Bill Ackman's $25B IPO plan crumbled by investor doubts
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Illustration: Aïda Amer/Axios
A universal trait of highly successful activist hedge fund managers is that they're all convinced they know how best to run a public company. When they try, however, they don't always succeed.
The big picture: ESL's Eddie Lampert famously took over Sears in 2013, only to see that stock go to zero. Pershing Square's Bill Ackman listed his hedge fund in Amsterdam in 2014, but for most of the past decade, it has been trading unhappily well below its net asset value.
- Wednesday, Ackman ignominiously retreated from his plans to launch a blockbuster IPO in New York — one that was originally envisaged as being as large as $25 billion.
Between the lines: Ackman's big idea was that he would parlay his notoriety on X, where he has 1.3 million followers, into becoming the next Warren Buffett.
- Actually raising the money, however, proved much harder than he'd anticipated, partly because of his own unforced errors.
- The main problem, per Ackman himself: Investors saw little reason to buy in at the IPO price, given the high likelihood that the stock would, like its European sibling, end up trading at a discount.
The bottom line: Ackman is very good at dreaming up clever structures, which often end up going nowhere. (Pershing Square Tontine Holdings and Pershing Square SPARC Holdings are prime examples.)
Our thought bubble: Maybe if he took a leaf out of Buffett's book and went with a much simpler structure, a la Berkshire Hathaway, he might have more success in the markets.
