Bill Ackman: Pershing Square, hedge funds & learning from your mistakes

Good afternoon, for those of you who haven't been to business school before, welcome to the Oxford University physical law site, just out of curiosity, how many of you are students at the University but not business school? ? Excellent welcome to Syed. I'm delighted this afternoon Pacific because that's what I'm going to do all afternoon. I am delighted to welcome this afternoon Bill Ackman, CEO of Pershing Square Capital, which is a multi-

bill

ion dollar investment fund that takes long-term positions and investments in companies and then works with them sometimes very publicly to improve their performance, in addition to being one of the most recognized investors in the world.

Bill is the opposite. Bill and his wife are also major philanthropists and we and Oxford are the beneficiaries of some of their donations in In particular, we have created a program called the 1+1 program here at Business School Wow that allows you to combine depth and breadth, so get the depth of an MA in one of the many subjects around Oxford, gain domain expertise and get past the top layer. of those management skills for those of you who are master's students in college and are thinking about having a second year here and getting

your

MBA, purchasing where the foundation scholarships graduate scholarship program will really make it possible, in addition to making it possible to come for students who had not yet been to Oxford but who applied for both the first-year master's years and our own in the MBA program, so we are grateful to Bill Ackman for that gift, but today it is not about of, you know?

Oxford and it's not about the 1+1 program, it's a conversation about activism investing in activism and philanthropy, so to set the stage, I think Bill it was 1991 when you and I first met, to put this In context, you were in

your

twenties and I. I had just started as a rookie teacher two years prior, so Bill at the time was trying to set up an interesting business that eventually became Gotham's partner, so for those of you who are students, it's a twenty-something Bill. created his first

hedge

fund, so why did you create Gotham Bill? Maybe you will learn from that experience.

Experience is making

mistakes

and

learning

from them. That's what I learned. No. So the answer is that I went to business school to learn how to be a good investor and I learned the first rule of investing, which is to do due diligence before transferring your money and when I got to HBS, I opened the catalog of courses for the first time and there wasn't a class on investing in other accounting classes or finance classes, so I decided I had to develop my own self-study program and I wanted to do it, so I opened a fidelity brokerage account.

I said this. He had some money he had made in the real estate brokerage business. my tuition in the investment business was about a year's tuition and if I missed it it was like I had gone to business school for two years but paid for three, so I figured it wasn't the opposite of the Oxford 1+ program 1, but, you know, the first stock that I bought went up and I said, "Okay, I found what I want to do well more involved in that, but actually, my father, who is here, came with us, that's dad over there in In the corner you can ask him whatever questions you want afterwards.

He told me that it's a really dumb idea to start an investment fund directly from him in school and recommended that I go work for Michael Steinhardt or George Soros or one of the other ambassadors. famous at the time, but I thought I knew enough about the dangers of youth, but the answer is that I was an entrepreneur and I felt that I wanted to approach investing my way rather than

learning

from someone else and it is one of the. few things you can really learn on your own, you can learn investing by reading books, reading annual reports, you can have a portfolio and invest $100 and you can learn the business, unlike many other businesses that require at least a lot more. that's what I thought at the time so it's a long way from just investing in fidelity you know a brokerage platform and Pershing Square has a particular form of investing that some of our audience members may not understand and it's sometimes called investment activists.

So maybe I can help guide the audience to what exactly this Square Capital person does, what the general investing style is, and why he set it up that way, so that the vast majority of capital invested in the markets today today be passive. think index

funds

or ETFs or even the big type of long term institutions, the vast majority of capital is by statute passive passive means you do your research, in some cases you don't do the research, you just blindly follow an index and judge you based on how closely you follow the index if you think about investing 100 years ago, although in the investment you had Andrew Carnegie as an owner of 20% of US Steel, where you had JP Morgan as a large owner of several companies to over time and in the old days. to invest, an owner would act as an owner, so if they were not happy with the company's performance, they would replace the CEO, they were not happy with the board's judgment, they would make changes to the board and, like capitalism in a way democratized the investment process and like any kid in business school can open a brokerage account and, as you know, the owners of many of these large companies, over time, gifted the shares to a university or to their heirs and the ownership was distributed, you know, the Sam Waltons of the world passed away and boards of directors became managed by professional owners, so what we do is look for situations where a company has lost its way, where a large company within a business that we would define as one that has significant barriers to entry that Warren Buffett would describe as having a moat around it, a business that is simply predictable generates cash and we can be sure that we will be here in fifty years, a good example, since We own a stake in Canadian Pacific, which is a railroad in Canada and if you think about the railroad business, you know it's not, it's a business where they're not going to build a new one across the street, they need to not There are some pretty dramatic changes in technology.

