In his latest 2021 Annual Letter, Bill Ackman discusses his ‘quieter’ approach to investing – Pershing Square 3.0. Here’s an excerpt from the letter:
When we consider our history of corporate engagement, we have previously described two Pershing Square eras:
(1) the initial period from our inception as Pershing Square 1.0 or “transactional activism,” where we invested in undervalued companies in which we were able to create substantial shareholder value by catalyzing corporate events like spinoffs, strategic asset or corporate transactions, and/or changes in tax or corporate structure, and…
(2) Pershing Square 2.0, beginning with our investment in General Growth Properties, where we joined the board of directors and helped to create shareholder value from the perspective and influence of an insider.
In the last year or so, some of our investors have asked whether our approach has changed again as they perceive us to be a “quieter” investor. They note that it has been about five years since our last proxy contest, and we have had only positive, constructive engagements with our portfolio companies in as many years.
To set the record straight, we have always sought to have positive, constructive engagements with our portfolio companies and their boards and management teams. Fortunately, we have largely succeeded, other than in the initial stages of a handful of proxy contests over the years.
Unfortunately, our quieter constructive engagements which characterize the substantial majority of our investments are less widely known because quiet, constructive engagements do not generate media attention, certainly when compared with proxy contests.
We have also on a few rare occasions engaged in the “noisiest” form of activism, activist short selling, although this has been limited to two high-profile activist short engagements. Despite our limited participation in this investment strategy, it has generated enormous media attention for Pershing Square.
In addition to massive amounts of media hits, our two short activist investments managed to inspire a book and a movie. Fortunately for all of us, and as importantly for our reputation as a supportive constructive owner, we have permanently retired from this line of work.
In our nineteenth year since inception, we have had the opportunity to get to know many boards and management teams, and we have built a reputation as a constructive, long-term, and helpful owner. The world of large capitalization public companies is small, and our reputation as a thoughtful investor has therefore become well known among CEOs, boards, and others who matter.
The result is that all of our interactions with companies over the last five years have been cordial, constructive, and productive. We intend to keep it that way as it makes our job easier and more fun, and our quality of life better. So, if it is helpful to call this quieter approach Pershing Square 3.0, let it hereby be so anointed.
You can read the entire letter here:
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