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Bill Ackman Continuing To Learn On The Job

It's pricey, but nothing works like life experience.
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Say what you will about Pershing Square Capital Management founder Bill Ackman, but the man is always learning. It may not be the best education in the world, but it’s probably the priciest.


The latest lesson came courtesy of Valeant Pharmaceuticals, and at $4 billion and counting, may be more than all of his previous coursework combined. Luckily, in addition to everything else that taught him, he’s garnered a key bit of insight for each billion lost.

His listed four takeaways as lessons from the investment: That managerial competence in deploying capital doesn't translate to value-added for a business; that "changes in regulations, politics or other extrinsic factors" can't be accounted for and can dent value; that even a strong management team can make mistakes; and that a big price decline in a stock "can destroy substantial amounts of intrinsic value" including "morale, retention and recruitment."

You can find those pearls of wisdom written alongside others he’s learned on his clients’ dime. For instance, that “retail is not our strong suit” after shedding $600 million on J.C. Penney, part of a more than $2 billion masterclass on what not to do in that space that also involved Target and Borders Books. Sometimes, they even take, as with Ackman’s botched deal to take over New York City’s sprawling Stuyvesant Town apartment complex. Thanks to his having “learned from prior experience that sometimes the better part of valor in an investment situation is to move on,” Ackman managed to lose no money on StuyTown, proving him an occasionally apt pupil.

Now, if you'll excuse him, he's going to make like a student and grab a bite at his (second-)favorite restaurant.

Chipotle has built a superb brand pioneering the “fast casual” restaurant industry with the success of its outstanding product offering, unique culture, and powerful economic model. We have followed the business for years, noting how it has disrupted the fast food industry with its high quality, delicious and customizable hot meals that are prepare quickly and sold at affordable prices....

We believe Chipotle’s food quality is superlative given the focus on cooking from scratch with the best available and simplest ingredients.

Ackman tells investors he’s learned from his Valeant mistake [CNBC]
Pershing Square Holdings 2016 Annual Report



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