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What Is Bill Ackman Up To?
The failure of Silicon Valley Bank and the looming bank crisis is fueling the hedge fund manager’s new passion: Twitter.
Most people on Wall Street know Pershing Square Capital CEO Bill Ackman as a daring shareholder activist, a hedge fund manager who once famously vowed to go to the ends of the earth to take down a foe. But after experiencing multi-billion dollar failures on that front — with Herbalife and Valeant — and rebuilding his reputation with a $2.6 billion short bet during the early days of Covid-19, Ackman gave up that form of activism. Last year the 56-year-old even relinquished his role as chief investment officer at Pershing Square to one of his younger partners.
Now, as his recent policy prescriptions surrounding the failure of Silicon Valley Bank suggest, Ackman is embarking on another chapter in his life — as a political activist on Twitter. In fact, Ackman’s such a fan of the social media site and its new owner that, as he recently disclosed on a little-noticed Twitter Spaces broadcast, he invested alongside Elon Musk in his leveraged buyout of Twitter. He thinks the social media site is “much better” under Musk’s ownership.
From Ackman’s perspective, sharing his views on what he calls “macro issues” is nothing new; he first did so in 2007, with his presentation on bond insurer MBIA, “Who’s Holding the Bag.” Ackman’s MBIA short made his reputation — and his first billion dollars. “I don’t view my job as just being a stock picker,” Ackman told Institutional Investor. “I view my job as finding great companies we can own but also being aware of what’s going on in the world.” He said that includes hedging “black swan and other kinds of risks” as well as trying to exert influence “when I think the country is going in the wrong direction or the central bank is making a mistake.”
What’s undeniably new is Twitter — and the constant bombardment of Ackman tweets on any number of politically charged issues, from the war in Ukraine to Kyle Rittenhouse and Sam Bankman-Fried to the presidential election — and the unfolding banking crisis. On Twitter, Ackman, now 56, can take his phone out of his pocket and comment at length, directly to the public, in real time — without having to answer questions from pesky journalists.
After the 2008 financial crisis, Ackman rarely spoke publicly on matters beyond his hedge fund’s positions. Covid changed that. Ever since he went on CNBC to warn the country that “hell is coming” while pleading with Trump to shut down the country in March of 2020, Ackman has been moving into the Twittersphere, often with controversial takes that have been met by long-term friends and fans with surprise — and occasional chagrin. Not all of his commentary can be termed a “macro” issue either.
Ackman’s most contentious take occurred last December when he tweeted in support of Bankman-Fried after the FTX founder was interviewed by Andrew Ross Sorkin at the New York Times Dealbook Summit, a few weeks after his crypto exchange went bankrupt. “Call me crazy, but I think @sbf is telling the truth,” Ackman tweeted — to a storm of blowback. Even Ackman’s longtime friend Whitney Tilson disagreed with Ackman. “I told him SBF in my view is Elizabeth Holmes times two,” Tilson said, referencing the convicted biotech fraudster. “Bill will listen, he will not hold a grudge against you, and sometimes, God bless him, he will change his mind.”
After Bankman-Fried was indicted for fraud, Ackman walked back his previous position — tweeting that the alleged conman should simply be presumed innocent until proven guilty.
But nothing thrust Ackman into the political arena in a way that the March 10 failure of Silicon Valley Bank has done. As fears of a new financial crisis roiled the markets, Twitter was set ablaze with debates about what the U.S. government’s response should be.
In a series of tweets starting the day before Silicon Valley Bank fell, Ackman first suggested a rescue plan — and said that Pershing Square might be interested in participating. Then, when the bank was seized by the FDIC, he joined with a number of powerful venture capitalists including David Sacks of Craft Ventures to rail about the need for the government to bail out (or “backstop” as they prefer) all of its depositors — mostly VC firms and their portfolio companies — even for deposits above the statutory limit. Otherwise, they insisted, contagion would cause more banks to fail. (On Twitter, Ackman has one of the new paid-for blue check marks that allows him to write at length, with one of his SVB tweets reaching almost 700 words. He also has the sought-after edit button.)
