Part One: The Rise of the "Activist" Investor

Robert explains the growth of "activist investors" through the career of one specific guy who also happens to be annoying as hell. See omnystudio.com/listener https://omnystudio.com/listener for privacy information.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:01Speaker 00

  Call Zone Media.

• 0:05Robert Evans?

  Welcome back to Behind the Bastards, the podcast that we're all listening to right now. You're listening to it as a recorded thing that's been turned into an ear product for your, your, your ear digestion, ear digestion. And I'm listening to it because I can't help but listen to my own voice. It's a curse. Here to be cursed with me on this glorious week, obviously, my producer, Sophie.

• 0:31Speaker 02

  Hey.

• 0:32Robert Evans?

  And the great Kim Kelly, author of the book Fight Like Hell. Kim, you are a wonderful journalist. You focus a lot on the labor movement and you have a new special edition of your book coming out soon, don't you?

• 0:44Speaker 03

  I do. It just came out, the young readers edition of Fight Like Hell, which is called Fight to Win: Heroes of American Labor. I thought it'd be really funny to call it Fight Like Heck, but they did not agree with me. So.

• 0:56Robert Evans?

  No, that is a pretty good bit.

• 0:58Speaker 03

  So it's Fight to Win, but it's, it's out, it's like really cheap. It's in paperback. It's summer reading time. Tell your teacher friends. Tell your little radical children. It's, you know, it's out.

• 1:08Speaker 02

  I like Fight Like Heck.

• 1:10Robert Evans?

  In the summertime, when the weather is hot, you got labor, you got labor on your mind.

• 1:13Speaker 02

  Yeah.

• 1:14Speaker 03

  Always.

• 1:17Speaker 00

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• 1:21Robert Evans?

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• 2:27Robert Evans?

  You know who else is a hero of American labor, Kim?

• 2:30Speaker 02

  Oh, no.

• 2:31Speaker 03

  Oh.

• 2:31Robert Evans?

  Well, no. That's kind of the opposite.

• 2:33Speaker 03

  I'm so curious about what you're gonna hit me with, man.

• 2:37Robert Evans?

  Yeah, you know, we, we used to, back when the show was newer and we were like more on the fly with everything, there was a degree to which like, I'd be like, okay, I definitely am doing this topic this week. Sophie would rack her brain, try to figure out like, okay, what guest, you know, is the, is the, like, should we pair with this? We still do that sometimes, but also just because of the size of the show, we're booked so far in advance that sometimes I'm like, ooh, okay, we'll see how this topic goes with this guest. This wasn't something I would have like artificially done, but this pairing of topic and guest is exactly like, it's, it's, it's perfect because this week, we are talking about activist investors slash activist shareholders.

• 3:19Speaker 03

  Oh, boy.

• 3:20Robert Evans?

  Specifically, one of these guys. We're talking about one specific kind of these guys who's, he's sort of the avatar of, of the activist shareholder, right? And if, do you know what that term means, Kim? I'm sure you do.

• 3:35Speaker 03

  Activist, it's, I mean, it sounds sort of self-explanatory, right? Like shareholder with a lot of fucking opinions?

• 3:42Robert Evans?

  Yeah, yeah, basically, right? Like it's a, it's, it's a, it's someone or a group because these are often like a term for like a hedge fund, basically, will, will be an activist shareholder in a situation where they're, they're going into a company and they very suddenly buy up a sizable chunk of that business, enough that they're able to put somebody on the board or maybe even force the company to take a new CEO. And they're called activist because this individual or this, this group that buys their way into having influence in a company this way, does so because they have some sort of plan, right? Generally, they see, okay, this company's, someone's making these really obvious mistakes. And I think if I fix just this couple of mistakes, the company will become rapidly

• 4:23Robert Evans?

  more valuable and then we can make a really quick profit, right? Because we, we buy in when the stock's $20 a share, we fix a bunch of problems, the stock goes up to 30 bucks a share, we cash out, we make a Buckload of money, right? That's kind of like the, the, the most basic version of, of what this is, right?

• 4:43Robert Evans?

  And this is, this is not like a super new thing, but the term i- i- is on the newer end of things, right? This is, it, to some extent, this is a term we've created to kind of replace the old term that we were using for people who were doing similar things. And the, the theory is, is that like an activist investor or an activist shareholder should like, like the, the fact that this exists is a good thing, right? Like, that's the theory, that because the, these, these individuals or groups that are quote unquote, the activist investors make companies stronger, right? Like, they, they, they go in and they fix these kind of like low hanging fruit problems. Sometimes they do much more extensive fixes and the company comes out the other side of it more profitable, right?

• 5:26Robert Evans?

  That's the idea. That's how this is supposed to work, right?

• 5:29Speaker 02

  So, this, this term was trending like a few years back when, with the Disney, when like, uh, what's his name? Pelts tried to take over the Disney board and do a hostile takeover. And then they were calling him an activist investor. And I was like, it kind of just sounds like a billionaire that's like trying to get richer. Like, I don't really understand the activist part of it, but your explanation now makes, makes more sense. I didn't look into it enough because I don't care about this man, but you know?

• 5:56Robert Evans?

  They're literally activists because they literally have a change or changes that they want to force the company to make. Yeah, yeah, yeah.

• 6:03Speaker 02

  Interesting.

• 6:04Robert Evans?

  And this, again, this is a term that's kind of become more common since the nineties. But there's a way in which it's, it's kind of an evolution of the, the, the old corporate raider. And in a lot of ways, Pete, some people will say that basically the term activist investor is people plastering over the term corporate raider, because that has a lot of bad connotations. But if you remember our episodes on, on Jack Welch, right? Like the former Monster CEO, Jack Welch, like that, the, these are the guys who's in like the eighties, they got really famous for like, they'd come in and they'd buy up a company or buy their way into a company that was struggling or even that just like wasn't as profitable as they thought it should be.

• 6:44Robert Evans?

  And then they would start selling off assets, spinning off, you know, whatever big business unit they could into a separate company to do an IPO to get quick cash.

• 6:52Speaker 02

  That's just every media company now.

• 6:54Robert Evans?

  Company to the bone. Exactly, exactly.

• 6:56Speaker 02

  Cool. I'm a vice refugee like so many other journalists out here. I remember how that works.

• 7:01Robert Evans?

  At a certain point, we went from calling these people corporate raiders to calling them activist investors. Now theoretically, it's because they got ni- the activist investors are nicer than corporate raiders. They're trying to leave something better behind and that's kind of the, there's a bunch of different studies, all of which are kind of similarly, I don't trust the language that they use to sort of like, make the claims that they're making, but there's a number of studies that will all argue like, no, these leave activist shareholders leave, you know, afterwards, the companies that were working on much stronger, this is very different from corporate raiders. They're not just laying off tons of people and like causing, you know, spinning off business units and doing all of this,

• 7:42Robert Evans?

  causing all of this chaos that makes them personally make a profit and fucks up a bunch of people's lives. They're also creating stronger companies and that's extremely debatable. Whether or not that's a real change, or if people just started calling corporate raiders activist investors? Like, that's kind of a big, big debate, so to speak.

• 8:04Robert Evans?

  And it, I, I think, I, there's a degree which I think we started using the term activist investor because in the 90s, corporate raiders were like the bad guy in half of the movie. Like, if you remember the fucking movie Hook, right? Robin Williams' character is a, is doing that job. He's like a corporate raider and the whole point is that the film compares that to piracy. Cause like Peter Pitt, he's become a bad person as he's entered the real world. So they, they, they were like, we gotta, we gotta get better PR. Like, we're the bad guys in every movie in the mid 90s. We have to like make a change.

• 8:36Speaker 03

  Everyone saw Office Space, they were not rooting for, for the mobs.

• 8:40Robert Evans?

  Yeah, yeah, they're not, like, it, it just wasn't a cool thing to be anymore, right? So come the late 90s and the internet age, the business guys don't want to be called raiders anymore. So the sexy thing is to find yourself at a stressed business and do like the ma- the business equivalent of like renovate with a goal of unlocking value by getting rid of old failed management and pivoting away from outdated business practices. And again, the reality is they're still usually doing the same thing. They're like selling off or spinning off assets and conducting vast layoffs. But it sounds, unlocking value, sounds a lot better in a press release.

