Billionaire investor Bill Ackman explains his shift from short-selling (betting stocks will fall) to 'constructive activism' (buying big stakes and pushing for change). He says shorting is too risky and now prefers using X (formerly Twitter) to pressure company management. His key holdings: Chipotle (CMG) – he bought after a food-safety crisis, pushed for a new CEO, and the stock rose 520%; Universal Music Group (UMG) – he believes AI can't replace top artists like Taylor Swift. He also warns about Herbalife (HLF), a short-sell that cost him over $1 billion.
At a Glance Bill Ackman, founder and CEO of Pershing Square Capital Management, discussed his activist investing career on the Lex Fridman podcast. His core argument centers on leveraging public market battles—such as pushing for Harvard President Claudine Gay's resignation—and using the X platform
Bill Ackman (Founder and CEO of Pershing Square Capital Management) reflects on his most controversial investments and public battles in a Lex Fridman podcast, with the core theme being: how he combines activist investment strategies with public opinion warfare, leveraging X (formerly Twitter) to pressure target company/institution management as a lever for investment returns. The most significant takeaway from the episode is: Ackman believes the "short-selling + public pressure" model is outdated, and that "long positions + driving management change" is now more effective — he describes his own transformation from a "corporate raider" to a "constructive activist investor."
Ackman believes that pure short selling (such as the five-year campaign against Herbalife), while capable of generating substantial returns, carries extremely high risk, is excessively time-consuming, and invites regulatory and reputational backlash. His core strategy now is: acquire a sufficiently large stake, then apply pressure on management through open letters, media, and the X platform to push for decisions he believes will enhance shareholder value.
Ackman attributed Harvard President Claudine Gay’s resignation to a dual crisis: “DEI (Diversity, Equity, and Inclusion) policies leading to declining academic standards” and “mishandling of antisemitic incidents,” claiming that his open letters and pressure on the X platform accelerated this process. He views this as a “financial battle”—because Harvard’s endowment fund (approximately $50 billion) is directly tied to its academic reputation, and DEI policies may undermine its long-term competitiveness.
Ackman believes that the X platform (especially after Elon Musk's acquisition) has become the core infrastructure for his "public pressure" and "information dissemination," with value far exceeding that of traditional media. He states that he spends approximately 2–3 hours daily on the X platform, directly interacting with followers and sharing investment views.
Ackman provided a detailed review of two successful investments, emphasizing that "deep research plus management trust" is the core.
| Position | Guest Stance | Key Data |
|---|---|---|
| Chipotle (CMG) | Bullish (Closed) | Entry price ~$450 in 2016, exit price ~$2,800, total return ~$1.2B |
| Universal Music Group (UMG) | Bullish (Holding) | IPO price €18.5, current price €28.5, up 54% |
| Herbalife (HLF) | Risk Warning (Short failed) | Short loss exceeded $1B (including legal fees) |
| MBIA (MBI) | Risk Warning (Short succeeded) | Shorted in 2002, MBIA share price fell from $70 to below $2 |
1. “Shorting requires you to be right forever, while going long only requires you to be right earlier than the market.” (Ackman) — This is the core logic behind his transformation, based on the lesson of losing over $1 billion in the Herbalife battle.
2. “X platform is the 21st-century ‘shareholder letter’ — it is faster, more direct, and more impactful than SEC filings.” (Ackman) — He claims a single tweet can reach over 1 million users, far exceeding traditional media.
3. “Harvard’s DEI policy is destroying academic standards — if the endowment shrinks as a result, all alumni will pay the price.” (Ackman) — He cites Harvard’s ranking dropping from 5th to 7th and data showing 40% of Jewish students feel unsafe.
4. “Chipotle’s crisis was a ‘buying opportunity’ — because the brand moat (fresh ingredients) was not damaged; only management was the problem.” (Ackman) — After he pushed for a CEO change, the stock rose 520% in five years.
5. “AI cannot replace top-tier music copyrights — Taylor Swift’s next album will always be more valuable than an AI-generated song.” (Ackman) — He uses this to argue for UMG’s moat, citing its 30% share of global streaming volume.
6. “I spend 2-3 hours a day on X platform — this is not a waste of time, but part of investment research.” (Ackman) — He views social media as a “real-time feedback system” for testing investment logic.
7. “Claudine Gay’s resignation is not the end — Harvard needs a complete overhaul of its DEI policy, or it will lose its status as a top global university.” (Ackman) — He claims he will continue to apply pressure until Harvard restores “academic freedom.”
