Mark Axelowitz @markaxe45

@BillAckman Yesterday is history, tomorrow is a mystery, but today is a gift. That’s why it’s called the present. Enjoy every moment. Life is short🙏🙏

@BillAckman @praneshbuilds @hardknocksedu I couldn’t agree more. Not only are they among the nicest and brightest people you’ll meet, but they also have a rare ability to make everyone feel completely welcome and right at home the moment they walk into the office.

A number of press reports have characterized our and other shareholders’ efforts on behalf of Fannie and Freddie (F2) as seeking a ‘gift’ or ‘handout’ from the government. We, the shareholders of F2, seek no such thing. Hundreds of financial institutions were bailed out during the GFC by the U.S. Treasury. Nearly all of the financial institution bailouts during the GFC involved an injection of capital in the form of senior preferred stock by Treasury at an interest rate of 5%, plus warrants to acquire common stock in an amount equal to 15% of the face amount of the preferred with an exercise price at the then-current stock price of the rescued institution. For example, Treasury’s preferred stock investment in Goldman Sachs was in an amount of $10 billion and, in addition, Treasury received warrants on $1.5 billion of GS' common stock at its then market price. The bailout terms for F2 were materially more burdensome and expensive, with a higher interest rate and substantially more warrant coverage, than that of every other financial institution (other than those of AIG whose terms were similar). Despite the F2 bailouts’ massively more burdensome terms, shareholders are not complaining about the original terms. Treasury invested $193 billion in F2 in the form of senior preferred stock (SPS), including funding for $2 billion of commitment fees, with a 10% coupon (twice that of the banks). Treasury also received warrants on 79.9% of both companies’ outstanding shares. Fannie and Freddie have since repaid Treasury $301 billion, which includes interest on the SPS at a blended rate of 11.6%, an interest rate which is 160 basis points more per annum, and have returned the entire $193 billion of outstanding principal, $25 billion in excess of what was contractually owed. In summary, the F2 SPS has been fully repaid according to its original contractual terms plus an extra $25 billion. Despite the fact that the SPS has been more than repaid in full, Fannie and Freddie have not accounted for these payments on their respective balance sheets, and the $193 billion of SPS remains an outstanding liability as if no principal payments had ever been made. How can it be, you might ask, if indeed F2 have repaid $301 billion to Treasury when only $276 billion was due could there be any remaining balance of the SPS on the F2 balance sheets? The answer relates to something called the ‘Net Worth Sweep (NWS).’ During the second term of the Obama administration, on August 12, 2012, two quarters after F2 returned to profitability, Treasury announced that it was unilaterally amending the terms of the SPS stock to provide that Treasury would take 100% of the profits of F2 each quarter in lieu of the 10% annual dividend rate. This was not a negotiated resolution with F2. It was a unilateral amendment of the original terms of the SPS that was done in bad faith. The supposed rationale for the amended terms of the SPS was akin to the IRS garnishing the wages of someone who will never be able to pay the taxes that they owe. That is, the Treasury said F2 will never be able to pay the 10% coupon, let alone the SPS’ $193 billion principal balance, so it decided instead to ‘settle’ for 100% of F2’s profits forever. In discovery, shareholders learned that the stated justification for the amendment was false. In mid 2012, the Obama administration had come to learn that both companies would soon be reversing tens of billions of reserves on their balance sheets as housing values had increased and the reserves taken during the GFC had been excessive. The NWS was instituted by Obama to forestall F2 from forever being able to recapitalize and be released from conservatorship. The NWS was not a ‘settlement’ for a lesser amount of future payments. It was the outright theft of the forever profits of both companies. Never before or since has the government ‘swept’ 100% of the profits of any company, let alone a financial institution in conservatorship, a form of government intervention where the goal is rehabilitation of the institution, and where the hierarchy of corporate claims has always been respected. The accounting for the NWS payments while it was in effect (until Secretary Mnuchin terminated the NWS in Trump’s first term) was also unusual. The NWS was treated by F2 as a quarterly adjustment to the dividend rate on the SPS such that the dividend amount owed was made equal to the after-tax profits of F2 for that quarter with no limitation. In other words, regardless of the amount of profit F2 generated for the quarter – whether or not it was in excess of the original 10% annual dividend – the