• 9:13Speaker 03

  Yeah.

• 9:14Robert Evans?

  Yeah. Unlocking value.

• 9:17Speaker 03

  That's just sound, man, where did it, where's like the evil school where people learn to say,

• 9:23Robert Evans?

  Right.

• 9:23Speaker 03

  Like evil PR school, it's probably not journalism. They're somewhere. They're learning these, these linguistic tricks.

• 9:29Robert Evans?

  I wonder, Kim, because you know, like in our field of work, periodically you're writing an article, your editor will be like, oh, that was a great turn of phrase. You did a really good job here. Maybe you'll even like share it around in like a work Slack if like somebody, you know, one of your colleagues puts out an article and you're really proud of it. And everyone's like, wow, that, look at that. That was a really good sir. That paragraph was really beautiful. That phrase you used was perfect. I wonder if there's that kind of thing for like monsters where they're like, holy shit, unlocking value? That's a fucking mic. You nailed it, man.

• 9:59Speaker 03

  Dude, I think that's just what LinkedIn is. Like that's where this is happening.

• 10:03Robert Evans?

  Yeah.

• 10:03Speaker 03

  That's their, that's their Slack.

• 10:05Robert Evans?

  Yeah, that's what, that's today, the workshop for it, right? Yeah, that's out in public where they, where they pride each other on coming up with new ghoulish ways to talk about destroying people's lives. It's awesome.

• 10:16Speaker 03

  Jesus. Yeah, it's, you know, I love it. You love to see it. It's great.

• 10:20Robert Evans?

  And for society. Idea of how like rapidly activist investors take over and kind of like push

• 10:26Speaker 03

  Can't get over that.

• 10:27Robert Evans?

  It's so great.

• 10:29Speaker 03

  Airplane food type shit.

• 10:30Robert Evans?

  1998, according to Star Tribune reporter Chris Serris, in 1998, fewer than 20 hedge funds in the US described themselves as activists. The first of these guys got so much good PR though, and made so much money that the idea spread rapidly. And by 2008, there were more than 200 hedge funds that described themselves as activist. Today, more than 45% of companies on the S and P 500 have been targeted by activist investors in one form or an activist shareholders, activist hedge funds in one form or another. And one study I found suggested that about 60% of the time, when an activist shareholder like buys their way in to a company, businesses make changes in response to demands from

• 11:11Robert Evans?

  that activist shareholder or investor. Now, why does this all matter, right? Now, this matters because while a lot of these activists, you know, sometimes they do like make, like some of these things do work out. We're talking about a couple of these cases. Where the company does wind up stronger, where it was a situation where some smart guy was like, oh, they, these people are making a really dumb, one really dumb mistake. And if I buy my way in and enforce them to stop, they'll be worth more. That does happen sometimes, but it's at least as common for these activist investors to just kind of slash and burn a functioning business for quick money. And the, the problem is this whole thing, this idea of being seen as an activist investor

• 11:52Robert Evans?

  is really appealing to a specific sort of narcissistic tech guy who number one, has an infinite pile of money and number two, is pretty sure he knows how to do everything better than the people currently doing it. Right? Like, have you, have we heard it? Can we think of any of those guys in the world right now? Who have fucked things up recently?

• 12:10Speaker 03

  Again, they're just, they're pumping them out in factories somewhere.

• 12:14Robert Evans?

  Yeah, yeah. And it's, it's a deep, deep sickness that runs through our society at this point. So obviously the guys who think this way, as we've all seen, living through this in the United States are wrong a huge percentage of the time. Again, you can find a suspicious number of studies that will show activist investing is good, but it's always because like, well, if you average it out on the long term overall, there's like a technically a long-term gains in stock price for, for a majority of these companies. And that kind of leaves out the fact that looking at it that way is a very incomplete measure of success. Speaking of averages makes this process sound like less of a roll of the dice than it is for people in the companies being affected by these kind of takeovers. And I'm going to quote now from a 2015 study by David Benoit and Vipal Munga, published

• 12:59Robert Evans?

  by the Wall Street Journal. The Wall Street Journal examined that question with a comprehensive look at what happens to large US companies after an activist arrives. The conclusion, activism often improves a company's operational results and nearly as often doesn't. Slightly more than half, or 38 of the situations in the journal's study, led to better shareholder returns than industry peers for the period studied after the activist went public. In the end, the median campaign beat peers by just under five percentage points. At the same time, companies in the study slightly underperformed industry peers in terms of growth and earnings and slightly beat them on profit margins. As for Capital spending as a percent of operating cash flow seen as a measure of reinvestment of the 48 companies in the study with good data for that measure 25 raised spending or left it at

• 13:42Robert Evans?

  the same level while 23 lowered it. In other words, it's a flip of the coin. Like, there's, it's certainly, there's not strong evidence that this is like a good thing, or that this usually works out. And when it does, it's just because like, well, there's a long-term stock price benefit. That doesn't say anything about what life is like for the workers, you know?

• 14:02Speaker 03

  No. Where are all those benefits going? Not to all the people that got laid off?

• 14:07Robert Evans?

  Yeah, exactly.

• 14:08Speaker 03

  It's just weaponizing math.

• 14:10Robert Evans?

  It also leaves out the fact that like, there's some situations that go really well, and there's some situations that go fucking catastrophically wrong, because some activist sticks their proverbial money dick into, into a situation that they don't understand, and makes everyone's life worse. And probably no single man better embodies that whole picture of the activist investor, both as success and as fuck up, than Bill Ackman. That's who we're talking about really this week, everybody.

• 14:39Speaker 03

  Oh, man, the Twitter guy.

• 14:41Robert Evans?

  Uh huh, uh huh, the Twitter guy. That's right, everybody.

• 14:46Speaker 03

  That'll be his legacy, being a dickhead on Twitter.

• 14:48Robert Evans?

  I, I needed to dress this up a little bit. I wanted to do just an episode on Bill Ackman, because he's a huge dick and he's really annoying, right? And I, I think he, he was kind of wavering as to whether or not I thought he was like a full bastard, like somebody who really deserved, like someone who's bad enough, not just bad, but entertainingly bad and deserved to be covered, you know, the way we do on the show. And one of the things that kept me from doing it is that Bill is incredibly online and super petty. And I just don't want to deal with a fucking social media fight with this fucking weirdo billionaire freak. It's just not worth the hassle. So I figured what I'll do is I'll broaden the scope of the episodes a little bit to make this be about activist investors, and I'll try and keep Bill's name out of the title, so that if

• 15:32Robert Evans?

  he does like a find and replace thing, he won't notice it immediately, and I won't have to deal with an annoying guy on the internet.

• 15:39Speaker 03

  Or me. Oh, my God, you've ruined my life, Robert.

• 15:42Robert Evans?

  Right, right. So, we'll see, we'll see how long it takes Bill to realize, or if he ever does. I think we're probably well under his threshold of giving a fuck about.

• 15:51Speaker 03

  How many times a day do you think he Googles himself? He must have people for that.

• 15:56Robert Evans?

  I think probably, I think he does it himself a lot, but also I think he's got a lot of fires to put out.

• 16:01Speaker 02

  Yeah.

• 16:02Robert Evans?

  So I don't know that I think we're high up on his, his list. We'll see. We'll see if we kind of slide through the flack here, or if we wind up having to deal with an annoying fucking guy on social media. It's not the worst thing in the world. I just wanted to make it a little bit less obvious that we're just doing Bill Ackman episodes.

• 16:19Speaker 02

  Yeah.

• 16:19Robert Evans?

  Right?

• 16:23Speaker 03

  I mean, it works with the whole obfuscation of activist investors. It's an episode about them, not this one specific guy.

• 16:29Robert Evans?

  Yeah. Yeah. Not this one specific guy who's the most annoying of the breed. Yes. William Albert Ackman was born on May 11th, 1966 in Chippewa, New York. I think that's how it's said, something like that.

• 16:43Speaker 03

  Oh, Hillaryville.

• 16:44Robert Evans?

