Bill Ackman: The Activist Investor Behind the $1 Billion Herbalife Bet

In the world of finance, few names spark as much debate as Bill Ackman. He is the activist investor who dares to place huge bets in public, then fights on national television to defend them. His most famous wager was a $1 billion short position (around RM4 billion at the time) against the nutrition company Herbalife, a battle that captivated all of Wall Street for nearly five years.

For Malaysian investors getting to know the big personalities of the stock market, Bill Ackman's story is more than just drama. It carries valuable lessons about conviction, risk, investor psychology, and the danger of clinging to a position for too long. Let us explore who Bill Ackman is, what happened in the Herbalife saga, and what we can learn from it.

Who Is Bill Ackman?

William "Bill" Ackman was born on 11 May 1966 in New York. He graduated from Harvard College in 1988 and went on to earn an MBA from Harvard Business School in 1992. That same year, he founded his first investment firm, Gotham Partners, with his partner David Berkowitz. The firm grew to manage around $500 million by 1998 before eventually closing.

In 2004, Ackman founded Pershing Square Capital Management with $54 million in seed capital, partly his own money and partly from Leucadia National. From that modest base, Pershing Square grew into one of the most closely watched hedge funds in the world. According to his Wikipedia profile, Ackman's net worth was estimated at around $8 billion in 2026.

What Is an Activist Investor?

Bill Ackman is best known as an activist investor. Unlike ordinary investors who buy shares and wait quietly, an activist investor takes a large stake in a company and then uses that influence to push for change, whether replacing management, selling assets, shifting strategy, or improving governance.

According to Britannica Money, Ackman's style is described as making "a bold call that nobody believes in", taking controversial positions and defending them publicly. This approach can generate huge returns, but it also carries high reputational and financial risk when a bet goes wrong.

This type of activism is more common in the United States than on Bursa Malaysia, but the concept is increasingly relevant to local investors who want to understand how large funds can move prices and company policy. If you are interested in investing in US stocks like the ones Ackman owns, read our guide first: Before Investing in American Stocks.

The $1 Billion Bet Against Herbalife

In December 2012, Bill Ackman announced that Pershing Square had taken a $1 billion short position against Herbalife, a multi-level marketing (MLM) company selling nutrition and weight-loss products. Ackman claimed Herbalife was actually a "pyramid scheme" that profited from recruiting new participants rather than genuine product sales to consumers.

A short position means Ackman would profit if Herbalife's share price fell, ideally to zero. He was so confident that he funded a documentary titled Betting on Zero and launched a public campaign to expose the company's practices to regulators. For Ackman, this was not merely an investment; it was a moral mission.

However, short selling is among the riskiest strategies in investing. When you buy ordinary shares, your maximum loss is 100% (if the company goes bankrupt). But when you short, the share price can rise without limit, meaning your losses can be unlimited too. This was the trap that eventually caught Ackman.

The Epic Clash With Carl Icahn

A few months after Ackman's announcement, another legendary investor, Carl Icahn, challenged Ackman's stance during a live interview on CNBC. Their on-air argument became one of the most famous moments in financial television history, two billionaires publicly quarrelling over the future of a single company.

Icahn did not just talk. In January 2013, he began buying Herbalife shares in large quantities, taking a long position directly opposed to Ackman's short. Over the years, Icahn kept adding to his holding, pushing Herbalife's stock higher and squeezing Ackman's short. It became a rare, openly played-out battle of ego and capital.

This clash teaches an important principle: you can be right about a company's fundamentals yet still lose heavily if timing and market psychology are against you. This is why risk management matters far more than conviction alone. The concept is explained further in Overconfidence Bias.

The Outcome: A $760 Million Loss, But Not Without a Moral Victory

In the end, Ackman lost this financial bet. After holding on from 2012 to 2018, he closed his main short position. Pershing Square is estimated to have lost around $760 million, while Carl Icahn reportedly made roughly $1 billion from his opposing position. In November 2017, Ackman announced he had closed his direct short and would only continue the bet using lower-risk put options.

Interestingly, Ackman's claims were not entirely wrong. In 2016, the US Federal Trade Commission (FTC) reached a settlement with Herbalife requiring the company to pay $200 million and overhaul its business model significantly. According to the official FTC statement, Herbalife was forced to change how it operated, a partial vindication of Ackman's criticism, though not enough to save his investment.

In 2024, when Herbalife shares plunged to a 14-year low, Ackman joked that it was "a very good day for my psychological short", as reported by Fortune. Although he had long exited the bet, he felt his original view had finally been proven.

Ackman's Other Big Wins

While the Herbalife saga often takes the spotlight, Bill Ackman's record is full of major wins that made him a billionaire. Among his most brilliant bets:

• COVID-19 hedge (2020): Possibly the best trade of his career. As the pandemic began, Ackman spent around $27 million buying credit protection (credit default swaps). When markets crashed, the position exploded in value to $2.6 billion in less than a month, a return of nearly 100x.
• General Growth Properties: Ackman invested in this real estate company when it was near bankruptcy during the 2008 financial crisis, and earned billions of dollars when it recovered.
• Canadian Pacific Railway (2011-2012): A successful proxy fight with nearly 90% shareholder support, leading to a major transformation of the company.
• Chipotle Mexican Grill: A long-term investment that became one of Pershing Square's largest holdings.
• Universal Music Group: Ackman owns about 10% of this music giant and served on its board from 2022 to 2025.

This pattern shows the real trait of great investors: not never losing, but ensuring the wins are far bigger than the losses. This philosophy of high conviction in a few select holdings mirrors the approach of other legendary value investors. Read how to calculate a stock's true value in our guide: DCF Valuation the Buffett Way.

