Ackman Leading Stock-Picking Contest by Shorting Caesars Investor Icahn
Bill Ackman, co-founder and CEO of Pershing Square Capital Management, is at the forefront of a well-known stock-picking competition, partly because of a wager against Caesars Entertainment (NASDAQ: CZR) investor Carl Icahn.
In a post that seems to have been deleted on X last Friday, Ackman disclosed that his short choice for the Robin Hood Foundation’s stock-picking competition is Icahn Enterprises (NASDAQ: IEP), the publicly traded holding firm for the financier’s investments. In his social media update, Ackman emphasized that his wager against Icahn Enterprises is exclusively for the Robin Hood competition and that Pershing Square does not engage in short-selling.
"The Robin Hood Foundation, a charitable organization committed to alleviating poverty in New York City, has enlisted the boldest names in finance in a stock-picking contest. Contestants have donated $10,000 and made two stock picks—a long and a short—per entry,” according to Bloomberg.
The competition began on October 28 and continues until April. As of December 11, Ackman’s returns in the competition stood at 112.5%, significantly surpassing the runner-up, whose selections have risen by 63.1% since the event began.
Ackman Not Specifically Wagering Against Caesars
In May, Icahn disclosed that he held a new stake in Caesars stock but emphasized that he wasn’t advocating for any type of activism in the casino behemoth. An August regulatory document showed that Icahn's holding in Caesars was slightly more than 2.44 million shares.
In 2019, Icahn Enterprises acquired about a 10% share in the “old Caesars,” setting the stage for him to eventually be the mastermind behind the $17.3 billion purchase by Eldorado Resorts — the deal that formed “new Caesars.” The management team from Eldorado, led by CEO Tom Reeg, now oversees operations at Caesars. Icahn is said to hold considerable respect for Caesars' current management, including Reeg, which might have influenced his decision to invest in the company a second time.
Ackman’s wager against Icahn Enterprises for the Robin Hood contest does not reflect a stance on Caesars, although the gaming stock’s 5.83% decline in the last month has contributed to Icahn Enterprises' nearly 19% drop during that period, giving the Pershing Square chief a solid advantage in the contest.
The dispute between Ackman and Ichan has been ongoing since at least 2013 and revolves around the nutritional supplement company Herbalife. Last year, Ackman established a large short position in that stock. In 2013, Ichan began accumulating a substantial long position in the stock, pushing the share price up and squeezing Ackman’s short position simultaneously.
The two exchanged insults during a CNBC interview that year, with Icahn referring to his opponent as a "crybaby." The two billionaires reconciled in 2014.
Additional Gaming Investors Engaging in Competition
Only a single competitor in the Robin Hood competition opted for a gaming equity as their primary choice. That’s Michael Fitzsimmons from Eminence Capital, who picked Melco Resorts (NASDAQ: MLCO). The stocks of the Macau casino operator have risen nearly 10% in the last month.
It's uncertain whether any participants hold direct short positions against gaming equities for the contest, but numerous individuals chose consumer discretionary stocks as their bearish wagers, which is the sector where gaming stocks are located.
David Einhorn, whose Greenlight Capital holds stakes in Penn Entertainment (NASDAQ: PENN), and Ricky Sandler, whose Eminence Capital is an activist stakeholder in Entain Plc (OTC: GMVHF), are also involved in the contest. Neither chosen gaming stocks serve as their long positions, with their short investments coming from the financial services (Einhorn) and healthcare (Sandler) sectors.
