Bill Ackman saw his hedge fund’s crusade against Herbalife as a moral battle with a billion-dollar payday. Illustration by Mike McQuade / Photograph by Andrew Harrer / Bloomberg / Getty

One day in the summer of 2011, Christine Richard arrived at the forty-second floor of a high-rise on Fifty-seventh Street in Manhattan to visit a hedge fund called Pershing Square Capital Management. Richard worked for a boutique research firm that identified “short” opportunities—companies that investors could profitably bet against—and she was there to present an idea to Pershing Square’s founder, William Ackman. On the way over, though, she was caught in a rainstorm, and by the time a receptionist directed her to a conference room she realized that she was dripping wet.

A few minutes past the appointed time, Ackman rushed into the conference room, trailed by an assistant who was listing a series of meetings for that day. Ackman couldn’t stay, so he summoned one of his most trusted analysts, a twenty-eight-year-old red-headed Texan named Shane Dinneen, to sit down with Richard. She placed the rain-spattered report she had prepared on the conference-room table. On the cover was a three-leaf corporate logo. Underneath it was the word “Herbalife.”

Pershing Square is what’s called an “activist” hedge fund. Ackman uses its considerable resources—around eleven billion dollars, raised from wealthy investors, institutions, and employees—to amass major stakes in publicly traded companies. The intention is then to push the companies to improve their businesses, or at least their stock price, which is how an activist investor generally makes money. There are debates over whether activist funds strengthen the companies they invest in or simply force them into taking short-term measures—laying off employees, selling off divisions—to drive up profits and the share price. Ackman, who is sensitive to stereotypes about profiteering, says that Pershing Square has fewer than a dozen investments in its portfolio at a time, and sees them as long-term commitments. He maintains that his firm puts tremendous resources into each one, gives strategic advice over a period of years, and often recruits C.E.O.s and board members.

“This is going to sound goofy,” Ackman told me recently, when we met at his midtown offices, “but we try to do things that we think are good for America.” Ackman, a youthful-looking fifty, is tall, with steel-white hair and intense blue eyes. A devotee of tennis, he’s muscular and trim; he can give the appearance, when you stand next to him, of leaning over you in a slightly possessive manner. He seems accustomed to employing his physical charisma in the service of his business interests.

“There’s a good-for-America reason to do that, and there’s also an economic reason to do that,” he went on. “It’s much easier, if you’re an activist, if you’re on the right side of things.” He was gazing out over Central Park, through panoramic windows that cast the grand public space as his own back yard. To the far right of the vista was One57, a ninety-story skyscraper that looms over the city like a blade. He recently bought a duplex apartment there for $91.5 million.

To make his case, Ackman cited the example of Canadian Pacific Railway, a company that was established in 1881. Pershing Square bought fourteen per cent of its stock six years ago, and recruited a new C.E.O., who took it from the “worst-run railroad in North America” to the best, in Ackman’s appraisal—while reaping a $2.6-billion return on the fund’s investment. A less flattering example of Ackman’s judgment is the fund’s $3.3-billion investment in Valeant, the pharmaceutical company. Valeant was known for borrowing money to buy competitors and then raising the prices of their drugs—sometimes by a thousand per cent or more—while closing their R. & D. divisions. Valeant’s profits soared, for a time, and other drug companies followed its example. Then Valeant came under federal investigation; its share price is now a fraction of what it was when Pershing Square bought it.

Valeant was the sort of company that Pershing Square should have bet against rather than bought into, but shorting stocks wasn’t a big part of what the fund did. Short selling—betting that a company’s stock price will go down—requires a special level of fortitude. It involves borrowing a stock from a brokerage or a bank (and paying a small fee to do so), selling the stock in the open market, and then returning the borrowed shares at some point in the future, having bought back the stock for much less than you sold it for. That’s if things go well; the losses are potentially limitless if the stock keeps rising.

Short sellers are generally reviled by corporations as malevolent opportunists. But, unlike most investors, they’re motivated to expose problems in public companies. “I think short selling, and in fact public short selling, where you share your concerns in a public way, is an incredibly healthy thing, not just for the capital markets but because the regulators do not have the resources to find these things,” Ackman said. “What short sellers do is identify the problem, because they’re economically incentivized to do so. But if you don’t tell anyone about it, you know, nothing necessarily is going to happen.” By shorting, he maintained, an investor can find that rare opportunity to profit handsomely while also providing a public service. “If you can find a really crooked company that’s causing harm to poor people? The government’s going to be a lot more interested in that company than some other kind of fraud that’s ripping off rich people.” He added, “It’s more interesting to fight evil than just to play with stock certificates.”

Ackman grew up in the affluent New York City suburb of Chappaqua, where his father ran a brokerage firm. He graduated from Harvard College and then Harvard Business School, where he was on the rowing team, and had a reputation as someone who couldn’t keep his opinions to himself. He and the rest of the team had rowed with oars adorned with dollar signs. “Let’s face up to what HBS represents,” he wrote in the student newspaper. “We spend 90% of our studies at HBS pursuing the maximization of the dollar.”

He started his first hedge fund, Gotham Partners, in 1993, at the age of twenty-six. Ten years later, after a series of misjudged investments and unfavorable court rulings, he was forced to close it. He was left with only one investment, a large short position in M.B.I.A., Inc., originally named the Municipal Bond Insurance Association. M.B.I.A. insured bonds issued by cities, states, corporations, and mortgage lenders; its backing gave bonds a high credit rating, assuring buyers that they were protected in case a borrower defaulted. At the time, M.B.I.A. was one of the most profitable companies in America. Ackman, though, had determined that it was concealing billions of dollars in potential losses on high-risk debt, including vast amounts of subprime-mortgage debt. He made a bet against the company, and then set about publicizing his opinion that it was in danger of going bankrupt. With the support of much of the financial industry, the company fought back, accusing Ackman of spreading false information to benefit his investment, and New York’s attorney general, Eliot Spitzer, started investigating him. (Charges were never filed.)

Christine Richard, who is fifty-two, joined the financial-news service Bloomberg News in 2006 as a wire reporter covering the bond market. She has an earnest air, speaks with a soft voice, and has sympathetic blue eyes. She grew up in Union County, New Jersey, and earned a degree in psychology at Boston University while waitressing part time. As she pursued an M.B.A. at Georgetown University, she started reading the Wall Street Journal, which had distinguished itself as a source of consequential business journalism, and decided that she would rather write about the business world than work in it. Wire-service reporting was by nature a mechanical exercise, however, and Richard yearned to write longer, more narrative pieces.