8. “My ‘constructive activism’ model is more sustainable than traditional shorting — because I don’t need the market to crash to make money.” (Ackman) — He cites an annualized return of 16% post-transition (vs. 9% pre-transition) as evidence.
Ackman defines the core of value investing as “the present value of cash that can be extracted from an asset over its lifetime.” This framework differs from traditional P/E valuation, emphasizing predictability and certainty. He explicitly states:
> “We look for companies where we can forecast cash flows over the next several decades with a very high degree of confidence.”
This criterion directly explains why Ackman favors non-disruptible businesses — companies whose value would still grow even if the market were closed for ten years.
| Dimension | Analysis |
|---|---|
| Core Assets | ~1/3 share of the global recorded music market, owning classic catalogs from The Beatles, Rolling Stones, U2, etc. |
| Business Model Shift | From physical records/CDs to streaming subscriptions, significantly improving revenue predictability |
| Competitive Moat | Ability to cultivate new stars (turning an 18-year-old YouTube amateur into a global superstar) |
| AI Risk Response | Ackman believes AI is a tool, not a replacement — human identification with an artist’s identity and story is irreplaceable |
Key Data: The streaming subscription model has shifted UMG’s revenue from “one-time sales” to “ongoing subscriptions,” with both the user base (smartphone penetration) and ARPU (~$10-11/month) being modelable and predictable.
| Dimension | Traditional Value Investing (Graham) | Ackman’s Practice |
|---|---|---|
| Core Concept | Difference between price and value | DCF + Predictability |
| Margin of Safety | Buy price 30% below intrinsic value | Buy price below conservative estimate; safe even if forecast is 30% wrong |
| Holding Period | Long-term | Very long-term (e.g., held General Growth for 15+ years) |
| Active Intervention | Passive holding | Becoming an “engaged owner” when necessary |
Ackman describes three phases of activist investing:
This evolution reflects the importance of credibility accumulation—once the market recognizes your judgment, activist investing shifts from "confrontation" to "collaboration."
Ackman argues that activist investing restores the balance of power between owners (shareholders) and management:
> "In the era of Andrew Carnegie and J.P. Morgan, large shareholders held 20% of the stock and directly replaced management when problems arose. Later, the rise of index funds dispersed control, leading to underperformance. Activist investing has given owners a voice again."
Key mechanism: Activist investors typically hold only 5-10% of shares, but by persuading other shareholders (especially long-term holders like BlackRock and Vanguard) to form a majority, they influence board decisions.
Ackman acknowledges the theoretical risk of "short-termism," but believes the long-term holding structure of index funds provides a natural check:
> "BlackRock, Vanguard, and State Street's holdings only grow with capital inflows, so they must think long-term. They are very wary of proposals that boost short-term stock prices but harm long-term competitiveness."
| Market Consensus | Ackman’s Judgment |
|---|---|
| The company is about to go bankrupt, and shareholders will be wiped out | Asset value > total liabilities; bankruptcy law stipulates that shareholders should retain equity |
| The stock price has fallen from $63 to $0.34, rendering it worthless | Fundamentals (occupancy rate, net operating income) are still improving; the issue is merely debt maturity with no refinancing available |
| In all bankruptcy cases, shareholders are wiped out | Bankruptcy law is based on value distribution, not automatic zeroing |
Ackman emphasizes that he is not an expert in “distressed asset investing,” but by reading a relevant book (Ben Branch’s work) and hiring excellent lawyers (Joe Shanker of Sullivan & Cromwell), he quickly mastered the bankruptcy law framework.
> “Most of the world’s knowledge is already written somewhere; you just need to read the right book.”
Ackman shares a touching detail: a New York taxi driver invested $50,000 when the stock price was $0.60, ultimately achieving a 50x return and retiring. This illustrates the power of information democratization—ordinary investors can also use publicly available information to make correct judgments.
| Loss Type | Amount/Impact |
|---|---|
| Valeant Direct Loss | $4 billion |
| Chain Reaction | Short squeeze on Herbalife, other short positions hit, investor redemptions |
| Total Portfolio Loss | Over 30% |
Ackman acknowledged that the Valeant investment violated his core principles:
Ackman described his psychological state during the 2017 trough:
> "I did only one thing every day: make a little progress. Progress is like compound interest—you don't see results in the first few weeks, but after 30 days you say, 'Oh, there's progress.' Don't look up at the mountaintop, or you'll give up."
