Bill Ackman: Winning Trades, Epic Losses, and the Next Berkshire
A Deep Dive into Pershing Square’s Most Explosive Deals—From MBIA Short to Howard Hughes Control
Introduction
You know that friend who always has the most dramatic stories? The one who either hits it big or crashes spectacularly, with no middle ground? That's Bill Ackman in the investment world. While most of us are grinding through our careers, this guy is out here making billion-dollar bets that would make your head spin.
Trump's creating chaos, and some folks are fishing in troubled waters. "When the water rises, so do the fish," as they say. Take Ackman's Pershing Square — when Amazon crashed by a third in April 2025, he swooped in like a vulture. That position's already bounced back 20%. Earlier, during the pandemic, he turned $27 million into $2.6 billion. Yeah, you read that right. That's a 100x return in less than a month.
But here's the kicker: this guy who seems like the ultimate speculator insists he's a value investor, just like Warren Buffett. Except he's the polar opposite of Buffett in almost every way that matters.
From Harvard Rebel to Wall Street Maverick
Picture this: it's 1988, and 22-year-old Bill Ackman is writing his Harvard thesis about discrimination against Jewish and Asian students in college admissions. Even back then, he had this talent for spotting structural unfairness and calling it out. That same instinct — finding where the system's broken and betting against it — would define his entire career.
College Ackman stumbled across Benjamin Graham's "The Intelligent Investor" and had one of those life-changing moments. You know, like when you discover that thing that makes everything click? That book set him on the path to becoming what some call an "activist value investor" — a value investor with anger management issues.
After Harvard Business School, he and a buddy started Gotham Partners in 1992. They even tried to buy Rockefeller Center in 1995. Didn't work out, but man, the audacity. By 1998, they were managing $500 million. Then came 2002, and everything fell apart in a mess of lawsuits and investor drama.
The MBIA Masterpiece: David vs. Goliath on Steroids
Right when Gotham was imploding, Ackman spotted something huge. MBIA, this municipal bond insurance company, was supposedly rock-solid with its AAA rating. But Ackman dug deeper — and I mean deep. This madman spent over $100,000 just photocopying 725,000 pages of financial documents.
What he found was terrifying: MBIA was insuring billions in toxic mortgage securities (CDOs) while having barely any cushion for losses. They had a debt-to-equity ratio of 139:1 and reserves of just 4 basis points. To put that in perspective, that's like having $139 in debt for every dollar in your bank account.
So what did Ackman do? He shorted the stock and bought credit default swaps, betting the company would fail. MBIA's management went ballistic. They got the New York Attorney General to investigate him for market manipulation. The SEC jumped in, too. For five years, Ackman was public enemy number one.
Then 2008 happened. The financial crisis hit, subprime mortgages collapsed, and MBIA's stock price cratered. Ackman's prediction came true, and he made billions. This single trade established him as one of Wall Street's most insightful — and most hated — investors.
Building the Pershing Square Empire
In 2003, with $54 million and lessons learned from his Gotham disaster, Ackman launched Pershing Square. His investment philosophy was simple but radical:
Ultra-concentrated: Only 8-12 stocks max
Deep research: Forensic-level analysis of every company
Activist approach: Don't just buy stock, actively push for change
Long-term holding: Unless fundamentals deteriorate or the target value is reached
Here's where it gets interesting. Apart from that third point, Ackman does sound like Buffett. But that one difference? It's massive.
Buffett's whole thing is the "hands-off" approach. Buy great companies, let great managers run them, collect dividends, repeat. Ackman looked at that and said, "Nah, I can do better." He criticized Buffett publicly, saying Burlington Northern Santa Fe Railway (one of Berkshire's biggest holdings) "might be the least efficiently operated railroad in the industry."
Ouch.
The Greatest Trade in Hedge Fund History
2009 was when Ackman cemented his legend. While everyone was running from commercial real estate, he saw an opportunity. General Growth Properties, which owned premium shopping malls across America, was going bankrupt. Not because their assets were worthless, but because they couldn't refinance their debt.
Ackman's logic was elegant:
The properties were high-quality, but faced a liquidity crisis
Bankruptcy would wipe out the debt problems
When the economy recovered, premium retail real estate would bounce back hard
He invested $60 million through the bankruptcy process and ended up with massive equity stakes. The result? $1.6 billion in returns — a 26x gain. That's hedge fund history right there.
Canadian Pacific
2011 brought another classic Ackman move. Canadian Pacific Railway was a century-old company that had been coasting. Inefficient operations, complacent management, and terrible stock performance.
Ackman bought 14.2% of the company and launched an all-out proxy war. He criticized management, demanded that the CEO be fired, and presented detailed reform plans. The board fought back hard, but Ackman won.
The new CEO came in and transformed the company. From September 2011 to December 2014, CP's stock went from $49 to $220. When Pershing Square finally sold its remaining 6.7% stake in 2016, it was worth about $1.45 billion.
