William Ackman, the investor-activist who runs the $12 billion hedge fund, Pershing Square Capital, is like one of those guys you used to see in a certain kind of old-fashioned comedy. On one shoulder sits an angel, encouraging his better nature. On the other sits a devil, whispering temptation.When he listens to the angel, Ackman does amazing things. He made a $25 million contribution to the Newark school system, an early and important match against the $100 million that Facebook’s founder, Mark Zuckerberg, put up in September 2010. Yet unlike virtually every other actor involved in the Zuckerberg grant, who have been squabbling ever since, Ackman attached virtually no strings to his donation. He wants his money to be used to help Newark’s schoolchildren — not to push someone’s reform agenda.
Then there’s his current Herbalife crusade. After making a $1 billion bet that the stock would fall, Ackman released a lengthy report alleging that the company was running an illegal pyramid scheme. I have been sadly constrained from writing columns about the Ackman-Herbalife battle because the company had the wit to hire my fiancée’s employer, David Boies, after Ackman unveiled his attack. I was, as they say, “conflicted out.”
But I will say this: Pyramid schemes are a hidden scourge, hurting millions of people seduced by their get-rich-quick promises. Until Ackman began agitating, the federal government had largely capitulated to the “multilevel marketing” industry (as it likes to be called), even exempting it from a law passed a few years ago specifically aimed at curbing pyramid schemes. Ackman has been heroic in taking on this litigious, well-financed industry. Not since Jim Chanos went after Enron has a hedge fund manager been willing to question whether a company was actually a criminal enterprise. That takes guts.
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