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Bill Ackman is back. Yep, our favorite baby Buffett. You guys remember this Forbes magazine cover? Well, as always, the magazines tend to be contra indicators. They're a lagging signal. Whenever they're super negative, you know we're close to the bottom in the market. And whenever they're super positive, you know we're close to the top.
And often times it works for people, too. Things got rough for our boy Ackman just as soon as he was put on this cover. He had to eat a lot of humble pie. Of course, everyone remembers his huge Herbalife short when he was talking about Herbalife being a scam, a whole pyramid scheme. So, he had a huge short position.
But, he didn't stop there. He was super public about it, very vocal. And eventually got into it with Carl Icahn, this guy right here. He's smiling, but he's one of the biggest corporate raiders. Icahn liked Herbalife, and he was long. So, you know we all got to watch the public battle between Ackman and Icahn.
Which as they described here, Ackman was a cocky CP Rail meddler and an activist investing up-and-comer, with Carl Icahn being the cantankerous corporate raider and activist investing legend. So, they went head-to-head, Icahn calling Ackman a crybaby in the schoolyard, claiming that Ackman being short Herbalife would eventually turn into the mother of all short squeezes.
And yeah, he did lose a lot of money. Like, he admitted on TV that he was 400 to 500 million in the red, but he would not pull out. He was short it to the end of the earth. And like I said, he wasn't just shorting the company, he was very vocal against it. He had a $50 million public relations campaign against Herbalife, start getting into legal trouble because, you know, the government was like, "Wait a second, you're shorting, but you're also kind of manipulating here." And then he got investigated, like is he putting false claims up, is he hiring people to give false testimonies?
It could basically be a Billions episode. And you've seen similar things happen in Billions, like with that juice squeeze short, I think it was. Whatever that company was called. But as you can see from this chart of Herbalife, you know, Ackman just got rocked. And he was so public about it that it made him look pretty bad.
Like, this thing just kept going up. So eventually in 2018, and he started this back in 2012, so it was a long time. But finally after those 6 years, he exited his near billion-dollar bet against Herbalife. It was a ton of money on the line because the company's stock price continued to rise. He lost.
And you can kind of see that here when his fund became somewhat public. It's kind of a weird trading structure, but it just got crushed as soon as it IPO'd. Our boy Billy went through some rough times. But now he's back on top. Incredible, really. So let's uh catch up with Bill Ackman for a little bit in this video.
But first, if you want to avoid rough times of your own in the market, then make sure you check out our Explosive Stocks Checklist. It's going to help you find the best stocks around. It's free. . Okay, so in 2018, Bill finally got out of Herbalife. It was around here. Finally out of the toxic thing that his whole career was pegged on.
And then you know what happened from there? He started killing it. And you can see that in his share prices right here. And you can see his 2019 results. He increased net asset value as by 58% and returned 51.2% for shareholders. They even initiated a 2% dividend now on their shares. And they bought back a bunch of shares because they're doing so well.
You can look at the comparison between Pershing Square and the S&P. It just crushed it. And what's also interesting to track with hedge fund managers and even CEOs of companies is their personal life. So back in 2016, Bill Ackman was also going through a divorce. He was married for like 25 years and then getting a divorce.
Now the reasons for the divorce, I don't know. But a lot of times you see this kind of thing happen when a hedge fund manager is going through rough times like he was going through with Herbalife. And you see the same thing with, you know, company executives. But now let's fast forward to 2018. Like I said, things were going to look up for Bill Ackman, right?
Well, you see this lady right here, the one standing next to Brad Pitt? Well, she is an MIT professor. And you know who she got engaged to in 2018, who she's now married to? Bill Ackman. Yeah, right around the time when his fund was turning around was the time when he was stealing women from Brad Pitt.
Like I said, personal life and business very connected for these people. So, this MIT professor's name is Neri Oxman and I'm probably butchering her name, but I guess on the side of being an MIT professor, she's a model. I don't know too many professors you can Google and you get pictures like this.
I mean, most of my professors back in the day, they looked like this. And I mean, that's just fine. Like I don't just judge people on looks, but all I'm saying is if she was my professor, you know, I'd be in class way more, probably would have learned a lot more. And again, this isn't a channel where I just go through pictures of people and like judge how they look.
I don't give opinions like that. All I'm saying is that she's like an MIT professor in design, Israeli-American, probably best friends with other Israeli-Americans like Natalie Portman, Gal Gadot. So, I guess you know, from my professional objective view, I see the appeal. I personally judge everyone off of personality, so you know, whatever.