To be sure, bank crises are right in Ackman’s wheelhouse, which is the world of money. One tweet drew 15 million views. Still, tensions were high, and some saw the hedge fund manager’s tweets as “shouting fire in an empty theater,” as MSNBC’s Stephanie Ruhle put it, questioning whether he was just “talking his book.”
Such criticisms have long dogged Ackman, whose career has shown that he can move markets. He bristled at Ruhle’s comments. “I am just trying to be helpful,” he tweeted back at Ruhle, who worked at Deutsche Bank during the last financial crisis before becoming a journalist. In his defense, Ackman told II, “What I’m doing is economic analysis about what’s going on the world.”
Pershing Square doesn’t invest in venture capital and only owns a handful of stocks — big companies that didn’t bank at Silicon Valley Bank or other regional banks, for that matter. Ackman himself banks at JP Morgan. He personally invests in venture and biotech funds and some early-stage startups (including crypto) and said those may have exposure to Silicon Valley Bank. (Venture is only 10 percent of his assets, but given that his net worth is estimated at more than $3.4 billion, that’s still $340 million.)
The day after his interaction with Ruhle, Ackman pivoted. The Pershing Square founder is long the market, so of course he doesn’t want it to crash. But instead of being willing to help recapitalize Silicon Valley Bank, as he had talked about in some detail in the prior weekend’s Twitter Spaces, Ackman had decided Pershing Square would not take a long — or short — position in any bank.
The reason is that he prefers being a pundit: “I want to continue to be part of this conversation and be able to share my views without the typical accusations against investors who share their views while having a trade on,” Ackman tweeted.
And he was not done sharing.
After the U.S. government made the decision on March 12 to guarantee all deposits of both Silicon Valley Bank and Signature Bank — which was seized earlier that day — President Biden held a press conference the next morning. “Americans can have confidence that the banking system is safe,” he promised. “Your deposits will be there when you need them.”
But Ackman did not have confidence. At 10:59 a.m., as regional bank stocks were falling, he tweeted, “The @FDICgov needs to explicitly guarantee all deposits now. Hours matter.”
Two hours later, those stocks were still tanking, and Ackman was back on Twitter. “Recent events have made clear in the mind of the average American that there is a risk that they could lose money doing something they used to think of as safe — being a depositor,” he said.
(The standard FDIC insurance coverage limit is $250,000 per depositor. The median amount in a U.S. checking account is only $5,400, according to the Federal Reserve’s Survey of Consumer Finances.)
Ackman thinks that if the government just listened to him and agreed to a temporary backstop on all bank deposits, a lot of pain could be averted, according to an individual familiar with his thinking. Moreover, had the Federal Reserve heeded his call for higher interest rates in early 2021 — which he made as a member of the New York Fed’s investor advisory committee on financial markets — the sudden spike in rates in mid-2022 that is now hurting bank balance sheets might also have been avoided, this person said. On Monday, Ackman tweeted that the Fed should “pause” raising rates this week.
But the barrage of posts on Twitter appears to have frustrated Treasury Secretary Janet Yellen, who testified before the Senate Finance Committee on Thursday. While she did not single out Ackman, she said that social media commentary could spur an “overwhelming run” on a bank and put it in danger of failing.
The Biden administration’s decision to guarantee all deposits at the two seized banks was not easily made. The government was likely hoping to avoid the political fury following the 2008 bank bailouts by insisting that stockholders and bank management would not be bailed out this time around. It also said the plan would not cost taxpayers but be borne by banks in the form of higher premiums on the insurance.
But it’s not clear the FDIC could explicitly backstop all of the deposits in the banking system without a change in the law. According to a CNN interview by Fareed Zakaria with former Goldman Sachs chairman Lloyd Blankfein, under Dodd Frank the FDIC can only make such decisions on a bank-by-bank basis.