dividend payable under the NWS was made equal to the quarterly profit. The absurd terms of the NWS sweep therefore made it impossible for any partial or full repayment of the SPS to take place as every dollar paid to the Treasury on the amended terms of the SPS was considered a dividend payment, even if the amount was massively in excess of the original contractual SPS terms. The absurdity of the NWS was made clear just two quarters after the NWS went into effect. Fannie Mae generated a profit of $59 billion in the first quarter of 2013, and the SPS dividend rate for that quarter was set at $59 billion so the entire amount was swept to the government, more than 10 times the contractual dividend rate. I had the opportunity to discuss F2 and the NWS with Warren Buffett about a decade ago and he said that he “couldn’t believe what the government had done.” In short, the shareholders of F2 are simply asking the government to respect the original and highly burdensome terms of the SPS. There is no dispute that Treasury has received more than the original 10% coupon and full repayment of principal of the SPS, that is, an extra $25 billion. We and the millions of other shareholders of F2 are simply asking the administration to honor the original SPS terms and properly account for the $301 billion of payments, thereby eliminating the SPS liability from both companies’ balance sheets. Shareholders have not asked for the extra $25 billion to be returned to the two companies. Treasury can decide whether to keep those funds or return them to the companies. Accounting for the repayment of the SPS has other important implications. Namely, it is critically important that conservatorships respect the rule of law, in particular, the contractual terms of corporate instruments and the hierarchy of claims. Otherwise, no financial institution that gets into trouble will be able to raise rescue capital in the private markets. Notably, the treatment of F2 in conservatorship explains why Silicon Valley Bank and other recent large bank failures since the GFC were unable to raise private capital and avoid government intervention or a forced sale to J.P. Morgan. If the government with the stroke of a pen during conservatorship can at a whim wipe out common and preferred shareholders, no one is going to step in to try to save a financial institution that gets into trouble, and only the top few banks will be possible rescuers of big banks that fail. Furthermore, because of F2’s history, their reputation in the capital markets has been greatly damaged. F2 raised $22 billion of preferred stock in the year or so prior to conservatorship as the government pressed both companies to raise capital. Institutions were willing to invest billions of dollars of capital into both institutions before they failed because, based on all precedent conservatorships, the contractual terms of all financial instruments and the hierarchy of claims had been preserved. Unfortunately, in light of the precedent of the net worth sweep, no investor can be confident that they won’t be wiped out in a future conservatorship so none has been willing to take the risk. Some have proposed that Treasury simply convert the SPS into junior preferred and common stock and massively dilute shareholders. Putting aside the potential legal challenges to this approach, the result will be that Treasury will at best own something approaching 95% of both companies rather than 79.9%. While the government’s percentage ownership stake would be larger in the SPS conversion approach, the value of the government’s larger stake would be considerably lower as the companies would become un-investable. Who would invest in F2 alongside the government when they just wiped out the previous owners? In the SPS conversion scenario, the government’s stake, at best, if it could be sold, would trade at a massively discounted valuation, well below the value of the government's stake if Treasury retained only its contracted for 79.9% stake and respected the original terms of the SPS. In other words, a slightly smaller ownership stake of much more highly valued companies would equate to considerably more value for Treasury and taxpayers. In a public letter to Rand Paul after his first term in November of 2021, President Trump recognized that the net worth sweep was theft from the shareholders of Fannie and Freddie. He wrote: “Another Obama/Biden scam in legal trouble was when they allowed the Federal Housing Finance Agency (FHFA) to steal the retirement savings of hardworking Americans who had invested in Fannie Mae and Freddie Mac…The idea that the government can steal money from its citizens is socialism and is a travesty brought to you by the Obama/Biden administration. My Administration was denied the time it needed to fix this problem because of the unconstitutional restriction on firing Mel Watt. It has to come to an end and courts must protect our citizens.” I couldn’t have said it better than President Trump. Now that you have the time, Mr. President, let’s Stop the Steal!

