Pershing Square Capital Management co-founder and CEO Bill Ackman is at the forefront of a well-known stock-picking competition partly due to a wager against Caesars Entertainment (NASDAQ: CZR) investor Carl Icahn.
In what seems to be a 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 firm for the financier’s investments. In the social media update, Ackman mentioned 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 outpacing the second-place participant whose selections have increased by 63.1% since the event began.
In May, Icahn disclosed a new stake in Caesars stock but clarified that he wasn’t advocating for any type of activism in the casino heavyweight. An August regulatory submission revealed that Icahn's stake in Caesars was slightly more than 2.44 million shares.
In 2019, Icahn Enterprises acquired approximately a 10% interest in the “old Caesars,” setting the stage for him to eventually lead the $17.3 billion purchase by Eldorado Resorts — the deal that established “new Caesars.” The management team from Eldorado, led by CEO Tom Reeg, now oversees operations at Caesars. Icahn is said to hold significant respect for Caesars' existing management team, including Reeg, which might have influenced his decision to invest in the company again.
Ackman’s wager against Icahn Enterprises for the Robin Hood contest is not a critique of Caesars; however, the gaming stock’s 5.83% decline over the last month has contributed to Icahn Enterprises dropping nearly 19% during that period, giving the Pershing Square leader a solid advantage in the contest.
The dispute between Ackman and Icahn originates from at least 2013 and revolves around the nutritional supplement company Herbalife. Last year, Ackman established a substantial short position in that stock. In 2013, Ichan began to acquire a substantial long position in the stock, pushing the share price up and constraining Ackman’s short position in the meantime.
During a CNBC interview that year, the two exchanged insults, with Ichan labeling his opponent a “crybaby.” The two billionaires reconciled in 2014.
Only a single competitor in the Robin Hood contest selected a gaming equity as their primary choice. This is Michael Fitzsimmons from Eminence Capital, who chose Melco Resorts (NASDAQ: MLCO). The Macau casino operator's shares have risen by nearly 10% in the last month.
It remains uncertain whether any participants have specific short positions against gaming equities for this contest. However, multiple individuals chose consumer discretionary stocks for their bearish wagers, which is the sector that includes gaming stocks.
David Einhorn, whose Greenlight Capital holds shares of Penn Entertainment (NASDAQ: PENN), and Ricky Sandler, whose Eminence Capital is an activist shareholder in Entain Plc (OTC: GMVHF), are likewise taking part in the contest. Neither did they choose gaming stocks for their long positions, and their short investments come from the financial services (Einhorn) and healthcare (Sandler) industries.