Feel quite comfortable knowing that the products will be shipped by rail for a long time, so it is a business that we can predict, we can think about it from a very long-term perspective, we can buy it at an interesting price and in the case of CP , this was the worst managed railroad in North America, it had the lowest profit margins, was trading at the lowest valuation relative to earnings, and had a very unhappy shareholder base, but there was nothing they could do about it because The largest investors tend to be very passive and we saw an opportunity and the opportunity was that if you could replace the worst CEO in the railroad industry with the best CEO in the railroad industry, you could make a lot of money and first we bought 12% of the shares and then another 2%, about 14% of the shares, we recruited a guy named Hunter Harrison, who is widely considered the best railroad executive of all time, certainly in North America, he He had retired at 65, he was 66 and a half years old, he had signed a two-year contract. -year non-compete with his employer and I think the biggest mistake they made was a two-year non-compete because he was removing me from the other Canadian railway, a Canadian citizen and we hired him as a consultant, he helped us study the railway. and I had a lot of fire in my belly and we said look, would you be interested in a day job? and he said: let me consult with my wife, she said: you know when it is time to get you out of the house again and we recruited them. and then we had to just put him in his place now the problem was that Canadian Pacific has one of the most esteemed and illustrious boards of directors in Canada, at least at that time, and it was the former director of the Royal Bank of Canada, the former CEO of Suncor Energy, the former head of the steel business, knows that it's a very important board and they didn't like the idea of ​​this idea coming from outside the company, so they said no, so we went to the shareholders and made an election.

In the contest we appointed seven directors to seven seats on a 13-seat board and the shareholders voted with us 90% of the time and voted against everyone else and got between 3 and 11 percent of the boat in the that we put to our directors. We did a review of the best CEOs in the world turns out the guy we identified as the best guy we put in a CEO and that was 16 months ago and it's almost the most profitable railroad in North America after 16 months, so quick this guy comes work Sox went from $46 to $151 per share, you know, a market cap of just under $8

bill

ion to a market cap of $25 billion, that's the perfect example, now It doesn't always work out that way and I have a feeling Peter You could ask me about one of those cases so I used to call Bill when I was a student so this is going to be fun so it's very clear that you've had notable successes.

Bill's only estimate is twenty three two and one, except I get the numbers right 2424 city one twenty four win two no win 1 tie something like that and Canadian Pacific is clearly a win I think you just monetized 800 million that's what I read about a thousand million dollars and then MBIA is another one that a bill was prophetic about you know the fact that the financial markets were going well, MBIA, which is a large insurance bond insurer, was on a bad path and you realized realize that, but there are some that, and I think what you've said in some of your recent things where you've had some things that you've learned from those experiences, could include, for example, JCPenney, which was in the news this summer, so what have you learned from the successes and then maybe what would happen if you learned from them? that has not been success again, as I said at the beginning, experiences making

mistakes

and learning from mistakes and unfortunately, as students, you have not made many mistakes yet, if you have arrived at Oxford at this point in your career, the biggest risk is you .

You probably haven't made a big mistake, so you know the risk is that when data arrives on your desk that doesn't match your success, you're less likely to pay attention to it than if you've made some mistakes, so I encourage you to make some. mistakes and in fact I've made a lot of them throughout my career and I think I've had a lot of success over time but it hasn't been a straight line in fact if it were a stock I would do it. It seems something like this after business school, you know, and then the concern is whether this is happening, but so far the general trend has been positive overall, but now there are certainly bumps in the road and JCPenney is a company in the one we invest.

