Bill Ackman has seen better days. His high-flying hedge fund Pershing Square Holdings, Ltd., was once the envy of money managers everywhere, boasting a 40% return for 2014 (the S&P returned 13% in the same year). However, due to the recent implosion in one of its core holdings, Valeant Pharmaceuticals International Inc. (VRX), Pershing Square’s returns have been utterly annihilated: the fund posted a YTD return of -13.5 for 2016, and -20.5% for 2015, thus grossly underperforming the market. Here is a brief look back at the best and worst highlights of Bill Ackman’s investing career. (See also: Pershing Square Capital Management: An Activist Investor Analysis.)

Hits:

Municipal Bond Insurance Association Inc. (MBI).

One of Ackman’s biggest successes came even before he founded Pershing. In 2002, 36-year-old Ackman was one of the first investors who noticed something was amiss in the billions of dollars’ worth of credit default swaps (CDS) against mortgage-backed collateral debt obligations (CDOs) that MBIA was as a counterparty to (Ackman's thesis). Ackman acted on his hunch by purchasing his own credit default swaps against MBIA’s own debt, as well as shorting the company’s stock, betting that the insurer would go into default due to its CDO exposure. After five years of slugging it out with MBIA’s management, Ackman’s persistence paid off as the bond insurer’s shares and debt ratings plunged during the 2008 financial crisis.

The Wendy's Company (WEN).

Wendy’s was one of Ackman’s first successes at the helm of Pershing. In 2004, Pershing took a large stake in the fast-food chain, and successfully pressured management to spin off its Tim Hortons brand (a veritable religion in Canada). Ackman would later exit his position at a substantial profit, though Wendy’s stock price would underperform in the post-spin off, without the presence of its fastest growing unit.(See also: Burger King and Tim Hortons Form Restaurant Brands International.)

General Growth Properties Inc. (GGP).

The greatest bet of Ackman’s career, and arguably one of the best hedge fund trades of all time, was Pershing Square’s turnaround of troubled mall operator General Growth Properties from the brink of bankruptcy, netted the hedge fund a whopping $1.6 billion return on a $60 million investment.

Canadian Pacific Railway Ltd. (CP).

In 2011, after Pershing acquired a 14.2% stake in CP, a fierce proxy battle between the CP Board and Ackman’s hedge fund ensued. Eventually, Pershing emerged victorious, afterwards installing a new CEO and revamping the company’s business strategy. As reported by the Financial Post, the results were a dramatic increase in CP’s stock from $49 per share to $220 per share from September 2011 to December 2014. In 2016, Pershing sold its 6.7% stake valued at approximately $1.45 billion.

Misses:

Valeant Pharmaceuticals International Inc. (VRX)

Unless you’ve been living in a cave, you would be well aware of Pershing Square’s nightmarish position in the troubled pharmaceutical company, Valeant. Originally entered at around $180 per share, Ackman’s massive 8.5% stake in the company has been thoroughly smashed, following accusations of channel stuffing/fraud levied against Valeant. The company is battling a host of challenges including, management mishaps, horrible earnings and guidance slashes, shady conference calls and the possibility of covenant breaches leading to technical defaults on the company’s debt. On March 13th, 2017, it was reported that Pershing Square had sold its entire position, taking a loss of more than $3 billion. (See more: Valeant: Did the other shoe just drop?).

Target Corporation (TGT).

Even the most bull-headed investors have to throw in the towel sometimes. While Ackman ultimately triumphed in his proxy battle at CP rail, the results were starkly different when Pershing attempted to take over five board seats in the second largest discount retailer in the United States. Unable to convince shareholders, which mostly consisted of his peers in the Wall Street institutional investment community, that him and his choice of board members were the right people for the job, and faced with staggering losses in a fund he specifically set up to invest in Target derivatives, Ackman eventually was forced to throw in the towel (Source: Barrons).

Borders Group.

Another misstep in Ackman’s career was his activist position in the now defunct Borders Group. After taking a stake in the bookseller in 2006, and boosting his holdings in 2008, Ackman entered into loan agreements as Border tried to find a buyer for itself. Even after pledging a $960 financing for Borders to take over Barnes & Noble Inc. (BKS), which ultimately went nowhere, Borders declared bankruptcy in 2011, losing Pershing Square hundreds of millions (WSJ). (See also: Businesses On The Brink: Change Or Fail?)

Herbalife Ltd. (HLF)

Perhaps the biggest trade associated with Bill Ackman is his conviction short of health supplement company, Herbalife Ltd. (HLF). Arguing that the company was a pyramid scheme, with an intrinsic value of zero, Ackman entered into a short position worth $1 billion in 2012. The trade has been chronicled at length by almost every financial news outlet even to this day and was famous for an on-air argument between Ackman and Carl Icahn on CNBC, who amongst other major hedge fund players had taken a long position in the stock. In the weeks following his short position, Ackman saw Herbalife's shares plunge around 60 percent, but the company has proven remarkably resilient, and has rebounded to its pre-short levels, thus costing Ackman millions in borrowing fees, and paper losses.(See also: Ackman maintains short bet on Herballife.)

The Bottom Line

Hedge fund manager Bill Ackman is both celebrated and derided for his confidence and tenacity when it comes to making big bets on a handful of positions. His all-or-nothing approach has led to some of the greatest, most prescient calls in the investing world, or some of the biggest busts. In this article, we examined the highs and lows of Bill Ackman’s career.

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