Embattled billionaire hedge fund manager Bill Ackman began his Tuesday with the surprising announcement that he was resigning from the board of J.C. Penney, effectively surrendering the three-year fight he has waged to turn around the retailer. He ended Tuesday on PBS's Charlie Rose show, sitting at the brown circular table on the minimalist set that has functioned for business leaders much in the same way as Oprah Winfrey's show did for celebrities: as a confessional, damage control center, and victory lane.
During the sprawling, roughly 40-minute interview Ackman, who runs Pershing Square Capital Management, touched all those bases. Dressed in a white shirt and striped navy blue suit, Ackman was equal parts contrite, defensive, and boastful.
For instance, he cast his decision to publicly release letters to the J.C. Penney board as a heroic move that benefitted all shareholders, saying that investment bank Lehman Bros would have been better served if its directors were willing to take a stand and go public with their concerns about the leverage and risk that ultimately led to its collapse during the financial crisis. At the same time, he described his J.C. Penney investment — where he ranks as the company's largest shareholder with an 18% stake — as his biggest disappointment and said the "media circus" that has resulted from his actions is "not good for the company in the long term."
Later, Ackman compared his $1 billion short bet on dietary supplement company Herbalife to the pyramid scheme run by Bernie Madoff, saying that the millions of dollars his firm has spent on research is helping regulators "do their work." And while he said that investing requires a "high degree of humbleness," he also characterized the majority of his fund's investments as "home runs."
"Investing is a business where you can look very silly for a long period of time before you are proven right," Ackman said during a line of questioning from Rose about whether he was concerned about getting an image that was "not necessarily helpful."
Below are some of Ackman's other choice comments from the interview.
On Former J.C. Penney CEO Ron Johnson:
Ackman handpicked ex-Apple retail chief Ron Johnson to lead J.C. Penney, whose decisions led the retailer to lose about a quarter of its revenue during a disastrous 17 months as CEO and ultimately led to his firing in April. But Ackman defended Johnson's brief tenure, saying that he believed in Johnson and that his ideas were "fundamentally correct," but that he "moved too fast, too quick, and in the public eye."
On Starbucks CEO Howard Schultz:
Ackman's decision to go public with his J.C. Penney disenchantment attracted the ire of Starbucks Chief Executive Howard Schultz, who called Ackman's actions "despicable" and unlike anything he's ever seen.
Ackman fired back at Schultz, saying that he "doesn't understand the facts" and pointing out that back in 2008 when former Starbucks CEO Jim Donald was performing poorly a memo written by Schultz to the company's board was mysteriously leaked to the press that ultimately resulted in Donald's ouster and Schultz's return to the coffee company as CEO.
On his Herbalife feud with rival hedge fund manager Carl Icahn:
For much of the year, Ackman has been battling with rival Carl Icahn over dietary supplement company Herbalife. Ackman is convinced that Herbalife is a pyramid scheme, and has bet $1 billion that the stock will go down. Icahn, however, has taken a long position on the stock in part for the very simple reason that he doesn't like Ackman and wants to see him lose money.
Ackman said Icahn is using Herbalife as a platform to get back at him because he "is not happy with me for making him pay what I was owed" as part of a breach of contract lawsuit that Ackman won against Icahn roughly ten years ago.
Of the gains in Herbalife shares, which has resulted in massive losses for Ackman, he said, "Herbalife is going up simply because Carl Icahn and others have been promoting it."
When asked by Rose if that meant investors believe in Icahn's view of Herbalife more than his, Ackman said, "Yes, but that says very little."