The real untold story of guys like Ackman and most of Silicon Valley is their sales and fund raising ability. Because he sure as hell ain’t a good investor. Yet he still manages billions of dollars of investor funds. At this point he’s like a bizarro world Gartman.
Ackman's fund got to where it did, because he actually produced a string of great returns across a decade and a few monster hits (such as Canadian Pacific). Investors would have never given him that level of capital otherwise.
The fact is, Pershing stomped the S&P 500 across a decade, from Q1 2004 to Q1 2014 (without anything from Valeant contributing). Which very few fund managers ever manage to do. Most are lucky to beat the S&P 500 at any point. You can call it luck, which it could be obviously, across a decade that's quite an unusual string of luck.
More likely, based on his actual track record over time (including spotting the mess with MBIA years before anybody else), Ackman is a decent investor. His seeming arrogance and stubbornness appears to be the culprit more than lack of skill. He refused to throw in his cards early when losing hands came up. It's what separates decent investors from great investors like a Buffett, who will typically cut an investment the moment he realizes the business is a dog (that his instigation thesis was wrong), rather than stubbornly fight the tide. Ackman likes to fight, and has an immense ego, that's what got him on VRX and Herbalife. Can he learn from those mistakes and become a better investor? He'll have to, or most of the money he'll be managing will be his own.
I think that's not exactly wrong, to refer to "a few monster hits", but you didn't mention his single best investment, which overshadows all others. General Growth Properties turned a few million into almost $2 billion.
My impression is that Ackman is simply a gambler who got really lucky once and that has allowed him to raise money and squander it on a scale that compensates for his successes.
Certain famous investors have talked about how it's not so hard to run across some big winners over time; what's really hard is to avoid big mistakes.
There's something particularly perverse about calling a fund that owns a small number of risky stocks a "hedge fund", I might add.
