For the notoriously blunt Mr. Ackman, it comes down to almost indecorous levels of honesty. “If your wife asks you whether she looks good in a dress, and every time you tell her she looks beautiful, she won’t believe you,” Mr. Ackman explained. “But if you tell her, ‘Well … ,’ and then other times, ‘Wow, that’s a really beautiful dress,’ then she really appreciates it. And it’s the same thing with friendships and CEOs.”
There have still been a few disasters since then, including a demoralizing proxy fight with Target, where Mr. Ackman had concocted a complex scheme for the company to sell off the land under its stores and its credit card receipts, a decision he still insists is right. (He even bought breakfast with his Target card.) He also made an investment five years ago in Borders that has been almost totally wiped out by the company’s recent bankruptcy.
“I’ve made a lot of mistakes, but the good outweighs the bad,” Mr. Ackman said. “This is a business where you don’t have to be right every time. People talk about how being right 55 percent of the time is good enough, and we try and be right a lot more than that.” Since launching Pershing Square, Mr. Ackman has turned a $54 million initial investment into a $9.3 billion behemoth, according to his March report–conveniently leaked, as it always does, on the rambunctious Wall Street gossip site Dealbreaker.
Following his Target fight, he has found JCPenney to be a willing partner, as well as Fortune Brands, where Mr. Ackman convinced the board to break up the owner of Jim Beam, Titleist golf gear and a home products division that includes MasterLock padlocks and Moen faucets.
His most successful investment to date may be the purchase of General Growth Properties, the mall operator. Mr. Ackman bought at 34 cents a share and led it through bankruptcy, and now it trades in the mid-teens. And he broke even on a brash takeover bid for Stuyvesant Town, the massive middle-income housing complex in Manhattan, where a $45 million investment stood to make him $2 billion. The lenders decided to buy him out rather than force a foreclosure. The plan echoes at least a little bit the disdainful strategies of Mr. Icahn–yet Mr. Ackman insists the tenants, and not his fund, would have been the true beneficiary.
Some people still struggle to understand how Mr. Ackman has not made more mistakes. “I don’t think he could make a simple investment if he wanted to,” said an analyst who has followed him for years.
Others are waiting for the next misstep. A friend who also works in hedge funds points to how the Target investment, had it not been made in a separate fund, could have dragged under the entirety of Pershing Square. “At least he is learning from his mistakes,” the friend said. “But whenever you set out to make more money than anyone else, when that is the very goal from the outset, I think there is an Icarus risk, if you will, of flying too close to the sun.”
SINCE HIS CHILDHOOD in the well-off Westchester ‘burb of Chappaqua, Mr. Ackman has been competitive and ambitious. He captained the tennis team, but graduated only fourth in his class. That did not stop young Bill a year later from telling his father, a successful real estate broker, that he was going to save the world. “And I think he is more anxious than ever to do that,” Larry Ackman said.
Mr. Ackman prides himself on donating to outré philanthropies like the Jewish History Project and the Boys and Girls Harbor in Harlem, where he talks casually about erasing multimillion-dollar debts at each. He and his wife, Karen, a landscape architect who was a grad student in design at Harvard when Mr. Ackman was at business school there, have both got their hands dirty transforming the High Line and the Armory. “Great brands, but underperforming, so we had to fix them,” Mr. Ackman said. “Kind of like the companies we invest in.”
But also like the companies he invests in, it is another way for him to quietly keep score. Whenever Mr. Ackman’s net worth–about $700 million, according to Forbes–comes up, friends and family counter with just how darn philanthropic he is! Yet in the same way he will “sheepishly” bring up a tennis match with Andre Agassi, Mr. Ackman has been known to mention spur-of-the-moment seven-figure donations, say, for Haiti relief. (He also keeps a rarely driven Ferrari he bought on a lark hidden away at his upstate home.)
Mr. Ackman also sees his investments as improving society, which is how he can spend his nonprofit dollars on the Innocence Project, which helps get people out of prison through DNA evidence, at the same time his fund holds a large stake in private prison company Corrections Corp. of America. “It’s a necessary evil, prisons, unfortunately,” Mr. Ackman said. “We’ve got a huge overcrowding problem in prison, and I think outsourcing is a good solution. And it’s a good business.”
“His goal is to gather up as much assets in the world as possible and redeploy them,” a friend said. “I’ve heard him say that a number of times.”
But the little things count, too. Almost everyone who has met Mr. Ackman has either been complimented or insulted regarding his or her appearance, and those falling into the latter group usually find themselves with an appointment to see his nutritionist and sometimes his personal trainer, too. He has been known to stop people on the street corner and give them advice or even find them a job in the time it takes for the light to change. Mr. Ackman claims to have yenta’d at least four marriages, though that score is in dispute; and he and Karen host singles parties at their $26 million Beresford apartment to add to that tally. (They are demure, catered affairs with a minimum of alcohol and a maximum of conversation, say former attendees, where 10 married couples bring their 10 most eligible friends.)
“Bill’s a fixer,” said Christine Richard, a former Bloomberg reporter who wrote a book about his MBIA battle, Confidence Game, and who has known Mr. Ackman for years. “He just looks at everything as how can I sort this out, including people, and it can take some people aback. I guess it’s like, does he care, or does it just bug him?”
But his targets aren’t limited to acquaintances who need haircuts and weight training, or even underperforming companies. Given enough time, Bill Ackman believes he might just be able to fix the entire country by himself. “My motivation for doing it is making profits for Pershing Square,” he said. “But what I like is that my interests are aligned with what’s good for the country. We could have had a strategy that was a fabulous, profitable strategy but doesn’t do anything for America.”
Editor’s note: This story reflects corrections, including to names and figures.