This is a pretty long article, but I think you’ll find it interesting. It’s the cover story on this month’s Bloomberg Markets magazine and it’s about Bill Ackman, the controversial activist hedge fund manager who is also the subject of this weekend’s homework.
Here are the first few paragraphs and a link to the full article.
Lunch was a bit awkward. It was around 1 p.m. on a warm October day in New York. A group of Wall Street investors were tucking into chicken in a red-wine demi-glace and Brussels sprouts at the Plaza Hotel. They’d convened for Jim Grant’s fall conference, hosted by the influential editor of Grant’s Interest Rate Observer.
The lunch speaker was Marty Lipton, legendary lawyer and veteran defender of management in countless proxy battles, hostile takeovers and corporate raids. His talk, which he had titled “Activist Interventions and the Destruction of Long-Term Value,” took aim at a strategy being used with increasing success against his clients and other corporations.
“It begins when an alpha wolf spots his prey and decides to move in for the kill,” Lipton said. He never addressed anyone directly, but it was clear his words had a target. William Ackman, billionaire founder of Pershing Square Capital Management, sat a few feet in front of the speaker, listening quietly, Bloomberg Markets will report in its February issue.
Ackman, 48, is one of the most famous hedge-fund activists in the world. Just about everyone in the room knew about the tensions between the two men. Earlier in the year, Ackman had teamed up with one drug company, Valeant Pharmaceuticals International Inc. (VRX), to take over another, Allergan Inc. — a client of Lipton’s firm, Wachtell, Lipton, Rosen & Katz. Both sides had sued; each was accusing the other of misconduct. In September, Ackman had written a letter to the Allergan board, saying the board’s refusal to engage with him would ultimately prove an embarrassment to the directors. “The smell of strong brew is in the air,” Ackman wrote. “Now is the time to wake up.”
It was hard not to watch Ackman as Lipton spoke. “Scheming with a hostile acquirer” and “publishing nasty, vitriolic letters,” Lipton said, ticking off examples of what he called “scorched-earth activism.”
If Ackman knew any of the barbs were meant for him, he didn’t let on. His expression was inscrutable. When Lipton finished, the room got quiet. Grant, the host of the day, stood up, gestured toward Ackman and said, “The alpha wolf ….”