Speaker 1: Bloomberg Audio Studios, podcasts, radio News.
Speaker 2: At the beginning of this year, hedge fund manager Bill
Speaker 2: Ackman was making headlines, but not necessarily for his business moves.
Speaker 2: On his ex account, he was denouncing anti semitism on
Speaker 2: college campuses and demanding leadership changes at Harvard, his alma mater,
Speaker 2: and in press interviews he wasn't being shy about it.
Speaker 1: The more woke, the more left leaning the institution, the
Speaker 1: more anti semitism. I'm not afraid. I'm not afraid of
Speaker 1: being canceled. I'm not afraid of losing my job, and
Speaker 1: financial independence gives me the wherewithal to speak.
Speaker 2: Politics is not the only area where he's had a
Speaker 2: big year, though. On Bloomberg's annual list of best paid
Speaker 2: hedge fund founders, Ackman has experienced some of the biggest gains,
Speaker 2: taking home six hundred and ten million last year. Today,
Speaker 2: on the show, how Ackman was able to find success
Speaker 2: with his fund, Pershing Square Capital Management, and why the
Speaker 2: same big players keep appearing on the list despite the
Speaker 2: economy's ups and downs. This is the big take from
Speaker 2: Bloomberg News. I'm Sarah Holder. We sat down with Bloomberg's
Speaker 2: Tom Maloney to talk about this list. He's a journalist
Speaker 2: on the Wealth Team. I asked him if he was
Speaker 2: expecting to see Akman on Bloomberg's annual ranking of the
Speaker 2: best paid hedge fund founders.
Speaker 3: It's not surprising to see his name on the list.
Speaker 3: His fund had a pretty good return last year. They
Speaker 3: were up about twenty seven percent, and he's been on
Speaker 3: the list before. Actually, back in twenty twenty, he made
Speaker 3: about one point three billion, but this is the highest
Speaker 3: ranked he's ever been. At number seven, he made about
Speaker 3: six hundred and ten million.
Speaker 2: What did he do differently last year to get to
Speaker 2: number seven?
Speaker 3: I guess what he did differently is not doing much.
Speaker 3: You know, he has a pretty concentrated stock portfolio. They
Speaker 3: only added one new position, alphabet. Otherwise the portfolio stayed
Speaker 3: pretty much to saying throughout the year. So in contrast
Speaker 3: to like some of the more complicated funds that are
Speaker 3: on the list, places like Millennium and Citadel that have
Speaker 3: you know, thousands of people working for them, So you
Speaker 3: could look at it as him kind of making money
Speaker 3: doing very little, although obviously there is a lot of
Speaker 3: analysis and so on that goes into this stuff.
Speaker 2: Right, Well, why did taking a quieter approach work for
Speaker 2: him in twenty twenty three. What broader trends in the
Speaker 2: market may have made that strategy more successful.
Speaker 3: Yeah, absolutely. I mean, look, the market was up quite
Speaker 3: significantly last year, so if you had a portfolio that
Speaker 3: was just tracking the S and P five hundred, you
Speaker 3: would have done pretty well. And his portfolio did a
Speaker 3: little bit better than that. So part of it was
Speaker 3: kind of just picking a good portfolio of stocks and
Speaker 3: sticking with it throughout the year. He used to be
Speaker 3: known as more of an activist investor and a short
Speaker 3: seller as well, and some of those positions caused him
Speaker 3: some pain in previous years. You know that. You might
Speaker 3: remember there was this big fight he had with Carla
Speaker 3: Khan some years back around a herbal Life position that
Speaker 3: he was shorting, and a few years ago he said,
Speaker 3: I'm not going to do that so much anymore. I'm
Speaker 3: just going to take a quieter approach. I'm going to
Speaker 3: stick to investing in a concentrated portfolio of stocks, and
Speaker 3: that's really worked out for him. But you know, everybody
Speaker 3: knows Akman for different reasons. In the past twelve months,
Speaker 3: I wouldn't really call it a quiet approach at all,
Speaker 3: he's become something of a Twitter troll. It's been very
Speaker 3: prominent in calling out some of the university heads for
Speaker 3: their positions on anti Semitism. He was really instrumental in
Speaker 3: getting the president of Harvard, Claudine Gay, to quit, and
Speaker 3: so on that front, he hasn't been quiet at all.
Speaker 2: Yeah, I mean, has Ackman's activism on X that loud
Speaker 2: voice he's raising impacted his hedge fund for better or
Speaker 2: for worse?
Speaker 3: Well, it's interesting. So in the past couple of weeks,
Speaker 3: in fact, it was it was very recently they've come
Speaker 3: out and said that they're going to raise a new
Speaker 3: fund in the United States for retail investors. So he
Speaker 3: might be looking to kind of capitalize on his popularity
Speaker 3: or infamy on X as a way to get people
Speaker 3: to invest funds with Pershing Square. He already has a
Speaker 3: kind of a retail fund, but it's only traded in
Speaker 3: Europe and it's not really very well known in the US.
Speaker 3: So you know, there might be something, there might be
Speaker 3: another reason why he's looking to get that kind of
Speaker 3: bully pulp it on Twitter.
Speaker 2: Acman's simpler, lessons more approach last year. It really stands
Speaker 2: in contrast to other funds on the list. These funds
Speaker 2: employ thousands of people and invest across a variety of assets.
Speaker 2: How did their investment strategy stack up against Acman's last year?
