively long of restaurants and hotels he had gotten in March and April. 

 

The 28 minute interview , where he talks about buying stocks can be found here

https://www.cnbc.com/2020/03/18/watch-the-full-interview-with-bill-ackman-on-the-coranvirus-threat-to-economy-shut-it-down-now.html?__source=twitter|main

 

Quote

minute 9 ish: I've been super bearish but i got bullish...I've been buying today...all the way down...the only answer for the world is to shut the world..

 

 

The details regarding the hedge monetization here. 

Quote

https://www.ft.com/content/f8f352d4-1526-4716-86ef-080b2055768b

Pershing Square started to unwind its CDS contracts on March 12 after their value had increased to $2.7bn, by selling some each day until exiting completely on March 23. At the time of the CNBC interview on March 18, Mr Ackman had cashed in $1.3bn and the value of the remainder was $1.3bn. “Our hedge had already paid off prior to my going on CNBC,” he wrote. “The hedge did not increase in value during or after I went on CNBC. It stayed at approximately the same value until we exited.”

 

 

At March 31st 2020, PSH  was long and strong

 

Bill's story that he didn't make much more money after his interview. This is corroborated in the data by the spread on CDX IG which widened from 40-60 bps in February to 140 on the 18th. It peaked at 152. on 3/20/2020 and ended the month at 113. 

 

He made the bulk of his money on the move from 40 to 140 (and had already taken off over half of it) before the interview, not from 140 to 155, even if you think he widened out CDX with that interview. . 

 

 

Edited February 26 by thepupil

[Gmthebeau]

2 hours ago, thepupil said:

 

the timeline of this incident is inaccurate.

 

the narrative around the "hell is coming" interview is false. 

 

Ackman was aggressively getting longer of stocks in March and monetizing his hedge (half of which already had been sold by the time of the CNBC interview). as someone who was buying his fund monitoring the net exposure,  I was a little taken aback at how quickly and aggressively long of restaurants and hotels he had gotten in March and April. 

 

The 28 minute interview , where he talks about buying stocks can be found here

https://www.cnbc.com/2020/03/18/watch-the-full-interview-with-bill-ackman-on-the-coranvirus-threat-to-economy-shut-it-down-now.html?__source=twitter|main

 

 

 

The details regarding the hedge monetization here. 

 

 

At March 31st 2020, PSH  was long and strong

 

Bill's story that he didn't make much more money after his interview. This is corroborated in the data by the spread on CDX IG which widened from 40-60 bps in February to 140 on the 18th. It peaked at 152. on 3/20/2020 and ended the month at 113. 

 

He made the bulk of his money on the move from 40 to 140 (and had already taken off over half of it) before the interview, not from 140 to 155, even if you think he widened out CDX with that interview. . 

 

 

well maybe he did it to drive prices down as he was buying, either way there was a profit motive.  to think otherwise is foolish.

[ValueArb]

Hanlons Razor: Never attribute to malice that which is adequately explained by stupidity carelessness.

 

No reason to assume he was trying to move markets by talking his book when he could just have been honestly venting about things he had been thinking intensely about for the month. 

[thepupil]

curious way to drive the stocks down...by saying he's buying in that very same interview. 

Quote

Still, Ackman said he grew optimistic that world leaders including Trump will move immediately to save the global economy.  

“I’ve been aggressively buying stocks including Hilton today. And I’ve ben buying all the way down — Hilton, Restaurant Brands and Starbucks,” Ackman said.

 

I don't know man...Isn't the alternative explanation (that he actually believed what he was saying) the simplest and most consistent.

 

- he thought lots of people would die (lots of people died)

- he thought we should shut down for 30 days (we ended up shutting down for longer, probably a big mistake, but idk if 30 day shutdown was a mistake for society, was reasonable view to take at time w/ facts known).

- he thought the turmoil he foresaw in february 2020 was not priced into credit markets, put on a huge position in them, and made money when it got priced into credit markets.