  I'm probably doing it a little wrong. Yeah. Hillaryville. Right. Uh, it's a little hamlet about 30 miles north of the big city. And today it's got about 2,500, 2,600 people live there. You know, i- it's not a big town, but it also, the fact that Bill grows up here doesn't mean that he's like a small town boy growing up close to the land, right? This is, this is an affluent area that he grows up in and he grows up very affluent, right? His family is very comfortable from, from the jump. Uh, Chris Serris describes Bill as coming up, quote, "The younger of two children born to a family steeped in the commercial real estate business. His father, Lawrence Ackman, is chairman of Ackman-Ziff Real Estate Group, a New York-based real estate financing firm." So he's got, not

• 17:29Robert Evans?

  just, does he come from like money, but like to call dad's, Bill's dad Larry, a major figure in finance would be putting it like mildly. Larry is a significant guy, right? Uh, he himself is the son of Herman Ackman, who is the founding partner of the real estate group that makes the Ackmans rich. So Bill is like a third generation rich guy, right? His grandpa starts this real estate company that his dad runs and they are both very successful doing this. Larry becomes president of his dad's business in 1968, two years after Bill was born. He was made CEO in 1977, when Bill would have been 10 or 11 years old. Simon Ziff, Larry's protege, describes Bill's father this way. "He lived his deals

• 18:13Robert Evans?

  and knew them better than his clients often did. He was an animal and never failed." So he might see like, kind of take from this, Bill grows up with like, something to, he's gonna grow up with something to prove to his dad, right? His dad is a, like a legendary figure. And you can kind of tell that Bill grows up in awe of his father a little bit. It's sort of my interpretation of things. If that makes sense.

• 18:38Speaker 03

  Family business, like, family business of exploitation and making money. Like, you can't, you can't fuck it up. You can't be the Ackman that ruins the whole line, that sullies the bloodline.

• 18:49Robert Evans?

  And you also, you know, mom, my dad, my grandpa, like, my dad made money in my, in my grandpa's business, right? So my dad is a nepo baby. I'm a nepo baby, but I don't necessarily want to be a nepo baby in the same industry. Right? Maybe I want to like, break out and try to prove that I'm like, you know, special too. That like, I, it's, I'm not just a rich kid, you know? I, I, I really see a lot of that in Bill's upbringing.

• 19:16Speaker 03

  Sure. For a little rich boy, the classic.

• 19:20Robert Evans?

  Yeah, yeah, yeah. And now, by all accounts, Bill is really close to his dad. He, he and Larry have a good relationship. Basically, you know, Larry's, the entire remainder of Larry's life. I think he dies in 2022. And Larry talks, like, a lot of Bill's childhood, he's hearing stories from his dad about their family and about like, his dad's dad and their great grandfather, who was like Abraham Ackman, the first member of the family to move to America. He's steeped in these stories about like, how hard his family members, his ancestors had to work to like, become rich and successful. Per an article in Forward, which is the website of a Jewish nonprofit, here's how Larry tells that story. "My grandfather came to this country at 18 in 1887.

• 20:04Robert Evans?

  He left Russia to avoid conscription into the Tsarist army, a 25-year service. My father used a little cart and rode across the border on a horse to Austria. He learned to sew and took a boat to the castle garden in 1887." Right? Like, that's the, we were, we were going to be conscripted into the Tsar's army and we fled the country and my, my dad learned how to sew and he gradually like, made his way into the United States where he started a business. You know, that's like the, the family legend of the story, right? And it is a very classic like immigrant story. Now that article I quoted from in Forward was written about an event, this like big dinner that Bill and his dad Larry hosted in 2015 at the Center for Jewish History in New York City. And based on some of the things Larry said that night, because they talk a lot about

• 20:49Robert Evans?

  their, their, you know, Bill's upbringing and Larry talks a lot about the family. This is a lot of my information on kind of what I assume Bill is raised hearing. I think these stories that Larry is telling this group about his family have, are, are a lot in part because they say that this is like the kind of shit that I was telling Bill when he was growing up, right? I raised him on these stories. Here's a quote from the Pershing Square Philanthropy website. "Bill's grandfather Herman initially tried to make a career as a songwriter, peddling his tunes on Tin Pan Alley," said Larry. "He'd get a hundred dollars a song and 150 for a great song, and he sold maybe 10 or 15 songs in about five years, until he could see this is no way to make a living, and went into his uncle's real estate business, services business, based on 149th Street in the Bronx.

• 21:33Robert Evans?

  His biggest hit, Put Your Arms Where They Belong, sold 750,000 records." So. That's very good. That's weird. I didn't expect that. Yeah, so his dad's dad does in between, like, so the, the, their great grandfather moves to the country, starts a clothes factory, grandfather grows up in it, but doesn't want to do that business for himself, becomes a songwriter, is weirdly successful for a while, and then gives that up to get into the real estate business. And I, I did find that song, Put Your Arms Where They Belong, because I was just sort of like, it's not, but I don't want to, I was considering playing it because I think it isn't very good, but the, the only version of it I have is a recent recording from a

• 22:18Robert Evans?

  lovely YouTube account called Sheet Music Singer, and it's just like a nice person who performs old sheet music, right? So you can hear all these like old songs that the original radio recordings probably don't still exist for. So I don't want to like shit, I don't want to shit on that person's musical stylings. They're just trying to fulfill a useful historical role. It's not their fault if the song is bad, but the song is bad, right? And I wasn't going to spend a lot of time on it until I saw Words in Music, where by Lou Davis, Henry Sante and Herman Ackman. In other words, three dudes wrote this song together. And now I got to read to you how the song opens. I dreamed alone till arms unknown embraced me and held me so sweetly thrilled by your

• 23:02Robert Evans?

  touch they taught me much and now I'm yours completely they brought me love in a night twas a love that is called love at sight. And I don't know how you interpret that, but I read this as three men had a beautiful experience together and wrote a song about it. And I think that's nice. I think that's lovely.

• 23:21Speaker 02

  Yeah, good for them.

• 23:22Robert Evans?

  They brought me love in a night, love in a night.

• 23:24Speaker 03

  I mean, close working relationship, a lot of late nights. I mean, I really thought of ghosts, but I mean, I do listen to more heavy metal and Tin Pan Alley classics, so.

• 23:33Robert Evans?

  Yeah, embrace me and help me so sweetly. I dreamed alone till arms unknown embraced me. That could be ghosts.

• 23:39Speaker 03

  Right? Like it's a little.

• 23:41Robert Evans?

  Maybe they got fucked by ghosts.

• 23:42Speaker 03

  Incubus succubus vibes, like you don't know what was going on back then.

• 23:46Robert Evans?

  That's right. Either way, I thought it was nice.

• 23:49Speaker 02

  It is nice.

• 23:50Speaker 03

  Beautiful expression, you know, you gotta express yourself. You get men loneliness epidemic, you can't keep it all locked up.

• 23:55Robert Evans?

  That's right.

• 23:56Speaker 03

  Yeah, put it out there, make it someone else's problem.

• 23:59Robert Evans?

  Unfortunately, instead of continuing to write beautiful songs about making love to ghosts, the patriarch of the Ackman family starts a real estate business and gets rich as shit. And we all have to deal with Bill Ackman now as a result, which is a bummer.

• 24:11Speaker 03

  What could have been, you know, he could have been part of a beautiful musical family.

• 24:16Robert Evans?

  He could have, he could have, he could have been the Bob Dylan of, I don't, I guess we already have a Bob Dylan. I don't know what he could have been. Yeah. Bronx real estate Bob Dylan. So during that speech that I've quoted from Larry also talked about how when Bill was a kid, he worked hard to drill good business ethics into his son because his own father did the same to him. This is what Larry recalled of, you know, his own father and how he was raised. Dad came home and told stories about interesting clients worthy of a documentary. He recalled Sarah Corin, an immigrant from Palestine and an entrepreneurial lady. When she was a little girl in Palestine and the fishmongers would run out of papers, she took all of her schoolmates workshop papers and sold it to the fishmongers. Sarah came to the US and went into making second mortgages, owning properties, i.e.

• 25:01Robert Evans?

  the Delmonico building, which she ended up selling to Donald Trump. So. These are the stories Larry grows up with, and these are the stories that he tells Bill. Bill is hearing stories about like, yeah, the lady who sold the Delmonico Hotel to Donald Trump, like, all of these hardscrabble tales of, like, refugees who come from nothing and get crazy rich. Um, like, these are the, this is the, the manna that he is, like, raised with in his brain. And as far as I can tell, Larry loves telling stories. And because he's also got a head for business, these stories are always like business parables. And so that's just like Bill's, we talk about kids who were grow up raised by, like, Star Wars or fucking Indiana Jones or whatever. Bill is raised on these, like, stories of entrepreneurs getting

• 25:45Robert Evans?

  rich and successful and, like, changing their families' lives. Like, that's his whole childhood milieu, right?