N

@BillAckman @andrewcuomo @CurtisSliwa Bill, I agree with your prediction and thoughts.

@BillAckman @ShucksADarnIt Mayor Bloomberg, can he do a 4th term?

@BillAckman @ZohranKMamdani I could not agree more. New Yorkers need to vote in the primary!!!!

@BillAckman I couldn’t agree more. I actually felt more comfortable buying GGP at $5 and $10 per share than at $1. My clients and I were very happy when it rose above $20 per share. Thank you very much, Bill.

@EliAfriatISR Yes

Ryan Israel (CIO of @PershingSquare and @HowardHughesHQ) and I did a fireside chat with the CIO of @UBS in Omaha prior to the Berkshire Hathaway meeting. It was an interesting conversation on a broad range of topics with a couple of hours of audience Q&A.

David Park @investingdpark

a year ago

Thank goodness for Omaha 2025 replays Bill Ackman Fireside Chat ubs.com/global/en/weal… @BillAckman ValueXBRK youtube.com/watch?v=ykcfrN… @GSpier Markel Brunch youtube.com/watch?v=fd_JeD… @MarkelStyle Gabelli Omaha Value Investor Conference youtube.com/watch?v=4XIIop… @MarioGabelli

7 86 413 380K 851

@BillAckman @WhitneyTilson Whitney is the right leader at the right time and will get the job done as Mayor of NYC.

@BillAckman @WindDustStars Neri is an Angel!

Last Friday in Omaha before the Berkshire Hathaway meeting, Ryan Israel, CIO of Pershing Square, and I did an extended fireside chat with Solita Marcelli, CIO of UBS. I think you will enjoy it. ubs.com/global/en/weal…

@BillAckman I am very lucky to know Neri. If BI took just 15mins to speak with Neri they would have never run this FAKE story because Neri has the heart and soul of Saint, she is selfless, generous and has such a positive impact on others and is one the most ethical people I have every met.

@NeriOxman @MIT Neri, well said. I wonder who paid BI to write this trash or were they looking to try to increase there subscription rate.

@BillAckman @Harvard Wow, a masterpiece that should be read by all.

@BillAckman @nytimes Well said. I am glad I cancelled my subscription to The NY Times last month!!!

