Few hedge funds are more identified with their founder than Bill Ackman’s Pershing Square Capital. But for the first time ever, the 56-year-old has turned over the role of chief investment officer to one of his partners: Ryan Israel.
“I periodically get asked about succession planning at Pershing Square,” Ackman wrote investors in his publicly traded Pershing Square Holdings hedge fund. “At age 56, loving what I do and in excellent health, my principal risk is what can be deemed ‘pie truck risk,’ that is, the risk I look the wrong way crossing the street and get smooshed by a pie truck.”
Ackman said he chose Israel as CIO because he is a “once-in-a-generation talent as an investor, not just in equities, but also in macro instruments. He is an excellent leader, teacher, communicator, and partner, and has the respect of each member of the investment team.”
The 37-year-old Israel grew up Kansas City, Missouri, and attended the Wharton School of Business before moving to New York City to work at Goldman Sachs, where he stayed for two years. He joined Pershing Square in March of 2009 and has long been one of the star performers in the hedge fund’s small investment team. He was named an Institutional Investor Hedge Fund Rising Star in 2018 and has spearheaded some of the firm’s top investments, including Lowe’s Cos, which is the top stock holding of Pershing Square now and accounts for about 20 percent of the publicly traded equities portfolio.
Israel is also the longest-tenured member of the team, which Ackman said meant “he has had the greatest opportunity to experience our profoundest successes and failures in dramatically different market environments and to learn from them.” He also has trained most of the newer employees on Pershing Square’s investment approach.
“Ryan is unafraid to challenge anyone including yours truly, and that is an extremely important quality in a CIO,” Ackman wrote. “Ryan is the right choice, and importantly, when I checked with each of the other team members, they all agreed.” Moreover, Ackman said that functionally, Israel is already unofficially serving in the role.
Ackman said he will remain CEO and Portfolio Manager with continued control over ultimate decision making. But he said he was obligated to let shareholders know how the firm would operate if something were to happen to him. He stressed that the decision "should in no way suggest to you that I am heading for the hills. I love this business and intend to stay active until they carry me out, and I am a heavy lift.”
Mortality seems to have been on Ackman’s mind since the Covid-19 pandemic, when he moved his wife, daughter and parents out of New York City to his home in the Hamptons in February of 2020, because his father was a lung cancer survivor. Although he survived Covid, Larry Ackman, Ackman’s father, died in May of complications from heart surgery. He was 83 years old.
Ackman’s decision to hire a CIO comes as Pershing Square navigates this year’s volatile markets. As of August 16, it was down 10.8 percent for the year, as a 20.6 percent gain during the third quarter has helped it claw back earlier losses. All of its stock holdings except for Canadian Pacific Railway were still in the red for the year as of mid-August, with the inflation hedge Ackman put on in early 2021 as its best performing bet. Its interest rate swaptions had gained 9.9 percent on a gross basis this year as of August 16.
