Published on: December 16, 2024, 04:30h.
Last updated on: December 16, 2024, 10:30h.
Pershing Square Capital Management co-founder and CEO Bill Ackman is leading a well-known stock-picking contest through a strategic bet against Caesars Entertainment (NASDAQ: CZR) investor Carl Icahn.
Recent reports indicate that Ackman made a short pick against Icahn Enterprises (NASDAQ: IEP) for the Robin Hood Foundation’s stock-picking competition. In a now-deleted post, Ackman clarified that his bet against Icahn Enterprises is specific to the contest and that Pershing Square does not usually short stocks.
The Robin Hood Foundation, a renowned charitable organization focused on fighting poverty in New York City, has gathered notable figures from the finance industry for a stock-picking contest. Participants have contributed $10,000 and selected two stocks—a long and a short— for their entry,” according to Bloomberg.
The contest commenced on October 28 and will continue until April. As of December 11, Ackman’s returns in the competition stood at 112.5%, significantly ahead of the second-place contestant with a 63.1% increase in their picks since the start of the event.
Ackman’s Position on Caesars
In May, Icahn disclosed a new stake in Caesars stock, stating that he wasn’t advocating for any activism within the casino company. A regulatory filing from August revealed that Icahn held just over 2.44 million shares of Caesars.
In 2019, Icahn Enterprises acquired a roughly 10% stake in the “old Caesars,” positioning itself to facilitate the $17.3 billion merger with Eldorado Resorts, leading to the creation of the “new Caesars.” The management team at Eldorado Resorts, including CEO Tom Reeg, now oversees the operations at Caesars. Icahn is reported to hold a significant regard for the current management team at Caesars, including Reeg, which may have influenced his decision to invest in the company for a second time.
Ackman’s short bet against Icahn Enterprises in the Robin Hood contest does not reflect his stance on Caesars. However, the slight decline in Caesars’ stock value over the past month has contributed to a nearly 19% decrease in Icahn Enterprises’ shares during the same period, aiding Ackman in securing a substantial lead in the contest.
The rivalry between Ackman and Icahn dates back to at least 2013 and revolves around Herbalife, a nutritional supplement company. In 2012, Ackman took a significant short position in the company, while Icahn started building a substantial long position in 2013, driving up the stock price and impacting Ackman’s short position.
The two billionaires engaged in a public dispute on CNBC in 2013, with Icahn calling Ackman a “crybaby.” They later reconciled in 2014.
Other Participants in the Contest
Among the contestants in the Robin Hood contest, only one selected a gaming stock as their long pick. Eminence Capital’s Michael Fitzsimmons chose Melco Resorts (NASDAQ: MLCO). The shares of the Macau-based casino operator have seen a nearly 10% increase over the past month.
It remains unclear if any participants have made direct short bets against gaming stocks for the contest, but several have chosen consumer discretionary stocks as their bearish picks, a sector that includes gaming stocks.
Notable investors like David Einhorn, whose Greenlight Capital holds shares of Penn Entertainment (NASDAQ: PENN), and Rickey Sandler, whose Eminence Capital is an activist investor in Entain Plc (OTC: GMVHF), are also partaking in the competition. Neither Einhorn nor Sandler selected gaming stocks as their long positions, opting for short bets in the financial services (Einhorn) and healthcare (Sandler) sectors.