Ackman’s S.E.C. Filing on Bid for Botox Maker Allergan

William A. Ackman has made billions on a reputation for being the smartest guy in the room. Sometimes, it turns out, even the smartest guy can be wrong.

The activist investor, who runs the $13 billion hedge fund Pershing Square Capital Management, has been one of the loudest proponents of Valeant’s $53 billion hostile bid for Allergan,teaming up with Valeant to pursue a deal. But a major presentation supporting his case contains an error.

The mistake is in a deck of slides filed with the Securities and Exchange Commission on April 23, the day Mr. Ackman and Valeant publicly announced their interest in Allergan.

In the section “understanding Valeant’s financials,” Pershing Square outlines why standard accounting methods called GAAP – Generally Acceptable Accounting Principles – do not capture Valeant’s true “economic performance.” But Pershing Square uses the wrong numbers. (Instead of GAAP numbers, the firm uses adjusted non-GAAP figures.)

Source: NYT

Ackman, Herbalife, Washington

Pershing Square’s short has been a losing trade so far. Given the large size of the short position, traders on the other side have driven the stock price up by short squeeze. Herbalife defended strongly.

Persing Square’s analyst who worked on the Herbalife short has left the firm. And Ackman has taken this matter to regulators now. Herbalife responded Ackman should be investigated.

“Choosing money over power is a mistake almost everyone makes. Money is the big mansion in Saratoga that starts falling apart after ten years. Power is that old stone building that stands for centuries. I cannot respect someone who does not see the difference.” Francis Underwood, House of Cards