Bill Ackman took a Wall Street tactic to an Ivy League fight in his attempt to oust Harvard’s president

Analysis by Allison Morrow, CNN

New York (CNN) — When Bill Ackman, a financier who got rich betting against companies’ stocks, decided to wage a battle against Harvard’s president, he relied on a strategy that earned him a reputation as one of the most ruthless investors on Wall Street.

Ackman, a Harvard alum who sits on a law school advisory board, and a handful of other deep-pocketed donors have been furious over what they see as Harvard’s inaction on antisemitism on campus. That anger reached a boiling point earlier this month when Harvard’s president, Claudine Gay, stumbled during congressional testimony and failed to give a full-throated condemnation of hate speech calling for genocide against Jews — comments that she later apologized for.

Of all the donors demanding action from Harvard, MIT, the University of Pennsylvania and others, none have been as relentless as Ackman. The billionaire has posted open letters, tweeted and even pushed to publicly identify students who blamed Israel for the Hamas attack.

In particular, Ackman wants Gay, the first Black woman to lead Harvard, fired. To that end, he has gone on X to claim (without evidence), that Harvard hired Gay only to fulfill diversity requirements. He has called Gay unqualified for the job and accused her of plagiarism — an accusation she and Harvard deny.

All of Ackman’s rabble-rousing to try to sway public opinion comes straight from the activist short-selling playbook. Put simply, activist shorts win when the company they’ve bet against fails. One of the most vital tools for executing such a play: a big, booming megaphone.

CNN has reached out to Ackman via his company, Pershing Square Capital Management. A representative declined to comment.

Ackman made his fortune as the founder and CEO of Pershing Square, a heavyweight hedge fund that notched a series of wins taking big stakes in companies like JC Penney, Target and Wendy’s. But recently, following some notable losses in the 2010s, Ackman has steered the fund away from the activist-short strategy he’s known for.

In the spring of 2022, Ackman announced that he had “permanently” retired from activist short-selling.

Of course, old habits die hard, and Ackman, who is 57 and worth just shy of $4 billion, according to Forbes, clearly isn’t done agitating.

His message to Harvard is not unlike the message he delivered to the businesses he has targeted in the past: Run your business the way I say, or watch me and my followers tank your stock (and your reputation). The financial saber-rattling succeeded in getting other big donors and right-wing pundits to align around his view. But it also catalyzed anger among conservative activists, some of whom responded by doxxing dozens of the students Ackman accused of antisemitic speech.

Ackman’s crusade to get Harvard’s president fired hit a big snag this week when the university’s board rallied to her side. But it hasn’t silenced Ackman, who continues to air his grievances on social media and sling allegations of antisemitism against Harvard. That’s also part of the short-seller playbook: keep hammering your target no matter what.

There may be a sizable hitch in Ackman’s strategy, however, in applying ruthless capitalist maneuvering against a venerated Ivy League school: Harvard isn’t Wall Street.

Why Ackman hasn’t won

Infamously, Ackman in 2012 made a $1 billion bet against Herbalife, the multi-level marketing company that sells dietary supplements. He claimed the bet was an ethical choice and that Herbalife was a scam. But he had a powerful foil: Carl Icahn, a rival activist investor who promoted the company’s stock just as loudly as Ackman trashed it. In 2018, Ackman ended his short bet, and Icahn claimed he made $1 billion from the ordeal.

Similarly, Ackman may have met his match with Harvard. Despite his attacks, more than 700 faculty members, 800 Black alumni and ultimately, on Tuesday, Harvard’s highest governing board, came to Gay’s defense. At Harvard, Ackman isn’t just going up against C-suite executives and corporate board members, he’s taking on a phalanx of donors and power players who are just as wealthy and savvy as he is — including billionaire Penny Pritzker, the Harvard Corporation’s most senior leader.

Harvard is a private institution, and the people Ackman needs to persuade to turn off the money supply aren’t only everyday shareholders but the wealthy donors who, so far, haven’t publicly condemned Gay or Harvard as vociferously as he has.

Even if he had, Harvard may be able to withstand the punishment. Harvard’s nearly $51 billion endowment is bigger than the GDP of some small countries.

Taking on Harvard

Ackman started sounding off about Harvard’s handling of antisemitism on campus shortly after the October 7 Hamas attack. He called for the students who blamed Israel for the attack to be outed so “that none of us inadvertently hire” them.

Later, he said on X that the leaders of Harvard, MIT and the University of Pennsylvania should “resign in disgrace” over their congressional testimony.

His campaign against Gay hasn’t managed to oust her. But Ackman carried the banner for an army of pundits and wealthy donors who have been on the attack against what they perceive as the leftist agenda on college campuses.

Ackman this week denounced the doxxing trucks prowling Harvard’s campus, which have displayed students names and faces and called Gay “the best friend Hamas ever had.” But in a follow-up post on X, he suggested the trucks harassing Gay may serve a legitimate purpose.

“Perhaps the doxxing trucks will give President Gay some perspective on what it is like to be Jewish and/or Israeli on the @Harvard,” he wrote on X.

If Harvard were a publicly traded company, its stock may have fallen the minute Ackman went on offense, causing other investors to flee. But Harvard isn’t beholden to shareholders with a fiduciary duty to maximize value. As a private institution, it serves an array of parties, including students, faculty and alumni, many of whom bristle at the notion that one wealthy donor could wield such outsize influence.

“We can’t function as a university if we’re answerable to random rich guys and the mobs they mobilize on Twitter,” Ben Eidelson, a professor at Harvard Law School, told the New York Times this week.

Why Ackman could still win

What undid former University of Pennsylvania President Liz Magill was ultimately a total revolt against her: A donor threatened to pull a $100 million gift from the university. Politicians called for her ouster. And her own boards at Wharton and Penn ultimately rebelled against her.

Ackman has some powerful allies on his side, too. New York Republican Rep. Elise Stefanik has not let up on her calls to oust Gay and MIT president Sally Kornbluth, who, like Gay, struggled to say whether calls on campus for the genocide of Jews would violate school rules.

Stefanik and her peers continue to probe antisemitism on campuses, and Ackman continues to bang the drum against Gay.

If there’s a lesson to be gleaned from Ackman’s Herbalife saga, it’s that Ackman rarely backs down, even if it costs him a small fortune.

This article has been updated to add details about Ackman’s statements on social media and his relationship with the Harvard Law School.

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