This is exactly why Ackman thinks he can beat Buffett. More aggressive, more hands-on, potentially bigger returns. But as we'll see, that sword cuts both ways.
The Disasters That Almost Killed Him
Every great investor has their horror stories. For Ackman, two trades nearly ended his career.
Valeant: The $4 Billion Nightmare
In 2015, Ackman made what he later called his worst investment ever. He put $3.2 billion into Valeant Pharmaceuticals at around $180 per share, eventually building an 8.5% stake.
His thesis seemed solid: Valeant was growing fast through acquisitions and price increases. They'd buy smaller drug companies and jack up prices on essential medications — sometimes by 500% or more.
But red flags were everywhere. The company was a financial engineering scheme disguised as a pharmaceutical business. They were accused of accounting fraud, had suspicious relationships with specialty pharmacies, and were drowning in debt.
The stock collapsed from a high of $263 to around $20. When Ackman finally threw in the towel in 2017, selling at about $11 per share, he'd lost over $4 billion. That's not a typo.
Netflix even made a documentary about the whole disaster in 2019, portraying Ackman as a fund manager who "often errs, never doubts."
Herbalife: The $1 Billion War
If Valeant was a mistake, Herbalife was a five-year obsession that became personal.
In December 2012, Ackman publicly announced he was shorting nutrition company Herbalife, calling it a "pyramid scheme." He prepared a 342-page presentation explaining why this multi-level marketing company would eventually collapse.
Enter Carl Icahn, one of Wall Street's most legendary (and ruthless) investors. Icahn saw Ackman's short position and decided to make it personal. He bought heavily into Herbalife, eventually owning 26% of the company.
What followed was one of the most entertaining financial feuds in history. On January 25, 2013, CNBC hosted what became the most explosive segment in financial TV history. Icahn called into the show while Ackman was being interviewed, and these two billionaires spent nearly 30 minutes screaming at each other on live television.
Icahn called Ackman "the crybaby in the schoolyard." Ackman fired back that Icahn was "dishonest" and "doesn't keep his word."
Meanwhile, Herbalife's stock kept rising. Ackman didn't give up:
Spent $50 million on public relations campaigns
Lobbied regulators to investigate
Even produced a documentary called "Betting Zero"
The FTC eventually fined Herbalife $200 million and forced reforms, but the company didn't collapse. In 2018, after five years and nearly $1 billion in losses, Ackman surrendered. He closed his short position.
Icahn made nearly $1 billion. Ackman lost nearly $1 billion. In the billionaire cage match, Ackman got knocked out cold.
These two disasters left Pershing Square bleeding. The fund lost money for four straight years. Assets under management fell from $20 billion to under $7 billion by the time COVID hit.
The Pandemic Masterpiece
Then came 2020, and Ackman pulled off what might be the most perfect trade in modern finance.
In late February 2020, while most investors were still figuring out how to spell "coronavirus," Ackman made a bet that would change everything. He spent $27 million on credit protection — essentially insurance against a market crash.
But this wasn't just shorting stocks. Ackman bought credit default swaps that would pay off if corporate credit markets collapsed. The position was designed with incredible precision to capture maximum upside if things went sideways.
On March 23, when markets hit peak panic, Ackman closed the position for $2.6 billion. In less than a month, he'd turned $27 million into $2.6 billion — nearly 100x returns.
But here's the genius part: instead of celebrating, he immediately used those profits to buy high-quality companies at fire-sale prices. Starbucks, Hilton, Berkshire Hathaway itself. When markets recovered, he made another billion-plus on those positions.
One crisis, two massive wins. That's "value speculation" at its finest.
This single trade brought Pershing Square back from the dead. The fund posted 70.2% returns in 2020, and assets under management recovered to $18.5 billion. Wall Street dubbed him "unkillable."
History Repeating?
Fast forward to 2025, and we're seeing the same playbook. When Amazon crashed by a third in April, Ackman was there. While everyone else was panicking about tech valuations and interest rates, he was backing up the truck.
https://www.reuters.com/sustainability/sustainable-finance-reporting/ackmans-hedge-fund-pershing-square-bets-amazon-exits-canadian-pacific-2025-05-22/
The 20% bounce we've seen so far? That's just the beginning if his track record holds. Amazon has everything Ackman loves: dominant market position, massive cash flows, and a temporary setback creating opportunity.
The Buffett Complex
Throughout all this, Ackman has had this weird relationship with Warren Buffett. On one hand, he worships the guy — he attends Berkshire Hathaway annual meetings religiously and calls Buffett his hero.
On the other hand, he thinks Buffett's gotten too old and conservative.
During the pandemic, Ackman says he talked to Buffett about the opportunity they were seeing. Buffett wasn't interested. Ackman thought the Oracle of Omaha was "scared."