• 25:52Speaker 03

  Yeah, just ultra-capitalist Grimm's fairy tale vibes.

• 25:55Robert Evans?

  Right, exactly. That's a very good way, ultra-capitalist Grimm's fairy tales. Now, in comparison, I haven't found anything at all about his mom, really. Like, very little.

• 26:05Speaker 03

  That seems about right, given the whole deal.

• 26:07Robert Evans?

  Yeah. You don't hear a lot about Ronnie Posner, that's his mom's maiden name. Uh, one account that I did come across from Larry, so this is Larry talking about his wife, is that she once collected thousands of signatures and lobbied to convince their local government to extend a railroad line in their hometown. After telling this story, Larry quipped, "Activism is genetic," referencing Bill.

• 26:29Speaker 03

  What?

• 26:29Robert Evans?

  So, again, I'm guessing that means that she had a personal way that she benefited from the radio, or the railroad line being extended, I guess?

• 26:37Speaker 03

  What if she was just a real nice lady, surrounded by all these demons, trying to do something nice? We'll never know.

• 26:42Robert Evans?

  Maybe she, maybe she was. We'll never know. But if it is telling, like, that's the way they think about activism. And that's how Bill thinks about activism. Activism is like a thing you do so that you profit, right? One way or the other. I think that is how he looks at it.

• 26:55Speaker 03

  That's what activism is.

• 26:56Robert Evans?

  Right. Now, you know who does love to profit, Kim?

• 27:02Speaker 03

  Tell me. Everyone? No one? Bill Ackman?

• 27:05Robert Evans?

  Sponsors of this podcast. I mean, Bill Ackman does love to profit. And so the sponsors of this podcast.

• 27:09Speaker 03

  It's our sponsors.

• 27:10Robert Evans?

  Which might be Bill Ackman. No way to know. I hope not. That would be awkward, but it's possible.

• 27:19Speaker 04

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• 27:47Speaker 05

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• 28:17Robert Evans?

  This episode is sponsored by BetterHelp. If you've thought about trying therapy with our long-term sponsor, BetterHelp, insurance options may now be available nationwide with an average copay for eligible members of just $23 per session. Your mental health doesn't know it's World Mental Health Day. Stress does not politely wait until October 10th. Burnout does not RSVP. And your brain definitely doesn't check the calendar before deciding to spiral at 11:47 PM. Mental health is just a part of regular health. Therapy isn't only useful for big life choices. It could be a place to talk through smaller things. That work situation, taking up too much of your mental real estate, or a relationship dynamic you can't quite name, or simply the sense that something feels off. If you've been waiting to start therapy, BetterHelp works with more than 125 health plan networks,

• 29:01Robert Evans?

  and eligible members have an average copay of just $23 per session with insurance. Don't have insurance who live outside the US? You can still get 10% off your first month. Visit betterhelp.com/behind to explore your payment options. That's betterhelp.com/behind.

• 29:21Robert Evans?

  And we're back. So, uh, Bill grows up rich. He's got access to the best resources available, one of which is just living in Chippacwa, right? Uh, this is a good place to grow up. He attends Horace Greeley High School, which is a public high school. Uh, in 2008, it was ranked the number 46 high school in the nation and the number seven high school among those with open enrollment. Probably the best known story of Bill's young life comes from his junior year in high school, which is 1984. And here's how it's explained in the 2013 Vanity Fair article by William Cohen. "He wagered his father $2,000 that he would score a perfect 800 on the verbal section of the SAT. The gamble was everything Ackman had saved up from his bar mitzvah gift money and his allowance for doing household chores.

• 30:06Robert Evans?

  'I was a little bit of a cocky kid,' he admits with uncharacteristic understatement. Tall, athletic, handsome, with cerulean eyes, he was the kind of hyper ambitious kid other kids love to hate and just the type to make a big wager with no margin for error. But on the night before the SAT, his father took pity on him and canceled the bet. 'I would have lost it,' Ackman concedes. He got a 780 on the verbal and a 750 on the math. One wrong on the verbal and three wrong on the math,' he muses. 'I'm still convinced some of the questions were wrong.'"

• 30:34Robert Evans?

  And that says a lot.

• 30:36Speaker 03

  Man, he's really not doing any favors for the cerulean eye community.

• 30:40Robert Evans?

  No, uh-uh.

• 30:42Speaker 03

  Like, people already think we're soulless. We just got this guy just piling on.

• 30:46Robert Evans?

  Yeah, fucking narcissist. That's so like, everything you need to know about Bill Ackman as a person is that this is the kind of guy who's honest, this is not a joke, an honest to God reaction to hearing he got questions wrong on a standardized test is, well, the questions must have been wrong. Right? Like, that's Bill Ackman. And you're gonna see this from him over and over again. This reality is wrong.

• 31:12Robert Evans?

  If it's not working the way I said it was going to be, that's impossible. It has to work the way I said it. The, the way I predicted is the only way things could go. And when things don't work out that way, he flips his fucking shit. It's very funny. And that's gonna be, it's also the, this, this need he has to make these bets with no margin of error based on this like insane confidence of his. It's gonna work out more often than it should, but it also goes wrong a lot. And usually his dad's not there to like let him off the hook. That's an important thing to kind of note. I'm sure his dad, his dad was trying to be a responsible father here, but that's maybe the wrong lesson to teach him

• 31:51Robert Evans?

  is that you can make dipshit bets all the time and nobody will like really call you on it if you're wrong in a way that will hurt you. Maybe that's not the right lesson for Bill to be learning at this point in his life. I don't know.

• 32:05Speaker 03

  Oh my God, what a weird, what a weird family. What a weird way to like.

• 32:09Robert Evans?

  Yeah.

• 32:10Speaker 03

  What, what a weird kid. Like I'm gonna bet my father, who is an adult man, all the money I have that I might.

• 32:14Robert Evans?

  It is weird that, that you'd take that at all. That is bizarre parenting, right?

• 32:20Speaker 03

  Yeah, like my, think of if I tried to do my, my, my dad didn't even know what, my dad didn't barely finish high school. He didn't know what the fuck was going on in my school. Like, oh, you got some numbers right? Great, good for you, kid. Like.

• 32:31Robert Evans?

  Yeah.

• 32:32Speaker 03

  I'll take all your money.

• 32:34Robert Evans?

  Yeah, taking your money, like a bet is a really weird, it's one thing to be like, okay, you know, I'll give you, you'll, you'll get this or you know, I'll, I'll do this for your allowance or whatever. If you do, if you improve on your test score, I don't know. I, I'm not against the idea of like trying to motivate a kid or whatever, but gambling on, with, on the SATs with them is insane. Like that's a really strange thing to do with your cha, your son.

• 32:59Speaker 03

  That's not even like, I don't even think, it doesn't seem like he's the kind of dad that was really, from, from all I've learned, he was like, all right, make sure you go in there and study and like.

• 33:08Robert Evans?

  Yeah.

• 33:08Speaker 03

  You know, go be a bookworm kid.

• 33:10Robert Evans?

  He seems like a straight laced kind of guy, but he's a gambler. You get that bit from him. Like none of the stories about Larry are, and Larry loved to gamble, but I kind of think Larry was a gambler because Bill's a gambler. And the fact that they're doing this when he's a kid says a lot about the relationship and about Larry, I think.

• 33:28Speaker 03

  To Brandon 1980s money? That's like.

• 33:31Robert Evans?

  A lot of money. He's a rich kid, but still, yeah.

• 33:36Speaker 03

  Wild.

• 33:37Robert Evans?

  So, uh, Bill graduates the year after this and he winds up where you'd expect at Harvard Business School. I only found a couple of fun anecdotes from that period of Bill's life, but one of them is pretty devastating. And it was posted on the webpage for the company that he owns. Like, this is something Bill allowed to be put out as part of his, like, PR. Basically, this is from the Pershing Square, that's his, like, hedge fund, the Pershing Square philanthropy website. Uh, I can't believe he let this get published. According to Bill, Larry helped set him up with the woman he married. "Women in business school had issues with dating men in business school," Bill said. "Or maybe they just had issues with me."

