Business

➚ BUY: Norfolk: The CEO of railroad Norfolk Southern survived an effort to oust him. “We are not done fighting,” said the president of hedge fund Ancora during Thursday’s shareholder meeting, when three of its seven director nominees were voted onto the board.

➘ SELL: Nordic. The continent needs to close its productivity gap with the US, Sweden’s top central banker told the FT. Last month, the head of Norway’s oil fund criticized Europeans’ lack of economic hustle, saying “Americans just work harder.” They do, but only slightly.

Crushing backlash to Apple’s crushing ad… Bank of England hints at summer rate cuts… Silver Lake is done with small ball… BBVA tries again with hostile Sabadell bid… Archegos founder on trial… Haley huddles with rich donors…

Bill Ackman’s anti-woke crusade pays off

Bill Ackman’s turn as an anti-DEI provocateur has turned the investor, well-known enough on Wall Street but not far beyond, into a culture warrior. It’s also been very good for business.

Shares of his Amsterdam-listed investment firm have been on a tear since Ackman took to X to criticize corporate diversity efforts, support Israel, stump for long-shot presidential candidates, question childhood vaccine schedules, and bash the student protests that have taken over college quads across the country.

Ackman owns about 27% of the fund, which means the transformation to a right-wing meme stock has earned him $280 million. There’s no obvious explanation other than Ackman’s political turn: He’s added half a million X followers over the same period.

Pershing Square Holdings, which went public in 2014, lets retail investors own Ackman’s private investment book. It trades the same stocks as his onetime activist hedge fund, which is now essentially a family office.

Despite posting some of the industry’s best returns, Pershing Square traded at a steep discount to the price of the stocks it owned, a gap that was only partly explained by the hefty fees it charges. It basically boiled down to a “lack of trust in Ackman” and worries that he’d pull “another Valeant,” one investor wrote, a disastrous investment that lost $4 billion and forced Ackman to publicly apologize to his investors.

“Great story Bill, how about the massive discount on PSH? Seriously frustrating,” one investor responded to an Ackman tweet last year bragging about a recent tennis win. In 2017, activist hedge fund Elliott bought a chunk of Pershing’s shares and tried to pressure Ackman to liquidate it. To fend off the attack, Ackman personally borrowed $300 million from JPMorgan and bought control of the fund, he said on Lex Fridman’s podcast in February.

The gap between Pershing Square’s stock price and the value of its investment portfolio bottomed out at around 35% in September. It began narrowing when Ackman started publicly attacking university presidents at Harvard, his alma mater, and MIT, where his wife works. Today it’s 25%, worth more than $1 billion in market value.

LIZ’S VIEW

Ackman broke out his own activist playbook to close the gap. Pershing Square bought back stock, joined the FTSE 100, and started paying a dividend. It turned out all he needed to do was open his mouth.

As the meme-stock craze proved, fanboys can prop whole businesses up. Elon Musk’s true believers kept Tesla afloat for years. And the place where Ackman has done most of his recent ranting — Musk’s X platform — is a true amen chorus for the kind of grievance-tinged politics that Ackman has embraced.

European rules prevent Ackman from saying much publicly about his fund (a spokesman declined to comment for this story) but that’s about to change. He’s launching a US version that he has hinted could raise $10 billion or more. US rules are stricter in some ways than in Europe — he can’t charge performance fees or borrow as freely — but laxer in one important way: Ackman can talk.

Documents for the new fund say Ackman intends to use his X account to talk about investments “as well as his views on macroeconomic, geopolitical and other developments.” If those views were worth $1 billion to a mostly unknown and unloved Amsterdam-listed fund, imagine what they’d be worth to madding crowds in America.

Much of the attention on the vocal new ultra-rich has been on “how loud billionaires convert their wealth into power,” as a recent New York Times op-ed headline put it. The trade works the other way, too.

Sand and sun: Saudi Arabia pulled its senior officials out of this week’s Milken conference at the last minute for a meeting to brief Crown Prince Mohammed bin Salman on the status of Neom, the futuristic desert city that is a key pillar of the kingdom’s economic growth plan, people familiar with the matter said. Construction on the city has been costlier and slower than projected, and Saudi Arabia is expected to unveil just a fraction of its flagship structure — a 105-mile-long, 1,640-foot high pair of skyscrapers known as “The Line” — at the city’s launch in 2030. Neom is one of a handful of must-go-right bets for the kingdom, along with the 2034 World Cup and the 2029 Asian Winter Games at a ski resort in the desert that doesn’t yet exist.

That’s the financial-criminal-industrial knot that John Ray untangled. The post-bankruptcy CEO of FTX finished his work this week and basically found all the money and a little extra. Customers will get 100% of their account holdings back, plus interest. The IRS gets $200 million, and maybe another $685 million, a fraction of its original claim. The Justice Department gets $1.2 billion — 3% of its 2024 budget — which it can keep or distribute to other creditors. FTX’s Silicon Valley venture investments get nothing. Sam Bankman-Fried got 25 years in prison.

What looked in November 2022 like a worthless pile of dubious tokens, venture investments, real estate, and shell entities will turn out to be worth some $15 billion, about two-thirds of it from cryptocurrencies whose prices have surged in recent months.

The recovery — almost unheard-of in big, complex bankruptcies — lends some credibility to SBF’s claims that FTX had the money all along, if only he’d been given enough time to find it and to realize investments.

That paradox had put Ray in a peculiar spot, where his success in repairing the damage would lessen, by degrees, the consequences of SBF’s misdeeds. “That things that he stole were successfully recovered … does not mean that things were not stolen,” Ray wrote the court. “What it means is that we got some of them back.”

Wait and si: The Spanish government says it has the final word on a merger between BBVA and Sabadell, the country’s second- and fourth-largest banks, and opposes the deal. So does Sabadell, which has rejected BBVA’s $12.4 billion offer. Bloomberg’s Paul Davies says it’s the “the best Sabadell shareholders are going to see for a long time,” because eventual interest-rate cuts across Europe will erase a lending advantage that has helped Spanish and Italian banks outperform their northern peers.

Members lonely: Soho House, the private club with $22 cocktails and zero profits, reports earnings tomorrow. The company formed a special board committee in February to explore a buyout by billionaire Ron Burkle and founder Nick Jones, who together own enough of the company to take it private “without any of us writing a check,” Burkle wrote. The “aging arbiter of young, cosmopolitan, vaguely creative cool,” founded in London as a modern twist on the city’s private clubs and launched in the US on the back of a 2003 Sex and the City cameo, has never made money.

Digging deeper: Japanese steelmakers are the latest to come out against BHP’s bid for Anglo-American, which they say would put too much coking coal, a key component in steel production, in the merged miner’s hands. The governments of South Africa and Botswana oppose the deal, and BHP faces long odds in Brazil, where it’s been trying to settle cases stemming from a deadly 2015 dam collapse. The big question hanging over the $39 billion hostile bid is whether it brings rivals like Rio Tinto and Glencore into the fray. BHP has until May 22 to improve its offer under the UK’s “put up or shut up” M&A rules.

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