William Ackman: ‘You Need a Thick Skin to Be in This Business’


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An eternal optimist, Liu-Yue built two social enterprises to help make the world a better place. Liu-Yue co-founded Oxstones Investment Club a searchable content platform and business tools for knowledge sharing and financial education. Oxstones.com also provides investors with direct access to U.S. commercial real estate opportunities and other alternative investments. In addition, Liu-Yue also co-founded Cute Brands a cause-oriented character brand management and brand licensing company that creates social awareness on global issues and societal challenges through character creations. Prior to his entrepreneurial endeavors, Liu-Yue worked as an Executive Associate at M&T Bank in the Structured Real Estate Finance Group where he worked with senior management on multiple bank-wide risk management projects. He also had a dual role as a commercial banker advising UHNWIs and family offices on investments, credit, and banking needs while focused on residential CRE, infrastructure development, and affordable housing projects. Prior to M&T, he held a number of positions in Latin American equities and bonds investment groups at SBC Warburg Dillon Read (Swiss Bank), OFFITBANK (the wealth management division of Wachovia Bank), and in small cap equities at Steinberg Priest Capital Management (family office). Liu-Yue has an MBA specializing in investment management and strategy from Georgetown University and a Bachelor of Science in Finance and Marketing from Stern School of Business at NYU. He also completed graduate studies in international management at the University of Oxford, Trinity College.

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Your fund, Pershing Square Capital Management, took a $500-million loss on its investment in J. C. Penney. How did that feel?
I’m not emotional about investments. Investing is something where you have to be purely rational, and not let emotion affect your decision making — just the facts.

Where do you think the investment went wrong?
Look, investing is inherently probabilistic — not every investment is going to be profitable. We bought a big stake in the company at a price that we believed to be attractive. We worked with the board to help recruit who we believed to be the best retail C.E.O. in America, Ron Johnson, who opened the Apple stores. The execution wasn’t perfect, far from it. Turnarounds are tough.

Your stake in Target also failed. Will you ever invest in another retailer?
It would have to be a very special situation.

Your short position on Herbalife — you’re betting against the company — has caused some friends like George Soros and Daniel Loeb to turn on you.
Neither of the people you mentioned is, or has ever been, a close friend of mine. I certainly know the people you mentioned — but, look, you need a thick skin to be in this business. In a short sale, the whole world is going to be on the other side of the investment until they realize you’re right.

You’ve said that Herbalife is a pyramid scheme and its stock will go to zero.
It is a certainty that Herbalife is a pyramid scheme. We believe it’s harming a population of low-income, principally Hispanic people in the U.S. to benefit a handful of superwealthy people at the top of the pyramid. You should ask yourself: Why are more than 60 percent of Herbalife’s distributors in the U.S. low-income members of the Hispanic community? Why are they buying overpriced nutrition products? There’s something unusual about this business. This makes no sense.

Getting seats on corporate boards is important to your investment strategy. Yet you wrote a public letter criticizing J. C. Penney’s chairman while you were still on the board.
The bottom line is, my obligation is to the shareholders. Think about the political process — it’s hard to think of an example of any kind of office where there aren’t multiple candidates from multiple parties competing for the office. Ninety-nine percent of the time, in the shareholder election process, there’s no choice for shareholders as to who serves on the board. I think that it’s a very broken process.

What does an investment manager know about running a company?
Jeff Bezos was a hedge-fund manager who became C.E.O. of Amazon. Prior to that I don’t know that he had any “business experience.”

What do you think of the hedge-fund industry’s reputation?
I think the hedge-fund industry has taken a reputational turn for the worse, this dog-eat-dog stuff. I’m not just talking about Herbalife or J. C. Penney, but in other situations where the media really focuses on who’s long and who’s short. I don’t think it’s a good thing for the industry.

What exactly is your investment style?
I would say we are, generally, elephant hunters. We’re not buying something at 100 because we think it’s worth 120 and then trading out of it. We’re looking for very large profits. We’re looking for very undervalued situations. Generally most of our investments are very-high-quality businesses. We’re looking to double our money over a several-year period of time.

According to Forbes, you’re worth more than a billion dollars already. What are you going to do with all your wealth?
I’m going to give away the substantial majority of everything I’m able to create over my lifetime.

Why are you still working?
I love what I do. I don’t do it for the money. I work on behalf of investors that I like and want to do well for. I’m a competitive person. In order to catch up to Buffett, I’ve got 35 years to go.

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