• 34:23Robert Evans?

  There's more to the quote, but like, holy shit, I gotta take a second.

• 34:27Speaker 02

  That's amazing.

• 34:28Robert Evans?

  Maybe they just, maybe, Bill, maybe.

• 34:33Speaker 03

  Only oddest things ever said.

• 34:34Speaker 02

  Yeah, self-aware.

• 34:36Robert Evans?

  Things improved the day he got a fax from Dad. One of those curly things that was a foreword of a fax from one of his dad's clients, containing the phone number of a graduate design student at Harvard. When Larry called later, Bill had already set up a date with Karen. A couple of years later, Bill's dad told him if he didn't propose soon, he'd find a nice guy who would. "Dad's a good negotiator," Bill said. That's how he meets his wife.

• 35:01Speaker 03

  Like, beautiful love story.

• 35:03Speaker 02

  From a fax.

• 35:05Speaker 03

  So his dad just bought him a lady? It was like, son, you're striking out. Let's get, we gotta get you a girlfriend.

• 35:10Robert Evans?

  He kind of neped him into a relationship.

• 35:12Speaker 03

  Pull some strings. Karen sounds like a nice gal. Just get it done.

• 35:16Robert Evans?

  I gotta say, you hear about a lot of nepo babies. You don't hear about a lot of nepo, like, husbands? Like nepotism got you married? Like, that's, that's something else.

• 35:25Speaker 03

  That's very, that's very, like, vintage. That's very, like... Royal, like 19th century before the whole romantic love, very business arrangement. Marriage as business arrangement. That layer is thinking, that's that old school, old world mentality coming out. Like, you need a woman? Eh, we'll get you one.

• 35:42Robert Evans?

  Yeah. And I, I, I should probably have a little bit of like, okay, Bill was probably joking a little bit with, or maybe they just had issues with me, but I can't help but read that as like him thinking about that for the first time, where he's like, yeah, you know, women in business school never date men in business school. And then he's like thinking back to all the guys and he saw like dating women in business school and was like, well, maybe it was just me, actually. Maybe that's not a thing.

• 36:07Speaker 03

  But I'm sure you saw it as like, well, I'm too special. Like they just, they couldn't handle me and the golden boy.

• 36:12Robert Evans?

  It's important to eventually self-reflect on things. So I guess he did kinda. We'll give him a point for that.

• 36:20Speaker 03

  Well, we.

• 36:22Robert Evans?

  I don't have any, I wish we had more good anecdotes from Bill's like youth and childhood, but yeah, that does imply a lot. Anyway, he graduates Harvard with his BA in 1988. His undergraduate thesis is titled Scaling the Ivy Wall: The Jewish and Asian Experience in Harvard Admissions. And the paper starts with him comparing the experiences that Jews had trying to gain admittance to Harvard in the twenties with the experience that Asian students had had trying to do the same in the 1980s. And we've talked a lot on the show about how like, if you ever get a chance to like read a novel that a political pundit you dislike has written, or like, I guess, has written, you should do it because it's like a window into their soul. That's sort of the same with a thesis.

• 37:06Robert Evans?

  You can tell a lot about where a young person's head is at with a paper like this. And I'm going to start, here's a quote from Bill's thesis. "As one of the oldest and perhaps the most notable of this country's academic institutions, Harvard represents the gateway to elite status and to making it in modern day American society. One need only look at the disproportionate numbers of presidents, Nobel laureates, and chairman of 4500 companies who have graduated from Harvard to understand the power of the Harvard degree. As a result, admission to Harvard has become the target of groups seeking upward mobility." That you can really see, that's why Bill goes to Harvard is because he, he wants to get guaranteed a spot in the elite, right? This isn't, he's not, and he never pretends that he has a particular like intellectual interest, right?

• 37:51Robert Evans?

  That like this is always about access. It's always about making the right connections and friends to him, you know? Which at least he's honest about that, I guess. And his thesis is comparing, he outlines how back in the twenties, there's like this massive soar in the number of Jewish undergraduates admitted to Harvard. And it causes a bunch of problems because like it pisses off the Gentiles. And Harvard's president changes admission requirements to restrict Jewish admission because he saw a lot of Jewish students as unassimilable. And his argument was that like, if we keep letting more of them in, they'll break up the sense of elite identity among Harvard graduates. And there won't be this feeling of like, we're all part of the upper crust together, right?

• 38:33Robert Evans?

  And, and there's this attempt to talk about it in a woke way where he's like, and that'll make people more antisemitic, right? Like if we let, if we let too many Jewish people into Harvard, it'll ruin the upper class and that will make people even more racist against them, right? So Ackman is laying all this out as hypocritical, right? And he accuses the administration of believing the image of the Harvard man would be diminished by the entrance of too many Jews. He builds up to an incredible point. Why does Harvard feel compelled to admit minorities? It appears that Harvard is more concerned with the campus mosaic than with what the colors of the campus spectrum actually represent. Considering the original intentions of affirmative action and other such programs to admit the societally disadvantaged,

• 39:15Robert Evans?

  Harvard's policies do not seem to be directed to confirm the spirit of such legislation. Many of the minorities on campus are not disadvantaged. If Harvard were truly concerned with a disadvantaged student rather than with its desire to maintain a positive public image for the media, we would see recruitment of more students from disadvantaged backgrounds regardless of their color. Why is there no recruitment for disadvantaged Poles, Italians and underprivileged Jews for that matter? Whose definition of diversity is Harvard applying? So he's concerned about this from the beginning after getting into Harvard. He's like, why aren't they letting in enough like poor white people? And again, it's like a rich white kid getting admitted to Harvard. That's a fascinating thing to take issue with. Again, really says a lot about him. Yeah.

• 40:01Robert Evans?

  Yeah, like that, that's, it's pretty, it's, it's such a weird grievance. Like, well, you're literally just like a rich kid who got into Harvard. Why are you concerned that, like, they're not letting enough poor white kids, they're letting too many, like, rich, non-white kids into Harvard?

• 40:16Speaker 03

  Where is this coming from? How many not rich white people does he even know?

• 40:21Robert Evans?

  Right.

• 40:22Speaker 03

  What a strange thing to surface. Like, I'll tell you what the real problem is.

• 40:27Robert Evans?

  Shows me that he's hanging around a lot of kids who are complaining that there's too many non-white kids at Harvard. That's what I guess from that. Why else would you take issue with that sort of thing specifically?

• 40:36Speaker 03

  Yeah.

• 40:37Robert Evans?

  So, Ackman concludes that Harvard admits different groups of people for different benefits. Athletes, because it makes the alumni happy. Legacies, because it gets them donations. And minorities, because they've been pressured by the government or public protest. So, and he argues, like Harvard's, this is entirely self-interested morality by Harvard. And that's true. It is entirely self-interested morality by Harvard. But Bill doesn't point this out to, damn it. Here's how Puck News writer William Cohen describes what Bill learns here. Quote, "Change at Harvard all comes down to pressure," according to Ackman. So, that's the, the, the reason he lays this out is not, the point he's building to isn't, and this is wrong. The point he's building to is, and so that's how you get

• 41:20Robert Evans?

  Harvard to make changes. Is you, you, you just, like, all you have to do is pressure them, and you can get them to stop or start allowing members of a specific group. So, it's, it's interesting. He's already thinking, as an undergraduate, what would it take to stop Harvard from admitting as many people that I don't think should be here? How can I alter who gets into Harvard? That's really interesting to me, that he's thinking about that from this point.

• 41:46Speaker 03

  Yeah, like the genesis, the kernel of what he was gonna become.

• 41:51Robert Evans?

  Yeah. This is gonna be really relevant much later. But yeah, as you said, saying, Kim, like, that's, this is like decades later, that he, he actually has a chance to do something about Harvard admissions.

• 42:01Speaker 03

  I mean, like I said, activism runs in the blood, or runs in the family, right?

• 42:04Robert Evans?

  Activism runs in the blood, yeah.

• 42:06Speaker 02

  Wow.

• 42:07Speaker 03

  Maybe his mom was evil.

• 42:08Robert Evans?

