I made the mistake of paying to watch the mediocre documentary, “Betting on Zero”.
The documentary follows the ongoing saga between billionaire hedge fund manager Bill Ackman, founder of Pershing Square Capital Management, and mega nutrition company Herbalife. In the movie, which was reportedly funded partially by Ackman, the hedge fund manager makes the claim that Herbalife is a pyramid scheme preying on its distributors. This is a popular and successful health food company with sales in over 90 countries.
The movie portrays Bill Ackman’s three year failing battle against the company resulting in one failed accusation after another. The movie tries to portray Ackman as a benevolent billionaire activist, yet a Fortune article from 2015 indicates that he will make even more billions if the company fails. It seems like he is more motivated by greed, than a progressive movement to stop a company that he thinks is illegal and immoral. This is the same guy who invested in the drug company Valeant that was investigated by Congress for price gouging – he does not have a history of benevolence.
I’m skeptical about Ackman’s claims and the manner in which he has manipulated the US Government, specifically the Federal Trade Commission (FTC) into going along with his ruse. The reality is that Ackman is a modern day Don Quixote de La Mancha of literary fame. He lives in a world of fantasy at the peril of his investors’ money. Quixote is a Spanish nobleman whose insanity drives his belief that he is a knight charged with bringing justice back to the world. Quixote’s tilting at windmills is a metaphorical description that is brought to screen in “Betting on Zero”.
Ackman is a hedge fund manager who operates with dangerously limited diversity in his portfolio. He’s had a few wins but his failures have been exceptional.As a hedge fund manager Bill Ackman has taken on a role as a self-appointed knight to bring justice to the world. He has redefined ‘activist investor’ – he recently sold his stake in Valeant, a pharmaceutical company that bought out proven pharmaceutical drugs and then jacked up the price purely for profit. His loss in this company: $3 billion.
Today, he is continuing his crusade against Herbalife. It’s a losing bet. Bill Ackman is managing his investments the same as Don Quixote believed he could bring justice to the world. Bill Ackman should stop tilting at windmills and start protecting his clients’ investments.