- he thought his highs quality restaurant and hotel stocks would see it through and recover. they recovered. 

- within reason, all of this was communicated in commercially reasonable real time to his limited partners for whom he tonned it. 

 

I have zero ethical concerns with this fact pattern; everything seems quite rational and in the interest of both society and his LP's. Is he a drama queen? sure. but I still don't understand why people give him shit for this call. he was pretty much right on everything. I'm not saying he's infallible, but just don't see anything wrong with this episode. 

 

I mean we've all got better things to do than debate what Bill ackman said 4 years ago, but for whatver reason, this is a "perception becomes a reality" thing that just seems completely inconsistent with he facts and where people extrapolate one one sound byte  to draw sweeping conclusions. 

 

 

March 18th 2020

https://www.cnbc.com/2020/03/18/bill-ackman-pleads-to-trump-to-increase-closures-to-save-the-economy-shut-it-down-now.html

 

 

 

 

 

Edited February 26 by thepupil

[Saluki]

20 hours ago, thepupil said:

curious way to drive the stocks down...by saying he's buying in that very same interview. 

 

I don't know man...Isn't the alternative explanation (that he actually believed what he was saying) the simplest and most consistent.

 

- he thought lots of people would die (lots of people died)

- he thought we should shut down for 30 days (we ended up shutting down for longer, probably a big mistake, but idk if 30 day shutdown was a mistake for society, was reasonable view to take at time w/ facts known).

- he thought the turmoil he foresaw in february 2020 was not priced into credit markets, put on a huge position in them, and made money when it got priced into credit markets.

- he thought his highs quality restaurant and hotel stocks would see it through and recover. they recovered. 

- within reason, all of this was communicated in commercially reasonable real time to his limited partners for whom he tonned it. 

 

I have zero ethical concerns with this fact pattern; everything seems quite rational and in the interest of both society and his LP's. Is he a drama queen? sure. but I still don't understand why people give him shit for this call. he was pretty much right on everything. I'm not saying he's infallible, but just don't see anything wrong with this episode. 

 

I mean we've all got better things to do than debate what Bill ackman said 4 years ago, but for whatver reason, this is a "perception becomes a reality" thing that just seems completely inconsistent with he facts and where people extrapolate one one sound byte  to draw sweeping conclusions. 

 

 

March 18th 2020

https://www.cnbc.com/2020/03/18/bill-ackman-pleads-to-trump-to-increase-closures-to-save-the-economy-shut-it-down-now.html

 

 

 

 

 

 

He's obviously a bright guy, but sometimes his actions contradict his supposed operating manual, as with Valeant.  More recently, HHH, which has been disappointing, paid $50 million for a minority interest in a celebrity chef's company. In this interview he says that he likes restaurant brands like Chipotle and Burger King because they have a system, and the system is very efficient and not prone to human error.  That's the exact opposite of how a high end/ celebrity chef restaurant operates.  The workers at a place like that need a LOT more training, and the menu changes constantly, which is why Chipotle with a limited menu that stays the same and where you can train a high school to make the dishes in a few hours is so good. 

 

He says he likes companies that generate a lot of cash, since when have minor league sports teams been known for their cash generation?  Even Ryan Reynolds is losing money on his soccer team.  

 

And the anti-woke college stuff and buying into Twitter seems like he is setting himself up to run for office. 

[Gmthebeau]

Yes, Bill is a Saint.  ROFLMAO.  It was proven that shutdowns were in fact the dumbest thing ever, and greatly damaged far more it helped.   In line with his Valeant call I suppose.  

Edited February 27 by Gmthebeau

[thepupil]

@Salukii will agree with you on those

 

@Gmthebeau I'm not saying he's a saint, just  that your characterization (which fits the popular narrative of that interview) does not, in my opinion, have any consistency with the facts. He's done like 20% gross/year for 20 years.  It may not be luck. Guess that's what makes a market. 

Edited February 27 by thepupil