Hedge Fund Manager Bill Ackman Earned Around $600 Million in 2023

Google and Chipotle are stars, but the bet that rates would continue to rise cost $200 million.

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Bloomberg/ Jeenah Moon

This past year hedge fund manager Bill Ackman may have become better known as a culture warrior on X than as a hotshot investor. But while he was posting on X (formerly known as Twitter) several times a day dabbling in anti-vax theories and opposing diversity mandates on college campuses, Ackman was still making bank in his Pershing Square hedge fund.

Ackman, who owns 21 percent of Pershing Square Holdings and earns performance fees on top of that, appears to have made at least $600 million in 2023, based on Institutional Investor calculations of the fund’s gains. The publicly traded hedge fund rose 26.7 percent on a net basis in 2023, according to fund documents. That was a hair above the total return for the S&P 500, which gained 26.3 percent.

Such a stunning return may seem surprising since managers who dabble in matters unrelated to finance are often skewered by investors who believe they will take their eye off the ball and underperform. But in some ways Ackman has freed himself up. In 2022, he named longtime partner Ryan Israel as chief investment officer of the firm.

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Last year’s biggest gains came from Chipotle Mexican Grill, the fast-food eatery that was the last successful activist play of Ackman’s and is now the hedge fund’s second-biggest position. Chipotle gained 64 percent in 2023, and is up more than 4.5 times what Pershing Square initially paid for the stock in 2016.

The next-best performing stock was Alphabet, the parent company of Google, which became the third-biggest holding of Pershing Square after its forward swaps were converted to shares in the third quarter. The stock gained about 60 percent in 2023, although the firm did not own Google the entire year.

Other Pershing Square stocks that gained double digits during the year were Hilton Worldwide Holdings, up 41 percent, Lowe’s Companies, up 21 percent, and Restaurant Brands, which rose 17 percent.

The only loss was Ackman’s bet on rising interest rates. That short bet cost the fund $200 million last year, Ackman said in a Pershing Square conference call in November. The bet had proved profitable in 2022, but Ackman stayed too long at the party. As recently as August, he was predicting a further increase in rates and was holding onto a very big short.

By the middle of October Ackman announced on X that he had closed out the short because “there is too much risk in the world to remain short bonds at current long-term rates.” Ackman said he had gone long interest rates, expecting them to fall — possibly as early as the first quarter of 2024.

While all of Pershing Square’s stocks posted gains, those that Ackman personally is most involved with were the underperformers. For example, Ackman sits on the board of Universal Music Group, which is Pershing Square’s largest position, accounting for some 25 percent of the firm’s portfolio at the end of 2022. Ackman had hoped his now-defunct special purpose acquisition company would take a stake in Universal Music when it was spun off from Vivendi in 2021. But the Securities and Exchange Commission nixed the plan, and the hedge fund stepped in. The stock was one of 2023’s laggards, gaining only about 8 percent for the year.

Another underperformer is Howard Hughes Holdings, a real estate investment trust, where Ackman is the chairman of the board. The stock gained 10 percent during 2023 — at least in part because Pershing Square has been adding to its stake all year. The hedge fund now owns 38 percent of the company.

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