Activist investor Bill Ackman, who runs Pershing Square Capital, spoke to MBA students at Oxford’s Saïd Business School last week and
the video has just been posted on YouTube.
During his Q&A with Dean Peter Tufano, Ackman talked about some of his failures, his successes, his leadership style, his JCPenney and Herbalife investments and his overall outlook on the hedge fund industry.
He began his early experience running Gotham Partners, which he founded in his late 20s after graduating from Harvard Business School.
That fund closed about a decade after he founded it because of a bad investment in a golf course that ultimately ended with investors redeeming their capital.
“Experience is making mistakes and learning from them. So that’s what I learned. The answer is I went to business school to learn how to be a good investor. I learned the first rule of investing, which is you do your due diligence before you wire in your money.”
Learning from mistakes was a common theme in his discussion.
As for JCPenney, Ackman said he didn’t think now former CEO Ron Johnson had ever made a mistake before. Ackman, who was the retailer’s largest shareholder, took a bath on that investment losing hundreds of millions.
“I don’t think he had ever made a mistake before. I think Ron would be, I think he would say this today, that he would be a much better CEO the next time having a big negative experience like this.”
As for failure, Ackman noted that many of the world’s billionaires have had major failures during their careers.
“On failure…I think it’s how you deal with adversity that determines your ultimate success as opposed to how you deal with success that determines your ultimate success…from JCPenney and otherwise,” Ackman said.
The conversation also touched upon Herbalife, the multi-level marketing company that sells nutrition products. Ackman has publicly called the company a “pyramid scheme” and is shorting the stock with a price target of $US0.
Ackman, who is known for being a mostly long investor, rarely shorts companies. When he does, though, he says that he believes the country or the world will be better off once that particular company is gone.
Ackman revealed his short late December 2012.
“So far so good until Carl Icahn bought 16% of the company, said it was totally wrong. Seems like everyday he goes on CNBC and says what a great company it is. Every time he says that the stock goes up a few dollars…”
“I’ll make a prediction. This business will be shut down. This business will collapse. I can’t give you the precise date, but we will have made progress in that direction within twelve months. That’s my prediction for today.”
Watch the full video here. He talks about Herbalife at the 29 minute mark.