He's also suggested that Buffett buy Hilton Hotels. Buffett passed. Hilton went up 5x over the next decade.
The subtext is clear: Ackman thinks he can beat Buffett by being more aggressive and hands-on. Maybe 80% Buffett philosophy, 20% activist intervention.
Building the Next Berkshire
Now 59, Ackman is trying to build his version of Berkshire Hathaway. In May 2025, Pershing Square injected $900 million into Howard Hughes Corporation, bringing their stake to 47%. Ackman became Executive Chairman and laid out a grand vision:
First, build an insurance business to generate "float" (money they can invest while it's waiting to pay claims). Then, gradually acquire controlling stakes in high-quality businesses across different industries. The goal is to create a multi-industry investment holding company that can last 100 years.
The audacity is incredible. He announced this plan in Omaha, at Berkshire's annual meeting, practically in Buffett's face.
Ackman's current plan is fascinating. He wants to create a "permanent capital" structure that can weather any storm and compound wealth over decades. The Howard Hughes investment is the foundation — they're developing master-planned communities that should be inflation-resistant and generate steady cash flows for generations.
But he's not stopping there. The goal is to build a conglomerate that can acquire entire businesses, not just stock positions. Think Berkshire Hathaway, but with more activist DNA.
Whether this works remains to be seen. Building something that lasts 100 years is incredibly hard. Even Buffett, the master of long-term thinking, worries about what happens to Berkshire after he's gone.
The Honesty That Saved Him
Here's what I find most interesting about Ackman: he's brutally honest about his mistakes. Most fund managers try to spin their losses or blame external factors. Not this guy.
Take the J.C. Penney disaster. Ackman was a major shareholder and pushed for hiring Ron Johnson (the guy who transformed Apple retail) as CEO. The turnaround strategy was a complete disaster, destroying the company and thousands of jobs.
Howard Schultz, Starbucks' founder, went on CNBC and destroyed Ackman: "This strategy has destroyed J.C. Penney and destroyed the lives of thousands of employees... Bill Ackman has blood on his hands."
That's about as personal as Wall Street criticism gets. You'd think that would create permanent bad blood, right?
Nope. In 2018, Pershing Square bought about $900 million worth of Starbucks stock. Ackman saw it as undervalued despite the quality of leadership, even leadership that had publicly eviscerated him.
They held for about two years and made 70-80% returns before selling when the stock hit fair value. Pure business, no emotions.
As Ackman puts it, "I don't take investing personally. Investing has to be purely rational, can't let emotions affect decisions — just look at the facts."
This kind of radical honesty and willingness to admit mistakes is rare in finance. It's probably why Pershing Square survived disasters that would have killed other funds.
Lessons for the Rest of Us
Okay, so what can we regular folks learn from this billionaire's wild ride?
Contrarian thinking pays off.
Ackman's biggest wins came from zigging when everyone else zagged. MBIA was when everyone trusted ratings agencies. GGP, when everyone fled real estate. Amazon, when everyone's scared of tech crashes.Concentration can be powerful.
While most financial advisors tell you to diversify, Ackman proves that knowing a few things extremely well can beat knowing many things superficially. This comes with huge risks that most of us can't afford.Mistakes are inevitable.
Even billionaire investors lose billions sometimes. The key is learning from failures and not repeating them. Ackman's evolved from doing risky short plays to focusing on long-term ownership.Emotions kill returns.
His ability to invest in Starbucks despite personal conflict with its founder shows the kind of rationality that creates wealth.Timing matters more than we admit.
That pandemic trade wasn't just smart analysis — it was perfect timing. Sometimes you need luck to go with skill.
The Future: Can He Beat Buffett?
So here's the million-dollar question: Can Ackman build something better than what Buffett created?
His track record over 20+ years is genuinely impressive, despite the disasters. Pershing Square has delivered strong long-term returns through multiple market cycles. That takes real skill.
But Buffett's achievement isn't just returns — it's consistency and longevity. Berkshire has compounded wealth for 60+ years through every possible market condition. That's the real test.
Ackman's more aggressive approach might generate higher returns in good times, but it also creates bigger risks. The Valeant and Herbalife disasters show what happens when activist investing goes wrong.
Maybe his "80% Buffett, 20% activism" formula is the sweet spot. Or maybe he'll learn what Buffett figured out in 1969: that being a long-term investor with short-term capital eventually leads to problems.
Either way, it's going to be fun to watch. In a world where most investing has become boring and algorithmic, Ackman represents something different: the belief that individual insight and conviction can still generate extraordinary returns.
Whether you love him or hate him, you can't deny one thing: the guy makes finance entertaining. And sometimes we need someone willing to take the big swings the rest of us can only dream about.
As Ackman himself says, "To be successful, you have to make sure that being rejected doesn't bother you at all."
In an age of consensus and conformity, maybe that's exactly the kind of contrarian thinking we need more of — in investing and life.
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