We knew there was a much higher risk situation ahead than the Canadian Pacific, so JCPenney, for those who aren't familiar, is kind of an iconic 112-year-old American retailer that's certainly past its prime; It probably peaked 25 or 30 years ago again. For example, James Cash Penney, who founded the company, died, I think in the early '70s, and there's a pretty good correlation between when the founder leaves and when he leaves, and part of that It has to do with governance, which is a topic I am studying. I'm sure we'll get to that, but at the time we invested JCPenney stock was down from 80 to about $20 a share, it was trading at about 4 times operating income, it had a lot of assets in the company that weren't core assets, it had had a very inflated expense base and generated very few sales per

square

foot, it was a very underperforming retailer and part of that is that the brand had gotten a little tired and they had gone to a very discount-oriented model where they marked an address at $40 and they wouldn't sell anything at that price and a week later they would market at 20 and probably wouldn't sell many at that price and then they would send you a coupon you would get $10 off and then you would start selling some and then if you used your card of credit, you got $4.00 off and if you bought right now you'll get another $5 off and finally it was eight dollars or whatever, they sell a lot of them at that price, but this was undifferentiated merchandise and the thesis.

In reality, this company still has a faded and restorable brand and because it was created over the last one hundred and twelve years, it actually owned about one hundred and twelve million

square

feet of some of the best real estate in the mall and the malls. real estate industry that owned or had very long-term leases stopped very low rents we said look, this is a great platform to rebuild the company and we bought a 16 percent stakein the company we drew I was invited to join the board I joined the board with a friend who bought ten percent together with us, together we owned twenty-six percent of the company, we both joined the board of directors, there were two of us of eleven directors and the CEO was 64 years old and the board was very focused on succession, as any general board should be. but particularly in their CEOs in their 60s and we helped the board with succession and there was a candidate who kept emerging as the top guy in retail and this guy's name is Ron Johnson and he had an ideal background to which He didn't come.

Oxford Business School but he or Syed went to Harvard Business School and graduated he went to work for Mervyn's his dream in life was to reinvent the department store and Mervyn's was kind of a dying department store that was acquired by Target So he spent a few years at Mervyn's, spent ten or eleven years at Target, which is probably the best-run discount department store in America, and then was hired by Steve Jobs to build the Apple Store from a blank sheet of paper. and he did an absolutely incredible job and we said look, I couldn't ask for a better experience to do.

What we're trying to do here is reinvent the department store, combine the Apple customer store experience with some of the excellence of the Target brand and cost management, and the problem was recruiting him. He is very happy living in Atherton, California, he was three. four hundred million dollars restricted from speaking and Apple 100 million of which it was going to lose if it left and had children who were between 13 and 15 years old, you know, the time when parents don't like to move, but I managed convince him to take the job and walk away from a hundred million restricted shares.

We gave him $50 million to compensate him, but he still suffered losses when he took the job and then invested $50 million in seven-year options. which he bought with his own money which he could not sell for six years. I thought this is absolutely perfect. We have the best. We have a great platform and a really affordable price. We have the perfect alignment of incentives. I thought it was done but it didn't work out, so Ron started in November 2011 and proceeded to make a series of changes, many of them very favorable, including him taking a hard look at the cost structure and finding about a billion dollars.

The JCPenney store basically became a mini mall, a Selfridges type model, where there were a number of brands, each of which would have their own type of presence in the store and then you have a consolidated checkout with a wireless experience and something like an Apple type customer. service experience and he sold this idea to brands that until then would not be willing to come into JCPenney and the charismatic guy's guy was a great idea. They had a ton of brands that he sourced from all over the world that were excited to open within. He and JCPenney got to work, but he made a very significant strategic mistake, this whole notion of what he almost called rip-off pricing, about pricing an item and then marking it down and marking it down and coupons, he said, seemed like a waste of time, Let's just mark. at the price the consumer knows the right price because when you looked at those $40 dresses and four unloaded shirts, they all sold it for something like $12.30 but you got on average and very little you sold it at any other price, just mark it for 12 dollars, the consumer understand the value, we can save a lot of money.

