Ackman Leading Stock-Picking Contest by Shorting Caesars Investor Icahn
Pershing Square Capital Management's co-founder and CEO Bill Ackman 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 seemingly now-removed post on X from last Friday, Ackman disclosed that his short selection for the Robin Hood Foundation’s stock-picking competition is Icahn Enterprises (NASDAQ: IEP), the publicly traded holding company for the financier’s investments. In the social media message, Ackman indicated that his wager against Icahn Enterprises is only for the Robin Hood contest 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 were 112.5%, a significant lead over the second-place participant, whose selections have risen by 63.1% since the beginning of the event.
Ackman Isn't Directly Wagering Against Caesars
In May, Icahn disclosed that he had acquired a new stake in Caesars stock but emphasized that he wasn’t advocating for any type of activism regarding the casino giant. An August regulatory report revealed that Icahn held a Caesars stake of slightly more than 2.44 million shares.
In 2019, Icahn Enterprises acquired approximately 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.” Eldorado's management team, led by CEO Tom Reeg, is now in charge at Caesars. Icahn is said to hold significant respect for Caesars’ present management team, including Reeg, which could have influenced his decision to invest in the company once again.
Ackman’s wager against Icahn Enterprises for the Robin Hood competition isn’t a critique of Caesars, despite the gaming stock’s 5.83% drop in the last month contributing to Icahn Enterprises’ shares falling nearly 19% during that period, giving the Pershing Square head a solid advantage in the contest.
The conflict between Ackman and Ichan goes back to at least 2013 and revolves around the nutritional supplement company Herbalife. The previous year, Ackman established a significant short position in that stock. In 2013, Ichan began acquiring a considerable long position in the stock, pushing the share price up and squeezing Ackman’s short at the same time.
During a CNBC interview that year, the two exchanged jabs, with Ichan describing his competitor as a “crybaby.” The two billionaires reconciled in 2014.
Additional Gaming Investors Taking Part in Competition
Only a single competitor in the Robin Hood competition selected a gaming equity as their primary choice. That's Michael Fitzsimmons from Eminence Capital, who picked Melco Resorts (NASDAQ: MLCO). Shares of the Macau casino operator have risen by nearly 10% in the last month.
It remains uncertain whether any of the participants hold direct short positions against gaming equities specifically for the contest, but multiple individuals selected consumer discretionary stocks as their bearish wagers, which is the sector encompassing gaming stocks.
David Einhorn, whose Greenlight Capital holds shares of Penn Entertainment (NASDAQ: PENN), along with Ricky Sandler, whose Eminence Capital takes an activist role in Entain Plc (OTC: GMVHF), are also involved in the contest. Neither chose gaming stocks for their long positions, and their short investments come from the financial services (Einhorn) and healthcare (Sandler) sectors.
