Gustavo Ballvé on February 15th, 2011
Corporate Governance, Corporate Strategy, Food for thought, Home, Industries, Investment Themes, Mental models, Portfolio Management, Retailing

NYT’s Dealbook linked yesterday to a CNBC interview with Bill Ackman of Pershing Square. A little more digging revealed other sections with him – it was a “Harvard Business School special” of sorts, and as such featured other high-profile alumni and professors such as Michael Porter. While each video has back-and-forth interaction with all participants, we highlight a few of Mr. Ackman’s “moments” inside.

Update (Feb. 17th, 14:00 ET): Bloomberg Business Week magazine published a lengthy profile on Bill Ackman in its last issue. Always be wary of stories about controversial people, be it favorable or unfavorable.

In the first section below, there’s a good defense of short-term traders in the stock and financial markets in general. They provide liquidity and different opinions due to many different reasons – but mostly, of course, the long vs. short-term focus arbitrage.

In this next section, Mr. Ackman discusses JC Penney in more detail, especially and most interestingly in comparison to Target and even Eddie Lampert’s Sears. As with the other two, JC Penney is an older retailer which owns a lot of its real estate or has long-term leases with very low rent. While it is a good aspect, he notes that having “free rent” can actually cause less discipline with costs and general operations that leads to inefficiencies. Having seen firsthand many such examples over the years, we agree when he says that “you have to run your business as if the rent is high”. There’s a bonus after some 8:30 where another HBS professor – Clayton Rose – is discussing GSE’s such as Fannie Mae and Freddie Mac (he’s in the Board of Freddie Mac). Mr. Ackman then drills him on where his fiduciary duties lie: shareholders, the government, etc. A very interesting exchange follows. Later on, he attacks rating agencies, with an interesting idea about the role of rating agencies.

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