You know the company would have spent a tremendous amount of man-hours changing the signs if you think about how often they constantly change Andry's ticket prices and change the signs in stores. It seemed very messy and you know it sounded like a brilliant idea. Apple's experience wasn't about testing, so instead of testing this in one or two stores or in one region, they rolled it out nationwide and tailored it to the customer. had gotten used to getting coupons in their Sunday circular, suddenly the coupons weren't there and they decided not to come and we lost about a third of our customers after about 12 months and the best thing about a retail business if you get It's true that this business It has enormous operating leverage, because you have a substantial base of fixed costs, but once you start generating additional sales on almost every downturn, many of them make it to the bottom line.

Oh, the only problem with leverage as you learn. in business schools it works the other way around and all of a sudden he was losing huge amounts of money after having spent a ton of money on capital to rebuild and redesign these stores and we found ourselves in a turnaround 15 months after he was hired and I had to replace it and the number one lesson for many was what I call an extreme makeover of a company and when you do an extreme makeover it requires perfect alignment of the board of directors and the support of the CEO and we did not have that number one.

We were one of the eleven directors on the board and there was still a look, if it had worked perfectly from the beginning, that wouldn't have been a problem. If things got difficult or there was a divergence of opinion on the board about what to do and when to do it. how to do it and who to hire, so I think it's an interesting lesson. I don't think he'll ever get on a board and be one of the eleven, like continue with a mandate like at Canadian Pacific, you know, I think Ron is an incredible talent, but I don't think, like the students in the room, he have made a mistake before and I think it was as the data kept coming back, and you know Ron was still very confident that it was going to work and you.

I had a CEO last year and I give him and I give him and I give him wind and I think Ron will be and I think I would say this today, he will be a much better CEO next time because having had a big negative experience like this. I think third retail is one of the businesses where you can really do proper testing, you can take a region, you can take a store and you can test things and tweak them and test them, and I think you know the Apple experience that comes from. Steve Jobs was about. the customer doesn't know what they want I know what the customer wants and Steve Jobs did it well I think in retail there's kind of a saying the customer knows what they want and I think I really have to listen to that so, While I still love JCPenney's vision, I think it was right.

I think the execution was difficult and you know how to do something like that and also in the public domain. This is an important change and the company. He was constantly being harassed by the press and Ron was attacked. I think it makes it difficult to make decisions in that kind of public context. There's a lot of stuff that could use the rest of the lecture here, otherwise you know what's surprising to the audience. This is on the bad side of the ledger and Bill, you know how you're so frank about what worked and what didn't?

I think that's how we learn in business school because even though you may not have failed yet, I know us sellout kids usually have it and have the opportunity to do it. I'm a failure just for a second. I don't know, there are very few people. You look at the most successful people in the world. I know very few. So that. They haven't had a big failure, you know, if you read closely, they're not the most financially successful people, if you read the Forbes billionaires list and you read their stories, you know they've had failed businesses and they lost everything and were left hanging, you know. , they almost died clinging to the ledge, you know what it's called, the CBS guy and Sumner fired someone, Redstone, Redstone, so there are a lot of examples of people who had great adversity.

I think that's how you deal with adversity that determines your ultimate success rather than how you deal with success that determines your ultimate success, so that's one of the things I've learned from JCPenney and otherwise, okay, so He's an investor, Bill, but you know. once you get on a board, you also know that you're a board member within Pershing Square, you're kind of a manager and a leader, so how do you describe your personal management style, your leadership style, not necessarily as an investor, but when Actually, I'm leading things, so the only leadership role I have in a public company today is chairman of the board of a company called Howard Hughes Corporation and there I'm a non-executive chairman and I work .

I have a great CEO called David Wine Rabbit who runs a company and he is outstanding and the key things I did there were: one, I recruited him, two, I gave him, we set up a deal with him. You know he was the first guy I made one of these, you know, with a seven year warranty, you can't sell it for six years. We put in his own money. In his case, he invested 15 million worth 150 million three years later, so in his case it seems to have worked. better than in the case of JC Penney, although I would say that in the case of JC Penney it also worked well for a second, since Ron lost his 50 million dollars, so he did it, the alignment was there, but that doesn't give you guarantees a result, but key, you know, setting the incentive structure so that management's problems are aligned with yours and then just being direct, you know, my approach in business in my personal life in a management role is of extreme candor and I think that if you live that way, I know you will run the risk of offending several people over time, but you will have much better relationships because you know that, first of all, if you tell people the truth, it is not typical.