But that's great for Bill Ackman. They're married now. Look at him getting away with his off-brand Anderson Cooper style. Which by the way, I was watching 60 Minutes interview with Anderson Cooper and Joaquin Phoenix and I did not know that Anderson Cooper was so jacked. Dude is ripped. Could he use bigger shirts most of the time?
Sure, but the guy is very built regardless. And not to stereotype here, but my gay friends and any gay guys I run into, they all seem to be jacked with not a hair out of place. As if everybody's just like a male model. And every time I just think, thank God you're gay. Cuz how am I supposed to compete with all of this?
With all of this? Thank God I don't have to. See, that's another reason why Bill Ackman is smart cuz he took this look and applied it to the other sex. Even Brad Pitt couldn't compete cuz they supposedly dated. Can't can't believe it. And I don't know if you can tell, but I got a little gray going here.
Yeah, I'm on the silver fox path, which is clearly very effective. So, once the full transition inevitably happens, you might see me wandering around Israel for unrelated reasons. But it's just funny to see Bill Ackman crushing it in his professional life and personal life at the same time with his fund taking off like this.
And I don't think it's just a coincidence. Just like you can think about getting out of a company when the CEO or fund manager is getting into trouble in their personal life, maybe when you see them absolutely crushing it and stealing girls from Brad Pitt, you go long. But going back to his returns, again, he crushed the S&P in 2019.
And as far as which companies contributed to their returns at Pershing Square, it was all of them. They put in their slide deck, "We did not have any detractors in 2019. Every portfolio company generated positive returns." So, Ackman's bragging, no losers. You can see some of his largest contributors here, Chipotle, Hilton, Fannie Mae and Freddie Mac, Starbucks, Lowe's, Restaurant Brands International, and a bunch of others.
We can take a look at one of his uh newest positions called Agilent, and they are a leading analytical measurement company. By the way, this article is from MacroOps. Uh they sell instruments, consumables, and services to identify, quantify, and analyze molecular properties of substances and products.
What does all that mean? It means they are a science company. They sell a bunch of science stuff. So, Ackman thinks they're undervalued for two main reasons. First, that margins can expand, and second, that they're under-levered relative to peers. So, right now they have 25% EBITDA margins, which is okay, but it's not as good as their peer Waters, which does 35%.
So, that's where the margins can expand, and they also don't have as much debt, or you could call it leverage, as their competitors again. So, their net debt over their last 12-month EBITDA was 0.8. Their peers have an average of 3x leverage. So, they got room to move. And you can see their chart right here.
It looks pretty good. Pretty pretty good. So, what's the lesson to learn from all of this? Beyond what we've learned about Israel, is that the market is going to give you real tough times. Ackman got smacked around a lot. Actually, if I remember right, even his first hedge fund that he started right out of B-school, it had to fold cuz he took another big bet that just went against him.
Now, I personally think the guy has ego problems, which is why the whole Herbalife thing happened, but he probably takes that and calls it conviction. Either way though, the guy doesn't stop. Like he had all these problems, looked like a fool, and this was after he was way at the top. Like this is a very high level, right?
He was managing billions of dollars. It's very public. He's not just some little fund manager. And from there, that's when he had all these problems, which in some ways make it worse. I mean, you could say, yeah, of course, he still has a billion dollars, so it's not going to be that bad. But, you know, in other ways, it is worse because it's so public.
And like I said, I don't know if this was the reason, but that is when he got a divorce as well. It affects your personal life. I'm sure it was a very tough time. And I made fun of him a lot of the way. I don't know why, but I just like making fun of Bill Ackman. But you got to give him props, too, when it's well deserved, because I know my opinion just matters so much in this.
But it's always great to see someone get through the fire and come out on the other side successful. So, the lesson for you and me is just to take inspiration from that. The markets are always going to be tough, and there's going to be bad times, which you just got to keep pushing through. You got to adjust fire, learn from your mistakes, and continue.
And that way you can come back from a huge setback as well. Are you going to be able to do this? I don't know, but Bill Ackman does give us hope. And if you want to find stocks that are going to help your investment returns, so hopefully you don't have to go through as many rough times, and know they're not going to be stocks like Bill Ackman, cuz this is a completely different strategy, that should work a lot better if you're a smaller account and not managing a billion dollars, then definitely check out our explosive stocks checklist.
It'll give you the 10 factors we look at to find small caps that are ready to explode. It's a checklist of 10 different factors. You can get that for free. . You'll go to a page, you'll put your email in, and I'll send it to you. And feel free to comment down below with anything that you think about this video, any thoughts about Bill Ackman, anything at all.
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