Ackman Leading Stock-Picking Contest by Shorting Caesars Investor Icahn

Posted on: December 16, 2024, 04:30h. 

Last updated on: December 16, 2024, 03:58h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Pershing Square Capital Management co-founder and CEO Bill Ackman is leading a famous stock-picking contest due in part to a bet against Caesars Entertainment (NASDAQ: CZR) investor Carl Icahn.

ackman
Pershing Square CEO Bill Ackman. He’s winning a stock-picking contest by shorting Caesars investor Carl Icahn’s company. (Image: Wall Street Journal)

In what appears to be a now-deleted post to X from last Friday, Ackman revealed that his short pick for the Robin Hood Foundation’s stock-picking contest is Icahn Enterprises (NASDAQ: IEP), the listed holding company for the financier’s investments. In the social media post, Ackman noted that his bet against Icahn Enterprises is solely for the purpose of the Robin Hood contest and that Pershing Square doesn’t short stocks.

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 contest started on October 28 and runs through April. As of December 11, Ackman’s returns in the contest were 112.5%, a massive advantage over the second-place contestant whose picks are up 63.1% since the start of the event.

Ackman Not Directly Betting Against Caesars

In May, Icahn revealed he had a new position in Caesars stock but noted he wasn’t pushing for any form of activism in the casino giant. An August regulatory filing indicated Icahn’s Caesars stake was just over 2.44 million shares.

In 2019, Icahn Enterprises took a roughly 10% stake in the “old Caesars,” positioning him to later become the architect of the $17.3 billion acquisition by Eldorado Resorts — the transaction that created “new Caesars.” Eldorado management, including CEO Tom Reeg, now run the show at Caesars. Icahn reportedly has ample respect for Caesars’ current management team, including Reeg, and that may have been some of his motivation for investing in the company a second time.

Ackman’s bet against Icahn Enterprises for the Robin Hood contest isn’t a commentary against Caesars, though the gaming stock’s 5.83% slump over the past month has played a part in shares of Icahn Enterprises sliding almost 19% over that time, helping the Pershing Square boss to a healthy lead in the contest.

The Ackman/Ichan “beef” dates back to at least 2013 and centers around nutritional supplement maker Herbalife. The prior year, Ackman took a massive short position in that stock. In 2013, Ichan started building a significant long position in the stock, driving the share price higher and crimping Ackman’s short in the process.

The two would trade barbs in a CNBC interview that year with Ichan calling his rival a “crybaby.” The two billionaires made amends in 2014.

Other Gaming Investors Participating in Contest

Just one contestant in the Robin Hood contest chose a gaming equity as their long selection. That’s Eminence Capital’s Michael Fitzsimmons, who selected Melco Resorts (NASDAQ: MLCO). Shares of the Macau casino operator are higher by almost 10% over the past month.

It’s not clear if any of the participants have direct short bets against gaming equities for the purpose of the contest, but several picked consumer discretionary stocks as their bearish bets, and that’s the sector in which gaming stocks reside.

David Einhorn, whose Greenlight Capital owns shares of Penn Entertainment (NASDAQ: PENN), and Ricky Sandler, whose Eminence Capital is an activist investor in Entain Plc (OTC: GMVHF), are also participating in the competition. Neither selected gaming stocks as their long positions, and their short bets hail from the financial services (Einhorn) and healthcare (Sandler) sectors.