Backstopping all deposits raises a number of issues. “It will give an incentive for bankers to take wild risks,” predicted Nate Koppikar, co-founder of Orso Partners, who was short Silicon Valley Bank almost a year before it failed.
That’s the “moral hazard” argument that is often raised. AQR’s Cliff Asness tweeted that he opposed the depositors’ bailout specifically for that reason. And Citadel’s Ken Griffin, in an interview with the Financial Times, said the government shouldn’t have even backstopped the depositors at Silicon Valley Bank and Signature Bank.
But when $30 billion in deposits by 11 banks into another regional bank, First Republic, didn’t stop its stock from sliding last Thursday, Ackman quickly pointed to that as another reason for guaranteeing all deposits, ending another ominous tweet with the words “tick tock.”
By Tuesday, First Republic was starting to bounce back. While not committing to the blanket depositor bailout that Ackman wanted, Yellen assured the markets by saying that more backstops “could be warranted if smaller institutions suffer deposit runs that pose the risk of contagion.”
The ongoing banking crisis, which Ackman has tweeted about 50 times in the past 12 days, is not the hedge fund manager’s only burning issue. Over the past year, foreign policy has become a surprising obsession for Ackman, an investor who rarely steps outside of his comfort zone in North America.
On Twitter, Ackman — whose ancestors fled Ukraine when it was part of the Russian empire — has become a fierce and constant defender of Ukraine and the U.S. support for its defense, arguing that a win by Russia would embolden not only Putin, but China as well.
He called for more arms from the U.S. shortly after Russia’s invasion of Ukraine and has continued to do so. Ackman also has donated more than $20 million to various humanitarian efforts in Ukraine.
In terms of domestic politics, Ackman takes credit for launching — on Twitter at least — the presidential campaign of Vivek Ramaswamy, whose firm Strive Asset Management was financially backed by Ackman. But he is now cooling on Ramaswamy’s campaign. Ramaswamy has situated himself at the extreme right wing of the Republican party, lining up with Trump by criticizing U.S. policy in Ukraine and vowing to get rid of the FBI. He also opposed the government’s recent move to backstop bank deposits above the $250,000 limit.
Ackman has vehemently disagreed with all of those positions and has walked back what was an implicit endorsement of the Ivy League educated Indian American entrepreneur. “If @VivekGRamaswamy policy is to withdraw support from UKR, he should not be our next President,” Ackman tweeted.
Ramaswamy is clearly a disappointment, but he represents the type of meritocrat Ackman typically favors. In the past, Ackman’s presidential picks have included both Mike Bloomberg and Pete Buttigieg. If there is a theme, it’s pretty easy to spot: All three men went to either Harvard or Harvard Business School, as did Ackman.
If Ramaswamy is out, it is tempting to wonder if Ackman’s new role as a Twitter pundit could lay the groundwork for his own presidential run. Certainly Twitter proved a powerful platform for Trump. And it has the advantage of letting Ackman reach the public directly — to rally support for Ukraine or government intervention in the markets. Trump’s election opened the door to outlier candidates, but unlike the former president Ackman is not a billionaire who tries to brand himself as a populist. He’s a registered Democrat.
“I’m not running for President,” Ackman said, chuckling. “Ask me again, when I get 100 million followers on Twitter.” That is a ways off: He now has about 680,000.
As CEO of Pershing Square, Ackman is still very much involved in running his firm, which has its own struggles with the market downturn. As of last Tuesday, it was down 3 percent for the year. In 2022 he also joined the board of Universal Music, Pershing Square’s biggest holding.
Still, it’s worth noting that Ackman is already trying to shed his hedge fund manager image, which no doubt would be anathema for electoral politics. He prefers to call Pershing Square an investment firm, and as II previously reported, hopes to turn it into an operating company that can get a listing on the New York Stock Exchange.
Whatever his ambitions, one thing isn’t likely to change. “I’m not afraid to share my concerns publicly,” said Ackman, “and I never have been.”