Please see my letter today to @Harvard governing boards of directors: December 10, 2023 Dear Members of the Harvard Governing Boards: In her short tenure as President, Claudine Gay has done more damage to the reputation of Harvard University than any individual in our nearly 500-year history. Because of her failure to condemn the most vile and barbaric terrorism the world has ever seen, for supporting rather than condemning 34 Harvard-branded student organizations who hold Israel “entirely responsible” for Hamas’ barbaric acts, for failing to enforce Harvard’s own rules on student conduct, and for her other failures of leadership, President Gay catalyzed an explosion of antisemitism and hate on campus that is unprecedented in Harvard’s history. In light of Harvard’s leadership position, President Gay’s mishandling of October 7th and its aftermath on campus have led to the metastasis of antisemitism to other universities and institutions around the world. President Gay’s actions and inactions have gravely interfered with the ability of students to continue to learn at Harvard and for its faculty to teach and do research. Classes are continually disrupted by protesters who use bullhorns and other disruptive methods, and the offending students suffer no disciplinary action. Literally, as I write this post, highly disruptive protests are underway inside Widener Library while students are trying to study for final exams and finish their term papers during the last two weeks of the semester. As a result of President Gay’s failure to enforce Harvard’s own rules, Jewish students, faculty and others are fearful for their own safety as even the physical abuse of students remains unpunished. President Gay’s absurd explanation for the lack of disciplinary action for the October 18th HBS incident was that the University cannot discipline students until the HUPD and FBI investigations are complete. To date, I am unaware of any disciplinary actions taken for the October 18th incident nearly two months later. President Gay’s principal response to address antisemitism on campus was to set up a task force. Within a few weeks of its formation, @RabbiWolpe, the only rabbi on the task force, publicly announced his resignation from the committee. In an @X post, he explained: “The short explanation is that both events on campus and the painfully inadequate testimony reinforced the idea that I cannot make the sort of difference that I had hoped.” He later explained on news television that: “I came to the conclusion that I was not going to be able to make the kinds of changes I thought Harvard needed,” saying the committee had “accountability without authority.” President Gay’s failures since October 7th led to a Congressional investigation of her conduct. This outcome on its own is an incredible embarrassment to Harvard. I have been unable to identify any former Harvard president being the subject of a Congressional investigation since the establishment of the Congress in 1789. President Gay’s entire testimony was abysmal. She was disrespectful and condescending to the Congress. She was a hostile witness, unwilling to answer direct questions from members. In words that will forever live in infamy, President Gay’s response to the question: “Does calling for the genocide of Jews violate Harvard’s rules regarding bullying or harassment?” President Gay: “It depends on the context.” My X post which shared the excerpt of the three university presidents’ testimony has been viewed more than 106 million times, and condemned in comments and reposted by more than 80,000 people from around the world. President Gay’s testimony was also slammed by Harvard Hillel: “President Gay’s failure to properly condemn this speech calls into question her ability to protect Jewish students on Harvard’s campus... President Gay’s testimony fails to reassure us that the University is seriously concerned about the antisemitic rhetoric pervasive on campus.” And by her most liberal supporters: Professor Emeritus Larry Tribe @tribelaw: “[Her] hesitant, formulaic, and bizarrely evasive answers were deeply troubling to me and many of my colleagues, students, and friends.” President Gay’s failures have led to billions of dollars of cancelled, paused, and withdrawn donations to the university. I am personally aware of more than a billion dollars of terminated donations from a small group of Harvard’s most generous Jewish and non-Jewish alumni. I have been copied and blind copied on numerous letters and emails to the University from alums who have written scathing letters to Gay and/or the Board withdrawing donations. President Gay’s actions and inactions have exposed Harvard to substantial legal liability due to alleged violations of Title VI of the Civil Rights Act of 1964 putting at risk Harvard’s Federal funding, tax-exempt status, and creating the risk of substantial financial liability to the University from private plaintiffs. President Gay’s Failed Leadership Did Not Begin with Her Presidency During her tenure as Dean and now as president, Gay has squelched speech she disfavors while defending and thereby amplifying vile and threatening hate speech, exhibiting a remarkable double standard. In the words of Professor Steven Pinker: “Claudine was technically correct that students can’t be punished for political chants, but when Harvard et al. have no prior credible commitment to academic freedom, institutional neutrality & viewpoint diversity, the born-again appeal to principle seems incriminating.” Free speech deteriorated materially under Gay’s deanship and presidency as evaluated by the Foundation for Individual Rights and Expression (FIRE). Harvard’s free speech ranking has deteriorated each year over the last four academic years to a ranking of 0.00 or last out of 254 universities this past year. According to FIRE, Harvard is the only university with an “abysmal” speech climate. In my letter to the board of December 3rd, I quoted Harvard faculty I interviewed on the lack of free speech at Harvard. I encourage you to read