  Yeah, I don't know. I found literally nothing else about her. After graduation, Bill went to work briefly for his father's company. So he spends like a summer working, you know, at the family real estate firm. The Vanity Fair piece I quoted from earlier describes this as simply a stint working for his father at the family's commercial mortgage real estate business. But the article in Forward describing that Ackman family dinner event quotes Bill talking about this part of his life. Quote, "Bill Ackman recalled, 'I couldn't get a job when I graduated from Harvard, so I went to work for my dad.'" That makes it a little sadder, but at least Bill's admitting that, right? Like, so I don't know.

• 42:47Speaker 03

  Geez.

• 42:47Robert Evans?

  While he's working on his MBA, Bill gets onto the rowing team for Harvard's business school. His team decides to pick shirts that year with dollar signs on the oars. According to Vanity Fair, "At the annual Head of the Charles race, spectators booed the HBS crew boats, causing Ackman to defend the decorations in an opinion column in The Harvest, the business school newspaper. 'Let's face up to what Harvard Business School represents,' he wrote. 'We spent 90% of our studies at HBS pursuing the maximization of the dollar. Why shouldn't our uniforms just be dollar signs? Because it's tacky.'" Because actually, Bill, even when people are just kind of self-interestedly concerned about money and don't have other interests, they feel bad about that, at least, like you should.

• 43:32Speaker 02

  Wild.

• 43:34Speaker 03

  He really loves saying the quiet parts of things out loud. I mean, like, why are people mad at me? Everyone thinks this.

• 43:41Robert Evans?

  Why are people, why don't people like this? And it's like, because it's almost as if he feels like, because he's so smart, if somebody is like offended or thinks something bad that he did, it's just because they didn't think about it right. So if he explains how they ought to think about it, then they won't find it gross. And like, no, no, no, I know, like, Bill, what you said there, I don't disagree with. Yes, Harvard Business School does represent max, soullessly maximizing the dollar. I agree. I don't misunderstand that. It's just gross. And like, even if that's what you want to do for a living, you should aspire to be slightly more than that, like, in your extracurricular life, you know?

• 44:21Speaker 03

  The SAT answers were wrong.

• 44:23Robert Evans?

  Exactly. So one of Bill's best friends at Harvard was David Berkowitz. He, this, this David Berkowitz is an engineering undergrad, not the son of Sam killer.

• 44:32Speaker 03

  I was gonna say, wow, that's entirely different episode direction we're going in. I'm here for it.

• 44:38Robert Evans?

  I'm not gonna say Bill Ackman isn't friends with this, the real son of Sam killer.

• 44:42Speaker 02

  No.

• 44:42Robert Evans?

  I'm not gonna say I can prove that this David Berkowitz didn't do the son of Sam killings. I can't prove that. Can you, Sophie? Can you, Kim?

• 44:51Speaker 02

  No, I, I, I simply just don't know.

• 44:55Robert Evans?

  The burden of proof is on this David Berkowitz to prove that he did not shoot a bunch of people in parked cars in the seventies. Uh, I just, I remember I watched a Spike Lee movie about the son of Sam killings recently.

• 45:08Speaker 03

  Hell yeah. Perfect callback.

• 45:10Speaker 02

  Shout out Spike.

• 45:12Robert Evans?

  Yeah. What a weird film. Uh, no, no one doesn't quite like Spike.

• 45:17Speaker 02

  True.

• 45:19Robert Evans?

  So, um, during that dinner event that Ackman hosted, Larry and Bill talked about what happened after he gets his MBA, right? So at this event, Bill's talking through like he graduates from Harvard the second time he gets his MBA. "I worked for you for two years," he said to his father across the stage, "then went to business school and you wanted me to come back. And I came back for one week, then chose to go on my own." So that's what Bill claims at this public event, but then his dad is like, that's not how it happened. And so you told me in your second year at Harvard, I'm coming back. I'm looking forward to it. And son, I was looking forward to it. Then you met David Berkowitz at Harvard Business School and created a hedge fund. So in his dad's version of events, he like is set to come back to work and, and just sort of bounces to start this hedge fund.

• 46:03Robert Evans?

  Uh, it's, it's weird to me. Maybe Bill just forgot. Maybe his dad had it wrong. But I kind of think Bill felt the need to like craft a slightly different version of this story, right? Wherein he, he comes back and he's working for his dad at the family business a second time. And it just doesn't feel right. And he has to like make the change because that's a little more cinematic. I kind of think that's what Bill is doing here.

• 46:27Speaker 03

  It makes him look a little bit more of like an autonomous being. Like I came back and it's like, no dad, I gotta go out on my own. I'm my own man now.

• 46:35Robert Evans?

  Yeah, yeah, I think a little more convenient of a narrative for him. So anyway, after graduation, Ackman and Berkowitz created their first hedge fund, Gotham Partners. Their first office was, according to William Cohen, a windowless office in midtown Manhattan. Now, despite that, this was not a scrappy startup running on fumes. These guys, their first business is not like hard up or anything. Per Cohen's piece, starting with $250,000 from Marty Perez, a college professor of Ackman's, and then the editor and owner of The New Republic and the father of Vanity Fair contributing era editor Evgenia Peretz, they raised $3 million. "We did incredibly well for five years," Ackman recalls.

• 47:17Robert Evans?

  "Most importantly, in 2002, Ackman made a huge bet that MBIA, Inc., the publicly traded municipal bond insurer, was fatally overvalued. The company protested that Ackman was trying to manipulate its stock price, both the SEC and Elliot Spitzer, then the New York State Attorney General, investigated. Not to put it to him politely, Spitzer told The New York Observer in 2011, but we put Ackman through the wringer." So, no charges are ever filed? But this isn't quite a nothing burger, right? There's never any conviction here, but this is a little bit more than Cohen describes it as being. I want to read a different summary of what happened.

• 47:53Speaker 02

  I just want to say Elliot Spitzer.

• 47:58Robert Evans?

  Ah, E. Spitz, we love him. We'll talk about Elliot one of these days on his own here. But again, this whole incident isn't quite as much of a nothing burger as that description by Cohen makes it seem. And I'm going to read another description of what happened in the Minnesota Star Tribune. "The investment firm wrote an article praising a company, prepaid legal services, then sold its stock. Ackman said he liquidated prepaid stock, as well as all of its public investments, because he was winding down his fund." So, the allegation is that his fund writes an article praising this company, which then boosts its stock, and he then immediately sells the stock. And that that's like stock manipulation, right? Which, Bill does a lot of similar stuff like this, and it's not illegal.

• 48:43Robert Evans?

  But it's kind of sketchy, right? But this is very much in line with how Bill, Bill's whole thing is putting a bunch of shit out into the media to like, start whatever kind of stock movement up or down, he needs to start happening in order to make his bets work, right? He like, this is him starting to figure out, if you're going to be this kind of guy who you're trying to like slide into a company and buy up a big chunk of it and then force it to make changes that you can make a profit, it's not enough, it's not just about making, being an activist investor and convincing the company to make changes. It's about putting stuff out into the media that so that people buying stocks say, oh, someone has a brilliant idea and they're fixing this company that's probably undervalued because it's making a mistake.

• 49:28Robert Evans?

  And Bill understands from the beginning, it's just as important to what you can get people to believe in the media as what you're actually doing to the company. That's not entirely about how much you can make the company function better. It's about what can you get people to believe you're doing to this company? Because that can move the stock on its own. And sometimes that's all you need to do is just push a narrative into the media so that folks start acting from there. And Bill is thinking about this from the start of his career. He's, he's from the beginning manipulating like media coverage in order to drive stock valuation in a way that helps him. And that's always going to be a thing that he does. It's a thing he's going to be good at and really bad at, at varying points in his life, right?

• 50:12Robert Evans?

  And again, he doesn't break any laws here, but the fact that he is in the crosshairs and being investigated for a while is tough on him. He would later say, people look at you funny. I learned that it takes a lifetime to build a reputation and someone can destroy it in a few days and we'll put a pin in that because he's Ghana. But at this point, things are going well. It's the early 2000s. Bill has correctly predicted that MBIA is about to collapse and it does fall apart not long after, uh, he makes a big bet. He basically like shorts it, right? And he is, he and his investors make about 1.4 billion dollars from this correct prediction that MBIA was about to fall apart.

• 50:51Robert Evans?