You meet a lot of people out of politeness or fear of confrontation or it's just uncomfortable not to tell the truth and that applies to people on boards of directors there are many examples of super talented people sitting in the room while an institution is failing think of all the banks during the crisis where people weren't I'm willing to confront the CEO, so I'm willing to confront the CEO, but I'm completely honest with him about his successes and his failures, but I give him a you know, I don't step on his no. I run. In the company I am not involved in the day to day at all.

I trust his judgment, it's a bit of trust, but I checked the type of relationship and it has worked very well, so that is my only public leadership role. I am CEO of Pershing Square, it is much easier to run a business than a normal company because we only have 56 employees and the key to successful leadership here is hiring the right people. I have the benefit of not inheriting anyone because I hired the company. I interview every receptionist. I interview every secretary, I interview every investor and ultimately I get to choose all the people I work with and that helps leadership a lot because if you hire the key behind the leadership, if you hire super talented people, you don't need to do so much. leadership because they are going to do the right thing.

The second thing is to set up the incentives correctly, so that everyone at Pershing Square feels incentivized by how the company is performing overall, which I think is a good dynamic because it creates teamwork. I follow the same approach of extreme candor. In assessment I assess people and I care about everyone I work with like I do a family member, so we take care of each other and if someone is going through a difficult health issue or a personal issue, a financial problem or you know I have the benefit of having a lot of relationships and whether it's in the medical community or the business community or the political community, that's why we help our people and we don't tolerate insincerity.

You know, people are encouraged to admit their mistakes immediately before finding a solution. The problem is mine. When I hired my CFO during the first year working with him, he would come to me with a mistake he had made after he had figured out how to solve the problem. Now we get angry with them every time. No no. I do not do it. I want to hear about the error after you've discovered the solution. I want the error to occur from time to time, we can work together to solve the problem. So I think if you have an organization where people admit mistakes very quickly and where you're honest. them and they don't get punished for making mistakes, it's a very good dynamic and it's worked very well, we have almost no turnover even at the front desk at Pershing Square and that's what has been a good model, so I don't do that .

I think you have to lead by example in terms of the way you live, in terms of the way you behave, because that affects the way other people look, it's my other key success factor. To be a leader in the 21st century in the era where everyone has a video camera on their cell phone is to assume that everything you do is being filmed and videotaped at all times,You will know that and you will consider that the video ends up as a top video. on YouTube and then adjust your behavior accordingly - fairly, by the way, they're videotaping you.

If I'm correct, all or almost all of your investments have been in North America, but I note that you are creating a new fund that will be listed. on the London Stock Exchange with a view to raising money from global capital markets any comments on opportunities for your type of investment outside the Americas sure I think there are many opportunities for activist shareholders in markets outside the United States the Which is why we focus on the US because there is so much to do. It's close to home. I speak the language, I understand the law. We are very well known in the United States.

I know every CEO in America knows who I am, so I pick up the phone and Call, they'll call me back and we do very few things a year. You know, if we do three things a year, it will be a great year for us and we have a lot of wood to cut before we leave. As much as it's fun to come to Europe, I'd rather come here on vacation than come here for a proxy contest, and by the way, if you have a problem, JCPenney was a problem, they spent a lot of time in Texas. but Texas is much closer than what you know from Japan or Italy, etc., culturally it's not exactly like that, so you know all that said and I think the US shareholder activism has become very well known and understood and directors are very receptive to shareholder activists, whereas I think Europe is probably 10 years behind in terms of the degree of shareholder activism and how directors respond and the precedents etc., so I think It's harder here, but I think it's going to happen because I think passive investment management as a long-term strategy is not a great long-term strategy except in bull markets, so I think the demand for returns to meet with pensioner obligations will make shareholders inherently more proactive and not accept poor performance, so Bill was recently interviewed on Charlie Rose and I saw him in preparation for tonight and one of the questions Charlie Rose asked him was whether If you weren't an investor, what would you do and then?