Speaker 3: They had pretty good years, but not as outstanding as
Speaker 3: they had the year before. So Citadel's main Wellington strategy
Speaker 3: had about a fifteen percent return and Millennium was up
Speaker 3: about ten percent. Those aren't outstanding returns, but even though
Speaker 3: they under formed Pershing Square this year, those funds have
Speaker 3: consistently had pretty strong returns for a number of years now,
Speaker 3: and that is really important to investors. If you can
Speaker 3: kind of have consistent positive returns despite whatever the market
Speaker 3: is doing, then that's really what a lot of investors
Speaker 3: are looking for from a hedge fund.
Speaker 2: One of the other main trends when looking at this list,
Speaker 2: seems like there have been less revenue gains for these
Speaker 2: top hedge funds across the board. Why was twenty twenty
Speaker 2: three worse than twenty twenty two.
Speaker 3: Well, what's interesting, I think is that some of the
Speaker 3: more complicated hedge funds, like Millennium and Citadel, because they
Speaker 3: invest in a lot of different asset classes, they had
Speaker 3: exposure more exposure than somewhere like pershing to volatility in
Speaker 3: those other asset classes, whether that's commodities or interest rates.
Speaker 3: So I think a big part of their returns last
Speaker 3: year came from some of those other asset classes, whereas
Speaker 3: twenty twenty three was a little bit more died in
Speaker 3: terms of volatility. So some of those outside returns were
Speaker 3: missing last year.
Speaker 2: And some of these funds and fun founders have yet
Speaker 2: to recover from those twenty twenty two losses. Who are
Speaker 2: they and what steps are they taking to reverse fortunes
Speaker 2: in twenty twenty four.
Speaker 3: A lot of them were big technology investors. Technology recovered
Speaker 3: a lot in twenty twenty three, but not necessarily enough
Speaker 3: to offset some of the losses that these funds suffered
Speaker 3: in the previous years. Obviously, tech has had a massive
Speaker 3: AI fuel boom in the first quarter, and I've got
Speaker 3: no doubt that that's going to influence their earnings. Some
Speaker 3: of those funds are invested in private companies as well,
Speaker 3: that private markets have kind of been stuck bench Capital
Speaker 3: markets have been in the doldrums the last year or two,
Speaker 3: and we might see reversal of that in twenty twenty four.
Speaker 3: So it'll be interesting to see how that plays out
Speaker 3: in the world of hedge fund returns.
Speaker 2: What have you learned from making this Bloomberg ranking every year?
Speaker 3: So I have been doing this for five years now.
Speaker 3: This is our fifth ranking of the highest earning hedge
Speaker 3: fund managers. I think the main takeaway from me is
Speaker 3: that every year, I think it gets harder and harder
Speaker 3: for new people to break into the list, simply because
Speaker 3: the incumbents have so much invested in the funds now
Speaker 3: that it doesn't take a lot for them to continue
Speaker 3: to stay near the top. Ken Griffin Israel, England, Steve
Speaker 3: Cohen as well, Jim Simon's at Renaissance Technologies, Chris Own
Speaker 3: at TCI. They're kind of people that we've seen near
Speaker 3: the top of this list or at the top of
Speaker 3: this list for the last several years, and that's because
Speaker 3: they've been around a long time. They've got a lot
Speaker 3: of money invested in their funds, and if the funds
Speaker 3: have any sort of a positive gain, then they're going
Speaker 3: to make billions of dollars. The assets under management are
Speaker 3: the really big funds keep growing and it gets a
Speaker 3: little bit harder to kind of make it. If you're
Speaker 3: a hedge fund that's running less than a billion dollars
Speaker 3: simply because to run the sophisticated strategy it costs a
Speaker 3: lot of money, and to compete with the big funds,
Speaker 3: you need to kind of have those sophisticated strategies. So
Speaker 3: it's certainly a very different industry than it was twenty
Speaker 3: years ago, when it was a lot easier to break
Speaker 3: in and it was a lot less sophisticated as an industry.
Speaker 3: And now you need a lot of computing power, you
Speaker 3: need a lot of technology, you need investor relations, and
Speaker 3: I think it's a much more complex business to operate.
Speaker 2: Can you translate what this all means to regular people
Speaker 2: like you and me or people who have their money
Speaker 2: in the stock market, Like, why should we care about
Speaker 2: how well these hedge fund guys are doing?
Speaker 3: I think people should care because I think it's important
Speaker 3: to have at least a sense of how much money
Speaker 3: some people are making in this world. You know, these
Speaker 3: people have a lot of influence and the amount of
Speaker 3: money that they make is enormous, and whether you think
Speaker 3: that's a good thing or a bad thing, I think
Speaker 3: it's important to be informed about it. We all have
Speaker 3: a good idea about you know, how much regular people make,
Speaker 3: whether it's a firefighter or a teacher or whatever, you
Speaker 3: have a pretty good sense of how much they make.
Speaker 3: But you know, I think it's kind of a shock
Speaker 3: to people when they learn that somebody like Ken Griffin
Speaker 3: made two point six billion last year. I mean, it's
Speaker 3: an enormous amount of money. They willed a lot of
Speaker 3: political power, so I think that's really important.
Speaker 2: Well, Tom, thank you so much for sharing this great
Speaker 2: reporting with us.
Speaker 3: Thank you it was a pleasure.
Speaker 2: Thanks for listening to The Big Take from Bloomberg News.
Speaker 2: I'm Sarah Holder. This episode was produced by Adriannasappia. It
Speaker 2: was edited by Caitlin Kenney. It was mixed by Blake Maples.
Speaker 2: It was fact checked by Stacy Renee. Our senior producers
Speaker 2: are Naomi Shaven and Jill Duddy Carley. We get editorial
Speaker 2: direction from Elizabeth Ponso. Nicole Beamster. Bor is our executive producer.
Speaker 2: Sage Bauman is our head of podcasts. Thanks for listening.
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