Congratulations to Bill Ackman for overcoming catastrophic regulatory and reputational damages as a result of his work on bond-insurer MBIA Inc. (“MBI”) in 2002 and other investment activities. Specifically, investigations by then Attorney General Eliot Spitzer and the Securities and Exchange Commission made it nearly impossible for Ackman to raise new capital from investors and the negative publicity eventually forced him to liquidate the fund, Gotham Partners.
By the end of 2003, Ackman proved that the short interest and advocacy activities he conducted in connection with MBI violated no securities regulations. Moreover, he convinced regulators to initiate an investigation of MBI in connection with accounting abuses Ackman publicized in 2002. In 2004, Ackman started Pershing Square Capital Management with $10 million of his own money and $50 million from Leucadia National. In addition to his regulatory problems, Ackman’s fund also suffered from poor investment decisions. Gotham Partners lost $70 million as a result of the well-publicized failure of the Gotham Golf-First Union deal.
Now Ackman’s troubles appear to be behind him. It was recently reported that Pershing currently has $6 billion of assets under management. Last week Ackman announced that he expects his fund to earn “multiple billions of dollars” from his MBI and Ambac Financial Group, Inc. (“ABK”: Ambac is another large bond-insurer) short positions. Ackman will make about $500 million from the deal and plans to donate all of it to charity. His work on MBI and ABK demonstrates short-selling’s positive contribution to the marketplace. Ackman believes both companies both have serious and he is publicizing his opinion for the benefit of any investor who cares to listen.
Many market participants mistakenly view short-selling as a disruptive force in the securities industry. Misguided critics and corrupt corporate executives lobby for increased regulation. Such individuals fail to appreciate the valuable information short sellers provide to various industry participants. Legislators, regulators, journalists, and investors all benefit from the deep research projects undertaken by short-sellers.
As the most successful and best-known short-seller in the history of the U.S. markets, Manuel Asensio earned incredible returns while maintaining his interest in protecting fellow investors. Please review the Asensio Three Point Plan for details of the Manuel Asensio short-selling advocacy project. Manuel Asensio believes the deregulation of short-selling will improve price accuracy and protect investors from making uninformed investment decisions.
