Ackman's Unconventional Wall Street Maneuvers in his Battle to Remove Harvard's President
Bill Ackman, renowned for his ruthless investment tactics, challenges Harvard's president, employing a Wall Street strategy Discover why he hasn't emerged victorious yet and the potential for his ultimate triumph
Financier Bill Ackman, known for profiting from betting against company stocks, made headlines when he led a campaign against Harvard's president, using the same bold strategy that earned him fame on Wall Street.
A Harvard graduate and member of the law school's board, Ackman and a group of wealthy donors have been deeply upset by what they perceive as Harvard's failure to address anti-Semitism on campus. Their frustration peaked recently when Harvard's president, Claudine Gay, stumbled during congressional testimony and did not forcefully denounce hateful calls for genocide against Jews. Gay later apologized for her remarks.
Ackman has been the most persistent among all donors threatening to withdraw their donations from Harvard, MIT, and the University of Pennsylvania. He has taken to posting open letters, sharing tweets, and even advocating for the public identification of students who expressed anti-Israel sentiment following the Hamas attack.
In particular, he is pushing for the dismissal of Gay, the first Black woman to hold the leadership position at Harvard. Ackman has gone as far as to make unsubstantiated claims that Harvard hired Gay solely to meet diversity quotas. He has also labeled Gay as unqualified for her role and accused her of plagiarism, allegations that both she and Harvard have denied.
Ackman is utilizing tactics from the activist short-selling playbook, which he helped create, in order to influence public opinion. Activist shorts benefit when the targeted company fails. One important tool for their strategy is a strong, influential platform. CNN contacted Ackman through Pershing Square Capital Management, but no response was received.
Ackman established his wealth as the creator and CEO of Pershing Square, a prominent hedge fund that achieved success by making substantial investments in companies like JC Penney, Target, and Wendys. However, after experiencing significant losses in the 2010s, Ackman has shifted the focus of the fund away from the activist-short strategy for which he is famous.
In the spring of 2022, Ackman declared that he had permanently retired from activist short-selling.
Certainly, old habits are difficult to break, and Ackman, aged 57 and with a net worth of just under $4 billion, according to Forbes, clearly has no plans to stop stirring things up.
His message to Harvard echoes the approach he has taken with businesses he has targeted before: Either run your business my way or watch as I and my supporters drive down your stock value (and damage your reputation). This financial intimidation tactic successfully gathered support from other major donors and right-wing commentators. However, it also provoked outrage among conservative activists, leading to the doxxing of dozens of students accused by Ackman of making antisemitic comments.
Ackman's attempt to oust Harvard's president faced a major obstacle this week as the university's board stood behind her. Despite this, Ackman remains vocal on social media, accusing Harvard of antisemitism. This persistence reflects a typical approach of short-sellers - relentlessly attacking their target.
Yet, Ackman's aggressive capitalist tactics may not work as well against a prestigious institution like Harvard. After all, Harvard isn't governed by Wall Street principles.
Why Ackman hasnt won
Harvard University President Claudine Gay.
Ken Cedeno/Reuters
In 2012, Ackman famously took a $1 billion stance against Herbalife, a company that sells dietary supplements through multi-level marketing. He argued that the move was rooted in ethics, alleging that Herbalife was running a scam. However, his opposition was met with a strong rebuttal from Carl Icahn, a competing activist investor who vocally promoted the company's stock while Ackman criticized it. By 2018, Ackman had ended his position and Icahn boasted a profit of $1 billion from the ordeal.
Likewise, Ackman may have found a formidable opponent in Harvard. Despite his criticisms, more than 700 faculty members, 800 Black alumni, and, most recently, Harvard's highest governing board, came to Gay's defense. At Harvard, Ackman is not only challenging C-suite executives and corporate board members, but also a powerful group of donors and influential figures who match his wealth and savvy, including billionaire Penny Pritzker, the most senior leader of the Harvard Corporation.
Harvard, as a private institution, requires Ackman to persuade not only everyday shareholders but also wealthy donors to stop funding. These donors have not publicly condemned Gay or Harvard as strongly as he has.
Even if they had, Harvard may be able to withstand the consequences, as its nearly $51 billion endowment exceeds the GDP of some small countries.
Taking on Harvard
Following the October 7 Hamas attack, Ackman began speaking out about Harvard's response to antisemitism on campus. He urged for the identification of students who attributed the attack to Israel, stating that it was important to prevent any unintentional hiring of these individuals.
Later, he stated on X that the Harvard, MIT, and University of Pennsylvania leaders should step down from their positions due to their congressional testimony.
His efforts to remove Gay from her position have been unsuccessful. However, Ackman has been a vocal advocate for a group of commentators and affluent donors who have been criticizing what they see as a liberal bias on college campuses.
Ackman condemned the doxxing trucks that have been targeting Harvard's campus this week, displaying students' names and faces and making inflammatory comments about Gay. However, in a follow-up post on X, he also hinted that the trucks may have a valid reason for their actions.
"Perhaps these doxxing trucks will help President Gay understand what it's like to be Jewish and/or Israeli at @Harvard," he wrote on X.
Harvard's stock might have dropped if it were a publicly traded company, following Ackman's aggressive actions, leading to other investors withdrawing. However, Harvard is not controlled by shareholders who have a legal obligation to maximize profits. As a private institution, it caters to various stakeholders, such as students, faculty, and alumni, many of whom are opposed to the idea of a single wealthy donor having significant influence.
According to Ben Eidelson, a Harvard Law School professor, "We cannot operate as a university if we are accountable to random wealthy individuals and the social media campaigns they organize." This was reported by the New York Times.
Why Ackman could still win
The final straw for ex-President of the University of Pennsylvania, Liz Magill, was a complete uprising against her: A generous donor warned of withdrawing a $100 million donation from the university. Leaders demanded her removal. Even the governing boards at Wharton and Penn turned against her in the end.
Ackman is backed by powerful allies as well. New York Republican Rep. Elise Stefanik has been relentless in her efforts to remove Gay and MIT president Sally Kornbluth, who also struggled to address whether calls for the genocide of Jews on campus would breach school regulations.
Stefanik and her colleagues persist in investigating antisemitism on college campuses, while Ackman remains vocal in his opposition to Gay.
If theres a lesson to be gleaned from Ackmans Herbalife saga, its that Ackman rarely backs down, even if it costs him a small fortune.
