Bill Ackman: In Most Transactions, We Have Inside Information About The Company Before We Buy Shares

Pershing Square was recently crowned with the coveted title of the best performing hedge fund of 2014 by Bloomberg. Pershing Square’s boss, Bill Ackman, was on CNBC discussing the benefits of activist investing.

Ackman also elaborated on how every position his firm takes is basically a trade based on inside information, using Canadian Pacific Railway Limited (USA)CP as an example.

"I think you have to decide is shorter activism a good thing for the market or bad thing," Ackman said. "Pretty much every transaction we do, we have inside information about a company before we bought the shares. So when we bought a 14 percent stake in Canadian Pacific we weren't buying it as a passive shareholder, we were buying it with a plan to put in the greatest railroad CEO of all-time. We didn’t tell one person we bought the 14 percent of the company from that we were planning to do that. We bought the 14 percent stake, they sold to us, the next day we announced our 13D, so that was news, right?"

Ackman continued, "We are allowed to trade on our own inside information and we introduced Hunter as CEO -- the stock got from $46 to $200 a share. So, we are trading on inside information. Now there, we didn’t have a partner, we did it on our own, but we actually talked to some Canadian pension plans about partnering with us to take a stake in CP […] but they passed because at the time, sort of the clubby boardroom environment in Canada they didn’t want to do something that looked hostile against a high-profile Canadian company."