Don’t Tell Ackman ‘Hedge Funds Are Dead As a Doornail’

He's taking Pershing Square public anyway. So, buyer beware.

View or listen in browser June 1, 2024 Don't Tell Ackman 'Hedge Funds Are Dead As a Doornail' Dear Subscriber, By Jim Nelson One of the world’s most famous investors is putting his name on the line.  That’s because he’s taking his company public as soon as next year. Many will be tempted to invest in a celebrity’s company from the get-go. And this could become a world-class investment one day. For your money, however, you may want to do a little more research before you buy shares. The big news this week — besides the first conviction of a former U.S. president — was a report from the Wall Street Journal that Bill Ackman is going to take his Pershing Square hedge fund public as early as 2025. Source: WSJ. Click here to see full-sized image.   This is a major story.  For good or ill, Ackman is a mega-celebrity investor. You may recall his recent involvement in Harvard firing its president, Claudin Gay. Just a few other quick hits from his past … In the ‘90s, this little-known investor and his Gotham Partners tried to buy Rockefeller Center. While the bid failed, it got everyone’s attention. By the 2000s, he made an even bigger name by taking on the financial industry.  He took a short position in MBIA, claiming that the company didn’t deserve its AAA credit rating. He then cashed in as shares fell from over $70 to less than $3 during the Financial Crisis. By then, he had launched Pershing and was working on deals to rebuild J.C. Penney and take down Herbalife. Somewhere, he also found time to pick several fights with another legendary investor, Carl Icahn.  The two once fought on CNBC for a full 30 minutes about whether Herbalife was a pyramid scheme.  Ackman even sued Icahn over one deal and won, collecting his prize of $4.5 million plus interest. Carl Icahn with Bill Ackman. Source: CNBC. Click here to see full-sized image.   While all that built his name and made him a headline-grabbing hedge fund manager, his celebrity only grew more with social media. During the early days of the pandemic, he called for a national shutdown. He also made a cool $2.6 billion from his hedges in March 2020. Yes, in just one month! That’s why there’s such interest in the potential 2025 IPO of Pershing Square.  But there’s a problem … Hedge Funds Are in Trouble Earlier this month, Nasdaq eVestment reported that $25.6 billion flowed out of hedge funds during the first three months of this year. March, which saw $9.9 billion of that outflow, marked the 22nd straight month of outflows. The most worrying part of this is who is bailing on hedge funds. It’s the ultra-high-net-worth individuals. Source: CNBC. Click here to see full-sized image.   That’s according to Michael Sonnenfeld, founder of Tiger 21 — a network of the ultra-rich. He told CNBC, “Hedge funds are dead as a doornail.” So, before you get excited about yet another celebrity investor with a company you can buy shares of, consider that the market might not want it. No matter what you think of Ackman — and plenty of people have strong opinions in both directions — it’s important to follow the money, do your due diligence and avoid hype around new investments that might not be as exciting as they seem. Of course, that’s what your experts are so good at. Getting past the hype and drilling down to the real story. And only introducing you to the best of the best. Here’s what they are looking at now … How to Fight Insurance Intimidation On Memorial Day, our Director of Research & Ratings, Gavin Magor, takes you inside the curtain on why insurance costs so much these days. Plus, he offers you a way to find a rational way to look for your provider. Startups Are Coming for Nvidia’s Crown Nvidia isn’t the only AI name in the game. In fact, our guru on startups, Chris Graebe, is looking at several pre-public companies trying to corner their small piece of this enormous market. An Easy Way to Play the Hard Asset Bull Market The rally in commodity prices isn’t over, despite the recent dip. In fact, Sean Brodrick makes the case that the good times are only getting started for hard asset aficionados.  Why I’m Pulling All My Money Out of Vanguard Our level-headed Safe Money Expert Nilus Mattive ran into a scrape with his previously favorite brokerage. Even if you don’t use Vanguard, you’ll want to read Nilus’ tale to avoid similar problems. How Microsoft Beat Apple to a $98.2B Market Whether you love Siri as is or not, Apple is bringing AI to your personal virtual assistant. Yet, our Tech Investing Strategist Michael A. Robinson notes that there’s another giant in this game. And it has a several-year head start on a $98.2 billion market. Have a great weekend! Jim Nelson Managing Editor, Weiss Ratings Daily Follow us:   11780 US Highway 1, Palm Beach Gardens, FL 33408-3080, USA Would you like to edit your e-mail notification preferences or unsubscribe from our mailing list? Copyright © 2024 Weiss Ratings. All rights reserved.