  Yeah, this is a lot of money and Bill is going to just make more money from this point on, right? Like this is from here on out, his company and he are always going to have a huge amount of cash to play with, you know, whether or not he's like winning or losing, like the, the kind of momentum that you get with a win like this.

• 51:09Speaker 02

  Right.

• 51:10Robert Evans?

  Kind of makes it impossible to stop, or at least it means that he's going to have to fail a lot in order to stop having enough money to keep gambling, right? But Bill's initial relationship with his first partner, Berkowitz, falls apart around this time. And over the course of like 2003, 2004, he winds things up at Gotham and in 2004, he meets several men that he takes on as business partners and they start Pershing Square, a capital management firm or hedge fund based in New York City. And we'll talk about that and a lot more, but first, here's some ads.

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• 53:23Speaker 02

  Just to say, it is incredible how these rich assholes decide to name their businesses.

• 53:30Robert Evans?

  Yeah. I mean, Pershing Square, I guess it's like a kind of a bland, banal name, you know? It makes like-

• 53:36Speaker 02

  But Gotham. You think you're Batman?

• 53:40Speaker 03

  Little on the nose, right?

• 53:42Robert Evans?

  No, I mean, that's just a nickname for New York too, right?

• 53:45Speaker 02

  Yeah.

• 53:46Robert Evans?

  But I, yeah, it's probably Batman for them.

• 53:47Speaker 03

  Yeah, I feel like most people just in like the world, they hear Gotham, they're like, oh, Batman. I don't think people are remembering the historic roots of it. There's like, oh, it's probably evil.

• 53:57Robert Evans?

  Yeah. No, it probably was a Batman thing.

• 54:00Speaker 03

  How many Ba- I mean, I'm not saying about Batman. Continue.

• 54:05Robert Evans?

  Yeah.

• 54:07Robert Evans?

  For a time, success follows Bill. Uh, in 2005, his fund acquired enough of a stake in Wendy's that Bill got to do the activist thing in Wendy's. And he decides that like, what Wendy's really needs to do is spin off Tim Hortons, which is this like Canadian coffee house diner, fast food style chain.

• 54:23Speaker 03

  It's like Canadian Wawa.

• 54:24Robert Evans?

  Institution. Yeah, yeah. A Wawa or Starbucks, a little bit of like both. Yeah, very popular. A little bit of like, honestly, a little bit of like a Waffle House vibes too.

• 54:34Speaker 02

  Yeah.

• 54:35Robert Evans?

  It's like a whole thing in Canada. And he is successful in getting Wendy's to spin Tim Hortons off into its own like independent company. Uh, the board fights him at first, but they ultimately cave. And when Tim Hortons has its IPO, it's a huge success and it netted $670 million for his investors in 2006. So- And this is where we talk about is our activist investors good or bad for companies? There's certainly an argument to be made that they're good for quote unquote the economy, right? Depending on how you count that, but it's debatable as to like, you know, obviously this is a successful investment for him and his company. They make a lot of money. Is this good for Wendy's in the long run? That's a lot more debatable per the Minnesota Star Tribune.

• 55:20Robert Evans?

  Though Ackman's investment in Wendy's nearly doubled in value, the stock has since slid to just $24 a share, below the $37 a share price Ackman paid. Some investors argue that by removing one of its fastest growing units, Ackman left Wendy's in worse shape as little more than a second rate burger chain. So again, what is spinning off Tim Hortons really create in terms of value? It creates this short term because you're creating a new company doing an IPO. You can make a shitload of money if you're, you know, Bill Ackman in this.

• 55:50Speaker 03

  Yeah.

• 55:51Robert Evans?

  But is there a gain to the world in Tim Hortons being a separate spun up company? Or is it more, maybe Tim Hortons does a little better, but Wendy's is doing worse and people are losing jobs as a result of that, right? And for his part.

• 56:05Speaker 03

  There's no consideration of like humanity in all of this.

• 56:08Robert Evans?

  No.

• 56:09Speaker 03

  All the investors, but like.

• 56:10Robert Evans?

  Yeah.

• 56:10Speaker 03

  What about like, you probably had to close a lot of locations. That's a lot of people's jobs.

• 56:15Robert Evans?

  Yeah. And Wendy's, again, their stock price collapses not long after they fucking cash out. And, and for his part, Ackman blames the stock slide on the fact that the Wendy's board refused to take his advice on who to hire as CEO and instead picked a woman, Carrie Anderson. And he apparently disliked Carrie so much that he liquidated Pershing's entire stake after she got hired, which is right before the stock value collapses and may have, you know, helped to spark the stock collapse. And by this point, Bill is enough of a name that him on like selling a bunch of stock could spark a sell off and him investing can drive a stock to soar, right? So. It's possible, one thing you could conclude from this is that he makes a bunch of money spinning

• 57:00Robert Evans?

  this off. And then when the company makes a lady he doesn't like CEO, he sells off his shit. And Wendy's is left in a much weaker position than they had been. And it's just kind of a result of Bill's arbitrary nature, you know, and it just like

• 57:14Speaker 03

  He just threw a little tantrum.

• 57:15Robert Evans?

  Who's better off shareholders and fucking the people invested in Pershing are Bill's better off is the world? I don't think so.

• 57:22Speaker 03

  Thank God.

• 57:24Robert Evans?

  Yeah. Now, again, depending on your attitude, how you think about business, you could look at this as Bill being brilliant or Bill being a fuck up, you know, that's a moral question. What I can say for sure is that Bill does not stop and reflect on whether or not what he made was the right call. He made money and that means he gets to keep rolling more dice. Here's the Star Tribune describing one of Bill's next big activist investments. One of Ackman's next targets was Ceridian Corporation, the Bloomington human resources firm. Ackman recalled his first meeting with Catherine Maranello, Ceridian's CEO, as frightening and one of the worst meetings of my career. Ackman said that Maranello, who he noted wore inexpensive jewelry and clothes to the meeting, spoke at length about her plans

• 58:06Robert Evans?

  to grow the company through acquisitions, an idea he opposed. He also recalls that Maranello said she already had enough money and that her strategy for growing the company was not driven by a desire for personal enrichment. And Bill is like offended by that. He's like, can you believe she doesn't just want to make as much money as possible? And she's wearing cheap clothes and cheap jewelry. Like, this is the worst meeting of my life. I had to sit next to a lady who wasn't dressed like a rich person. Like, is really how he kind of describes it.

• 58:36Speaker 03

  Like an affront to everything he stands for.

• 58:39Robert Evans?

  Yeah.

• 58:40Speaker 03

  Oh, my God.

• 58:40Robert Evans?

  It's really, and like

• 58:42Speaker 03

  How dare she?

• 58:42Robert Evans?

  The level of fear, like she says she has enough money, like.

• 58:47Speaker 03

  God, like for that moment, that deep, bottomless pit inside of him, he glimpsed it and was like, oh.

• 58:52Robert Evans?

  Oh, there's, there's more? That's, that can't be right. That can't be right.

• 58:56Speaker 03

  The void stared back for a minute and he did not like that.

• 58:58Robert Evans?

  No, no, no, I'm not going to stare into that void anymore.

• 59:03Robert Evans?

  I should also note here, this is just the second case of this, but so far we have in short order, two specific instances of like Bill developing irreconcilable differences with female executives. Might be worth making a note of that.

• 59:15Speaker 03

  I mean, the man who bought Wendy's is not a feminist icon.

• 59:18Robert Evans?

  Right. Not shocking. Poor Wendy.

• 59:22Speaker 02

  Very funny.

• 59:23Speaker 03

  What did she do to him?

• 59:24Robert Evans?

  Yeah. Here's, here's what Bill said about Catherine. She was proud of the fact that she had no economic ambition. That's disconcerting to a shareholder. And I guess so, yeah, but I don't know that she had no economic ambition. She might just have not felt the need to like obsess over maximizing short-term profits and expense of like the long-term health of her company. That might have been how she would have framed it. I don't know, Bill. So Ackman owned about 15% of the board and he pushed to get his people onto it. And his goal was, I think, to convince them to spin off the most profitable division into a separate company. Right? Again, it's like, they're always, people always say, oh, activist investors, totally different from these like corporate raiders who just come in and like strip a company for parts.

• 1:00:09Robert Evans?