Pershing Square Today

Today, Pershing Square manages around $17.7 billion in assets (2025 data). A large part of that is managed through Pershing Square Holdings, a closed-end fund listed on the London and Euronext Amsterdam exchanges, allowing retail investors to gain exposure to Ackman's strategy.

In 2024-2025, Ackman doubled down on turning Howard Hughes Holdings into a diversified holding company in the style of Berkshire Hathaway. Pershing Square now owns roughly 47% of the company, and Ackman was named Executive Chairman of its board. He has also become increasingly active in social and political issues, including open support for political candidates and campaigns related to Harvard University.

Note: All financial figures and positions above are as of June 2026. Please refer to the latest official Pershing Square reports and SEC filings for confirmation.

Bill Ackman's Investment Philosophy

Behind the drama and controversy, Ackman actually follows a fairly disciplined investment philosophy. He prefers to hold only a small number of high-quality companies, typically between eight and twelve positions, rather than spreading capital across hundreds of stocks. This "high conviction, concentrated holdings" approach means every investment decision is made after deep research.

Ackman looks for companies with strong brands, stable cash flows, and pricing power, traits that allow a business to keep growing even in tough economic conditions. That is why holdings such as Chipotle, Hilton, and Universal Music Group have anchored his portfolio for years. For Ackman, time is the friend of a great business.

He is also known for combining long-term investing with clever hedge bets. The COVID-19 hedge is the best example: with a small cost ($27 million), he protected his entire portfolio from a market collapse while potentially earning huge returns. This kind of asymmetric strategy, where the potential loss is small but the potential gain is large, is a hallmark of financial wisdom every investor should learn. To assess whether returns are worth the risk taken, investors can use measures such as the Sharpe Ratio.

Lessons for Malaysian Investors

Bill Ackman's story offers several practical lessons, even though most Malaysian investors will never manage billion-dollar funds:

• Conviction vs stubbornness: Ackman was right about Herbalife's problems, but holding a position too long cost him $760 million. Know the difference between patience and being hard-headed. This relates closely to the Sunk Cost Fallacy.
• The risk of short selling: Losses can be unlimited when you short. For retail investors, this strategy is far too dangerous without strict risk management.
• Position sizing: Even though Ackman lost heavily on Herbalife, it was only part of his portfolio. Do not put too much capital into a single idea, no matter how confident you are.
• Market psychology: Being right about fundamentals does not guarantee profit if the market moves against you over the long term. Timing and sentiment matter.
• Win big, lose small: Great investors are never right 100% of the time. What matters is that the wins (like the COVID hedge) far outweigh the losses.

To understand how institutional investors read market cycles and manage risk, our article on Howard Marks & the Oaktree Memos offers a perspective that complements Ackman's story.

Frequently Asked Questions (FAQ) About Bill Ackman

Who is Bill Ackman?

Bill Ackman is an American activist investor and the founder and CEO of Pershing Square Capital Management, a hedge fund managing around $17.7 billion in assets. He is known for taking large positions and pushing for change in the companies he invests in.

What was Bill Ackman's Herbalife bet?

In December 2012, Ackman took a $1 billion short position against Herbalife, claiming it was a pyramid scheme. He ultimately lost around $760 million after closing the position in 2017-2018.

Did Bill Ackman win or lose the Herbalife bet?

Financially, he lost, around $760 million. However, the FTC later fined Herbalife $200 million and forced an overhaul of its business model in 2016, a partial vindication of Ackman's claims.

Who was Bill Ackman's opponent in the Herbalife saga?

Carl Icahn, another billionaire investor, took the opposite position by buying Herbalife shares in large quantities. Icahn reportedly made around $1 billion from the bet.

What was Bill Ackman's most successful investment?

Many consider the 2020 COVID-19 hedge his best, he spent $27 million on credit protection that surged to $2.6 billion in less than a month.

What is an activist investor?

An activist investor is one who takes a large stake in a company to push for changes in strategy, management, or governance, with the goal of increasing the share price.

Can Malaysian investors invest like Bill Ackman?

Malaysian investors can gain exposure to Ackman's strategy through Pershing Square Holdings, listed in London/Amsterdam, or buy the individual stocks he owns via a foreign stock account. However, his activist and short-selling strategies require large capital and a high risk tolerance.

Conclusion

Bill Ackman is the perfect example that success in investing is not about never being wrong, but about ensuring big wins outweigh the losses. The Herbalife saga teaches us that conviction without risk management can be costly, while his COVID hedge demonstrates the power of a smart asymmetric bet.

For Malaysian investors, this story is not meant to be copied wholesale, but to be understood: discipline, position sizing, and psychology are the pillars of long-term success.

If you want to start building your own investment portfolio on the right foundation, the first step is opening an account to invest.

You can open a CDS account to start investing in Bursa Malaysia as well as foreign stocks such as the US and Hong Kong markets, just like the companies Bill Ackman owns.

To understand the basics of stock investing before you begin, download our free Stock Market Basics Ebook as a step-by-step guide.

Further Reading

• Howard Marks & the Oaktree Memos: How to Read Market Cycles Like a Distressed Investor
• Before Investing in American Stocks: 7 Things Malaysian Investors Must Know
• DCF Valuation for Bursa Investors: How to Calculate a Stock's Intrinsic Value Like Buffett
• Overconfidence Bias: Why Traders Who Win 3 Times in a Row Start Losing Capital
• Sunk Cost Fallacy: Why Investors Keep Averaging Down on Dead Stocks