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At the beginning of this year, hedge fund manager Bill Ackman was making headlines, but not necessarily for his business moves. On his ex account, he was denouncing anti semitism on college campuses and demanding leadership changes at Harvard, his alma mater, and in press interviews he wasn't being shy about it.
The more woke, the more left leaning the institution, the more anti semitism. I'm not afraid. I'm not afraid of being canceled. I'm not afraid of losing my job, and financial independence gives me the wherewithal to speak.
Politics is not the only area where he's had a big year, though. On Bloomberg's annual list of best paid hedge fund founders, Ackman has experienced some of the biggest gains, taking home six hundred and ten million last year. Today, on the show, how Ackman was able to find success with his fund, Pershing Square Capital Management, and why the same big players keep appearing on the list despite the economy's ups and downs. This is the big take from
Bloomberg News. I'm Sarah Holder. We sat down with Bloomberg's Tom Maloney to talk about this list. He's a journalist on the Wealth Team. I asked him if he was expecting to see Akman on Bloomberg's annual ranking of the best paid hedge fund founders.
It's not surprising to see his name on the list. His fund had a pretty good return last year. They were up about twenty seven percent, and he's been on the list before. Actually, back in twenty twenty, he made about one point three billion, but this is the highest ranked he's ever been. At number seven, he made about six hundred and ten million.
What did he do differently last year to get to number seven?
I guess what he did differently is not doing much. You know, he has a pretty concentrated stock portfolio. They only added one new position, alphabet. Otherwise the portfolio stayed
pretty much to saying throughout the year. So in contrast to like some of the more complicated funds that are on the list, places like Millennium and Citadel that have you know, thousands of people working for them, So you could look at it as him kind of making money doing very little, although obviously there is a lot of analysis and so on that goes into this stuff.
Right, Well, why did taking a quieter approach work for him in twenty twenty three. What broader trends in the market may have made that strategy more successful.
Yeah, absolutely. I mean, look, the market was up quite significantly last year, so if you had a portfolio that was just tracking the S and P five hundred, you would have done pretty well. And his portfolio did a little bit better than that. So part of it was kind of just picking a good portfolio of stocks and sticking with it throughout the year. He used to be known as more of an activist investor and a short seller as well, and some of those positions caused him
some pain in previous years. You know that. You might remember there was this big fight he had with Carla Khan some years back around a herbal Life position that he was shorting, and a few years ago he said, I'm not going to do that so much anymore. I'm just going to take a quieter approach. I'm going to stick to investing in a concentrated portfolio of stocks, and that's really worked out for him. But you know, everybody
knows Akman for different reasons. In the past twelve months, I wouldn't really call it a quiet approach at all, he's become something of a Twitter troll. It's been very prominent in calling out some of the university heads for their positions on anti Semitism. He was really instrumental in getting the president of Harvard, Claudine Gay, to quit, and so on that front, he hasn't been quiet at all.
Yeah, I mean, has Ackman's activism on X that loud voice he's raising impacted his hedge fund for better or for worse?
Well, it's interesting. So in the past couple of weeks, in fact, it was it was very recently they've come out and said that they're going to raise a new fund in the United States for retail investors. So he might be looking to kind of capitalize on his popularity or infamy on X as a way to get people to invest funds with Pershing Square. He already has a kind of a retail fund, but it's only traded in Europe and it's not really very well known in the US.
So you know, there might be something, there might be another reason why he's looking to get that kind of bully pulp it on Twitter.
Acman's simpler, lessons more approach last year. It really stands in contrast to other funds on the list. These funds employ thousands of people and invest across a variety of assets. How did their investment strategy stack up against Acman's last year?
They had pretty good years, but not as outstanding as they had the year before. So Citadel's main Wellington strategy had about a fifteen percent return and Millennium was up about ten percent. Those aren't outstanding returns, but even though they under formed Pershing Square this year, those funds have consistently had pretty strong returns for a number of years now,
and that is really important to investors. If you can kind of have consistent positive returns despite whatever the market is doing, then that's really what a lot of investors are looking for from a hedge fund.
One of the other main trends when looking at this list, seems like there have been less revenue gains for these top hedge funds across the board. Why was twenty twenty three worse than twenty twenty two.
Well, what's interesting, I think is that some of the more complicated hedge funds, like Millennium and Citadel, because they invest in a lot of different asset classes, they had exposure more exposure than somewhere like pershing to volatility in those other asset classes, whether that's commodities or interest rates. So I think a big part of their returns last year came from some of those other asset classes, whereas twenty twenty three was a little bit more died in
terms of volatility. So some of those outside returns were missing last year.
And some of these funds and fun founders have yet to recover from those twenty twenty two losses. Who are they and what steps are they taking to reverse fortunes in twenty twenty four.
A lot of them were big technology investors. Technology recovered a lot in twenty twenty three, but not necessarily enough to offset some of the losses that these funds suffered in the previous years. Obviously, tech has had a massive AI fuel boom in the first quarter, and I've got
no doubt that that's going to influence their earnings. Some of those funds are invested in private companies as well, that private markets have kind of been stuck bench Capital markets have been in the doldrums the last year or two, and we might see reversal of that in twenty twenty four. So it'll be interesting to see how that plays out in the world of hedge fund returns.
What have you learned from making this Bloomberg ranking every year?
So I have been doing this for five years now. This is our fifth ranking of the highest earning hedge fund managers. I think the main takeaway from me is that every year, I think it gets harder and harder for new people to break into the list, simply because the incumbents have so much invested in the funds now that it doesn't take a lot for them to continue to stay near the top. Ken Griffin Israel, England, Steve Cohen as well, Jim Simon's at Renaissance Technologies, Chris Own
at TCI. They're kind of people that we've seen near the top of this list or at the top of this list for the last several years, and that's because they've been around a long time. They've got a lot of money invested in their funds, and if the funds have any sort of a positive gain, then they're going to make billions of dollars. The assets under management are the really big funds keep growing and it gets a
little bit harder to kind of make it. If you're a hedge fund that's running less than a billion dollars simply because to run the sophisticated strategy it costs a lot of money, and to compete with the big funds, you need to kind of have those sophisticated strategies. So it's certainly a very different industry than it was twenty years ago, when it was a lot easier to break in and it was a lot less sophisticated as an industry.
And now you need a lot of computing power, you need a lot of technology, you need investor relations, and I think it's a much more complex business to operate.
Can you translate what this all means to regular people like you and me or people who have their money in the stock market, Like, why should we care about how well these hedge fund guys are doing?
I think people should care because I think it's important to have at least a sense of how much money some people are making in this world. You know, these people have a lot of influence and the amount of money that they make is enormous, and whether you think that's a good thing or a bad thing, I think
it's important to be informed about it. We all have a good idea about you know, how much regular people make, whether it's a firefighter or a teacher or whatever, you have a pretty good sense of how much they make. But you know, I think it's kind of a shock to people when they learn that somebody like Ken Griffin made two point six billion last year. I mean, it's an enormous amount of money. They willed a lot of political power, so I think that's really important.
Well, Tom, thank you so much for sharing this great reporting with us.
Thank you it was a pleasure.
Thanks for listening to The Big Take from Bloomberg News. I'm Sarah Holder. This episode was produced by Adriannasappia. It was edited by Caitlin Kenney. It was mixed by Blake Maples. It was fact checked by Stacy Renee. Our senior producers are Naomi Shaven and Jill Duddy Carley. We get editorial direction from Elizabeth Ponso. Nicole Beamster. Bor is our executive producer. Sage Bauman is our head of podcasts. Thanks for listening. Please follow and review The Big Take wherever you listen
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