  Okay. Well, what do they do whenever they, you know, buy their way into a new company? Well, they strip it for parts. You know, they spin off the most profitable division into a separate company to make a bunch of money off the IPO. It's like, wow, really creative. You really, you really identified a problem no one else could see that they hadn't done the thing that everybody does when they're stripping a company for parts yet. Anyway, it seems like, from what I can tell, Bill loses the fight, right? He's trying to convince them to spin off the company's most profitable division. But the CEO that he hates because she's not money focused enough, fights back on him. And the company takes its own device, you know, advice, and the company does basically like what Maranello,

• 1:00:50Robert Evans?

  you know, thinks is the right idea and sells itself to a private equity firm for $36 a share. This guarantees Bill and his investors a huge return. They make like a 50% return on investment because of the move this lady makes. And it's not exactly not being obsessed with profit to sell your company to private equity, like what she's doing. But Bill is livid because it's too low. He could have gotten more. And I just think this is him having issues with a woman doing the thing that he was wanting to do. I think if Bill had walked the company through a 50% return here, he would have crowed that this was a big win. But because they don't do it the way he wants to, and this woman gets her way instead, and it still works out really well for him, I think Bill gets pissed. That's my interpretation.

• 1:01:35Robert Evans?

  Maybe I'm being unfair, but that's my rate of this.

• 1:01:38Speaker 03

  I'm this broad with her cheap jewelry, making decisions that benefit me. How dare she?

• 1:01:44Robert Evans?

  Yeah. How fucking dare she?

• 1:01:46Speaker 02

  So likely misogynistic on top of racist. Got it. Got it.

• 1:01:51Robert Evans?

  Maybe, maybe, maybe, maybe.

• 1:01:53Speaker 02

  Allegedly, maybe, maybe.

• 1:01:55Robert Evans?

  He hasn't said anything racist. He's just really concerned with fucking not enough poor white people getting into Harvard as opposed to rich, non-white people.

• 1:02:04Speaker 03

  I mean, big advocate for the Polish community, I guess.

• 1:02:08Robert Evans?

  Big advocate for poor Polish guy. It's Bill Ackman.

• 1:02:11Speaker 03

  I'm sure he was very familiar with that community living in Chiapacua.

• 1:02:15Robert Evans?

  Yeah, yeah, yeah. So by some accounts, Bill's most impressive and significant success as an activist investor was his 2008 move to stake a big claim in General Growth Properties, or GGP. This was a risky move because GGP was in the business of owning and operating a fuckload of malls, right? This is a company that owns a bunch of malls. And come the aughts, malls aren't doing great, right? It's not the best time in the world for malls, you know? I think we can remember that trend starting to happen. And to make matters worse, General Growth was operated and owned at the behest of the Buck's Bombs, which were one of the oldest and moneyed families in the United States, right? The Buck's Bombs get into this more than a half a century ago.

• 1:02:58Robert Evans?

  They start this company, and the last of the family to act as CEO, John Buck's Baum, presided over a staggering 97% drop in stock value. He is a fail son of all fail sons.

• 1:03:11Speaker 02

  I have like a visceral, I have like a visceral twitch every time you say Bucks bombs.

• 1:03:17Robert Evans?

  Bucks bomb, yeah.

• 1:03:18Speaker 02

  Like.

• 1:03:19Robert Evans?

  Yeah, that's a rich asshole name right there.

• 1:03:21Speaker 02

  Yeah, I love it.

• 1:03:22Robert Evans?

  It's like a beautiful, blue blood, like fail family name.

• 1:03:25Speaker 03

  But it also sounds like something you buy at the cash register at the liquor store at the same time.

• 1:03:29Speaker 02

  It's the perfect, like, rich asshole sitcom character names.

• 1:03:33Robert Evans?

  Yeah, the Bucks bombs. Yeah, it is a good name for like, uh, yeah, uh, like, like a bonbon, like a chocolate treat.

• 1:03:41Speaker 03

  Yeah, or like a buzz ball crossover situation.

• 1:03:44Speaker 02

  Totally.

• 1:03:44Robert Evans?

  So, yeah, John Bucks bomb is failed son. He buzz bombs. Yeah, when he takes over the family business, their 25% stake in GGP is worth 3.2 billion. Uh, and by the end of his tenure, it's worth 116 million. Like, there, he's really bad at this. So Bill sees this company is flailing. It's clearly not being managed well. And GGP is like the perfect, this is like the, an ideal situation for an activist investor. Cause what you really do have here is a company that actually has, and Bill accurately sees their fundamentals aren't bad. They own a bunch of real estate. They own like a bunch of businesses that are functioning.

• 1:04:26Robert Evans?

  The issue is that they're managed by idiots who have tacked on a shitload of debt for very shady and stupid reasons. And it's made it impossible for the company to function, right? So this is a case where Bill accurately sees, oh, I actually could just come in here, fix a couple of things and make the company worth a lot more. And so I'm not going to bore everyone with a long economics explainer. This is a case where what Bill does works well. And the whole activist investor, investor thing is as big a success as it can really be. Bill's fund injects some investment money into the company to kind of rebuild some stuff. The creditors get paid off and the company goes through bankruptcy without liquidating properties or laying, doing mass layoffs.

• 1:05:07Robert Evans?

  The stock price rebounds from 34 cents a share to more than $30 a share in a pretty short period of time. And Bill and Pershing Square make off like bandits and can arguably be, be said to have done some good at the same time. They avoid layoffs, so people keep their jobs. This is everything working as well as it possibly can, right? This is not going to be every investment that we see Bill come into, right? Uh, but this is going to be like, uh, you know, some of them, sometimes it does work.

• 1:05:36Speaker 02

  Incredible.

• 1:05:37Robert Evans?

  It doesn't work every time, but it is gonna work kinda one more time. Although this next big success is a success of Bill's company, but he doesn't have anything to do with it. So in 2011, Pershing Square makes a hostile acquisition of a bunch of stock for Canadian Pacific Railway, and they execute what BuzzFeed reporter Mariah Summers called "one of the greatest activist investing campaigns in history," adding more than $25 billion in value over just two years. And again, this is a very successful investment that Bill's company makes, and it really does turn things around for this Canadian railway company. Bill is not behind it. He is not the guy planning this.

• 1:06:17Robert Evans?

  The mind behind all this is a guy, a Pershing Square executive named Paul Hillel, who spotted structural issues and how the company was like working and drew up a proposal to fix those issues, picked a CEO candidate and like masterminded like the rebound of this whole company. And during the same period of time, where Hillel is executing this masterful turnaround of Canadian Pacific, one of the great activist investor case studies in all time, Bill is failing miserably to do exactly the same thing to one of the most storied names in American retail, JCPenney Company. And we're going to talk about how Bill helps to kill JCPenney's, but first, we're gonna end this episode and let Kim pluck her pluggables. Kim?

• 1:07:02Speaker 02

  Yay. Do you wanna tell our viewers and listeners about your books, Kim?

• 1:07:08Speaker 03

  Yes. That's right, plural. I have, well, I mentioned the kids' book, like YA, Precocious 8 up to 14, Young Readers' Edition. It's basically like a radical labor history book for young people, and it's a spinoff, I guess, of my first book, which is, it's back there somewhere, Fight Like Hell: The Untold History of American Labor, which is basically like a marginalized people's history of labor in the US. It's specifically focused on women workers, Black workers, Indigenous workers, Latino workers, Asian workers.

• 1:07:45Speaker 03

  Sex workers, incarcerated workers, basically every type of worker you can think of who doesn't necessarily get top billing when the media talks about labor or unions. There's not that many white guys with hard hats who like have bad politics in there, I will say. There's lots of other labor books that have that, if you want some of that. But my book's a little different. And I'm working on another book right now, which is also very different. Because it's, it's still about labor, but it also is about the circus.

• 1:08:16Robert Evans?

  Oh, excellent.

• 1:08:17Speaker 03

  Yeah, the sideshow.

• 1:08:19Robert Evans?

  Well, check out Kim's books. Check out Kim and check out part two of these episodes where we, we continue with the, the tale of Bill Ackman helping to murder JCPenney's. So, all that and more.

• 1:08:33Speaker 03

  Oh, my god.

• 1:08:35Robert Evans?

  Whenever, when we're done. Go away.

• 1:08:36Speaker 03

  Bye.

• 1:08:41Speaker 02

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