what they had to say. Gay has presided over discriminatory hiring practices at Harvard. The faculty have been told in no uncertain terms that candidates that do not meet DEI criteria will not be considered for certain faculty positions. As Dean, Gay showed no respect for basic American legal principles when she fired Harvard Law School Professor Ronald Sullivan as residential dean for taking on the legal defense of Harvey Weinstein. President Gay should hope that someday when she needs counsel, she will be able to obtain quality representation for herself. DEI and the Office of Equity, Diversity, Inclusion and Belonging (OEDIB) In recent weeks, I have learned a lot about DEI practices at Harvard and have come to the conclusion that the Office of Equity, Diversity, Inclusion and Belonging, which was formed in 2019 under Dean Gay’s oversight and vision the year after she became Dean of FAS, is none of those things. In fact, the actions of the OEDIB have led to preferences and favoritism for certain racial, gender, and LGBTQ+ groups at the expense of other groups, and made some members of the Harvard community feel included at the expense of others that are excluded. When I mentioned in my December 3rd letter to President Gay that among others, Jewish, Asian, Indian and straight white male students were excluded from the benefits of the ODEIB office, her solution to this problem, which she outlined in an email to the Harvard community, was to propose that the OEDIB include Jewish students in some manner. This is not right answer. The OEDIB is a major contributing source of discriminatory practices on campus and highly damaging to the culture and sense of community at Harvard. It is beyond repair and should be shut down. I do not mean to suggest whatsoever that the goal of a diverse university that is welcoming for all should be abandoned. Rather, the OEDIB is not the solution as it is fundamentally an organization with political objectives that are inconsistent with achieving true diversity and inclusion at Harvard. The OEDIB’s definition of equity is also inconsistent with Harvard excellence. Over its nearly 500-year history, Harvard has been a beacon for excellence based on the equality of opportunity it offers, not by promoting a system or ideology which forces or requires the equality of outcomes. On the Decision to Terminate President Gay Last Thursday, December 8th, a bipartisan coalition of 72 members of Congress issued a public letter to the Harvard governing boards demanding President Gay’s termination. It is rare that our Congress has been able to accomplish anything in recent years in a bipartisan fashion, let alone in a matter of days. Congress’ decisive action here speaks volumes. In the last 24 hours, a petition has been circulating among the Harvard community which asks the board to fire President Gay. I expect it may already have thousands of signatures. As Charlie Munger of blessed memory advised: “Invert, always invert,” i.e., turn a situation or a problem upside down to better understand and solve it. Using Mr. Munger’s rubric, let’s assume that the office of president at Harvard were vacant. Knowing what we know now, would Harvard consider Claudine Gay for the position? The answer is definitively “No.” With this simple thought experiment, the board’s decision on President Gay could not be more straightforward. The Search Process for a New President I was recently accused by several bloggers and other commentators of being a racist when I shared that the board, in the search process that led to the hiring of President Gay, would not consider a candidate for president that did not meet DEI criteria. I have confirmed now from multiple sources that the search committee that led to President Gay’s appointment excluded non-DEI eligible candidates from the process. To set the record straight, my criticism of President Gay would be unchanged if her gender, race, and/or LGBTQ+ status were different. As I am sure the board is well aware, a search process which excludes potential candidates based on their racial, gender, sexual preference or other similar criteria is inherently a discriminatory and/or racist process, which is illegal under the law. In the likely event that Harvard launches a new search process for president, to state the obvious, all candidates regardless of ethnicity, gender, sexual identity, and/or political views should be considered for the position. The board also needs to also launch a detailed investigation into discriminatory hiring practices at the University, and put in place measures to ensure that these practices never again occur. The events of the last two months have taken a devastating toll on the Harvard brand and its community at large. With the right leadership and governance, Harvard can be restored to its historic stature as one of the world's leading research and educational institutions comprised of a diverse and welcoming community which fosters free speech, encourages diverse viewpoints, and provides an environment that preserves academic freedom. I am highly confident that Harvard, the governing boards, and the Harvard community at large will greatly benefit and learn from this experience. As I often say, experience is making mistakes and learning from them. The mistakes that were made that led to recent events began many years, if not decades, ago. Let’s make sure that we use this opportunity to fundamentally repair our beloved institution for it is incumbent upon us as the current stewards of Harvard. We are all collectively responsible for the currently impaired status of our historically esteemed institution. I am grateful for the role all of you serve on behalf of the entire Harvard community. Thank you for your service. I would be delighted to help the governing boards and Harvard in any way that I can. Please call upon me at any time. Sincerely, William A. Ackman, A.B. 1988, MBA 1992

Now the focus turns to Presidents Gay and Kornbluth and the boards of @Harvard and @MIT.

@BillAckman @Harvard @MIT And Columbia