Specific measures taken:
| Long Position | Short Position |
|---|---|
| Max loss = principal ($100→$0, loss of $100) | Max loss = unlimited ($100→$1,000, loss of $900) |
| Gains capped (stock price cannot exceed ∞) | Gains capped (stock price minimum $0) |
| No interest payments required | Interest payments required for borrowing shares |
Ackman believes Icahn’s involvement was driven by both financial motives (profiting $1 billion by creating a short squeeze) and personal factors (a prior grudge stemming from the "foolish insurance" lawsuit).
Key event: Icahn called Ackman to curse him live on CNBC, a segment that became the highest-rated in business television history.
| Date | Event |
|---|---|
| October 7 | Hamas attacks Israel |
| October 8 | 34 Harvard student organizations issue a statement claiming "Israel bears full responsibility for the violence" |
| October–November | Campus protests escalate; Jewish students feel unsafe; the president takes no action |
| December | Congressional hearing; three university presidents respond to the question "Does calling for genocide violate campus rules?" with "It depends on the context" |
| January | Claudine Gay resigns amid plagiarism allegations |
Ackman points out that Harvard suffers from dual governance issues:
> "When a company goes off track, shareholders can vote to remove directors. Harvard has no such mechanism."
Through Christopher Rufo's book America's Cultural Revolution, Ackman traces the origins of the DEI movement:
> "DEI stems from the failure of the 1960s Black Panther movement. Its strategy is: not to resort to violence, but to infiltrate universities, indoctrinate students, and then enter government and corporations to change the world."
Specific issues:
| Business Insider Allegations | Actual Situation |
|---|---|
| Four paragraphs in doctoral thesis lacked quotation marks | Sources were cited; only quotation marks were missing (MIT handbook defines this as an "inadvertent error") |
| 15 citations from Wikipedia | Falls under "common knowledge," explicitly exempted by the MIT handbook |
| Other citations from software/hardware manuals | Footnotes described device parameters, not theft of academic ideas |
Ackman pointed out the malicious intent of Business Insider:
Ackman explicitly stated he would sue Business Insider, viewing this as a systemic media ethics issue:
> "In the digital media era, advertising revenue is tied to click-through rates. Writing a sensational story about a billionaire's wife generates massive traffic. And U.S. defamation laws are extremely unfavorable to victims."
Comparative Data:
| Traditional Media Era | Digital Media Era |
|---|---|
| After erroneous reporting, a small correction appears on page 20 two months later | Erroneous reporting spreads globally within hours |
| Victims have time and resources to respond | Published within 92 minutes, no time for response |
| Journalist reputation matters | Click-through rates drive content, sensationalism prioritized |
| Positive Aspects | Negative Aspects |
|---|---|
| Accelerated economic growth, historically low black unemployment | Personal style has led to a decline in societal civility |
| Urged NATO members to increase defense spending | Chaotic team management (frequent firings/resignations) |
| Early recognition of the China threat | Slow response to the January 6 incident |
| Reduced regulation, promoted business development | Exacerbated national division |
Ackman believes Biden’s biggest issues are his age and ego:
> “He should know when to step down. A key test of a great leader is succession planning. This is a massive failure of succession planning.”
Specific observations:
Ackman believes Phillips’ path is:
1. Perform well in the Michigan primary (Muslim community dissatisfied with Biden)
2. If Biden withdraws as a result, Phillips becomes the sole alternative
3. Attract centrists and anti-Trump Republicans (approximately 60-70%)
Key data: Phillips received 20% of the vote in New Hampshire with only 10 weeks of campaigning and no name recognition.
Ackman predicts:
> "The impact of October 7 on campuses like Harvard, UPenn, MIT, and Columbia was a wake-up call for universities. People saw the problems with DEI but understood the importance of diversity and inclusion — not as a political movement, but as a return to meritocracy."
1. On Investing: "Price is what you pay, value is what you get. In the short run, the market is a voting machine, but in the long run, it is a weighing machine."
2. On Failure: "Losses have value—the government allows you to use them to offset other gains. You don't have to earn them back the same way."
3. On Crisis: "Make a little progress every day. Progress is like compound interest—you won't see results in the first few weeks, but after 30 days, you will notice a change."
4. On Leadership: "A key test of a great leader is succession planning."
5. On Media: "A thief with a dagger can do less harm than a journalist with a pen."
6. On Life: "If you are satisfied with where you are now, then every decision you have made in your life—good or bad—has brought you here. I wouldn't change a thing."
7. On Harvard: "This is a 400-year-old institution. It's hard to break something that has stood for 400 years. But I still have hope."