Just to clear my throat, you said I always thought about the government, so let's say we continue with Charlie Rose's question and I can see that some of what you've done is, in a sense, reframed it almost as a private matter. regulator, you know what you did with MBIA and Herbalife, which we'll get to in a second. You know, I really see you as a private regulator, but suppose you were in government, where in government would you be and what would your mandate be? so I'm not sure I'm ready to go into government, there's a lot of disadvantages associated with that, but look, there will come a point in time, hopefully there will come a point in time, that's a better way to say it where I'll do it. be so where I don't feel frustrated with the way our government is run and feel like I need to do something about it, but I think the business community globally has gotten too far away from government and I think the consequences, I mean, I think that the typical point of view in the United States has always been well, you know, our governments are not particularly well run, but you know it's a big country that doesn't really matter and I think that the government structure is inherently dysfunctional means that our ability to make decisions even about meeting our contractual obligations to our bondholders, I mean the fact that we had a debt ceiling crisis just a couple of weeks ago is a perfect example of that implementation, you know , we imagined launching a business that would attract a hundred million new customers and the website went down on the first day and didn't work for like a month.

Okay, imagine if that happened in the private sector. Would anyone keep their job that worked for that business? And I think so. I think you know our government hasn't done it. He has been particularly effective in business and I think a big part of that is how the country works. You know, the president is the CEO of the United States and is ultimately responsible for how the website runs. It's like Jeff Bezos' website went down. Blame the CTO, blame Jeff Bezos and I think you know what I like about what I do is that we can work to make businesses more effective and at some point it would be time for someone to take my place and the question is whether I can be useful in government and I don't know what the right role would be, but it's hard to have been, you know, the benefit of where I am now is that the responsibility is mine, the question is do I want to work for someone else, so I guess that they have to be CEO or they have to find something else to do.

Okay, we're waiting for the US CEO position here, so that's coming up and they should have that position, there should be the president and there should be the guy. you run the business or the country or the COO here, so I will suggest that the next president can shake hands, can attend funerals, okay, there you go, how much you run the country. I would be remiss if we spent this time together and didn't talk. a little early Herbalife for those of you who don't know and build, I was going to explain more, this is a direct sales scheme that the day I came to see you in New York you were about to do it or that day you launched your doctorate. extensive report on all the various problems with Herbalife, then he had a substantial short position for those of you who don't know finances, so basically it's a position where you profit from the stock, you fall into a very public and unpleasant battle with Carl Icahn. and in the last few days I see you restructure your position from short positions and put options, forget about that, for those of us who don't care about the financials, and one element of this deal that was extraordinarily novel, I mean, everything was novel, it was his announcement that you would donate your profits from the business to charity.

You explain what's happening at Herbalife, and in particular, maybe focus on that last piece, which will be a bridge to some things about philanthropy. You know what we're trying to achieve and what this ad is about. donating trading profits to charity and why you did it right, as you mentioned above, about 11 years ago I published a white paper called MBI to triple-a where I questioned the company's triple-a rating. I called a. I revealed on page one of that report that he had shorted the stock and bought CDs, a kind of insurance product, betting on the company's credit deterioration and causing a bit of a stir with his newspaper.

The company didn't like the paper and when the largest guarantor of the New York state and city bonds decided they wanted to get back at me and they called Eliot Spitzer, who was then the presiding attorney general in New York, and they told me look there's this evil guy who says we don't deserve our triple a rating and you know Moody's and S&P say they were triple a who is this guy and what is an SP then I would lose some credibility after this but it was about of a company leveraged one hundred and fifty to one.

I was guaranteeing a whole CEO cube type squared, and so on, and it was insolvent based on the exposures and a good analyst who dug deep could determine that and I went public with it and was ignored. He was a persistent guy and I made a series of presentations to see if I remember some of their names, but anyway I made a series of presentations and no one was really paying attention, the stock was at 73, credit, insurance kept getting cheaper and cheaper, I mean, no one believed we were right and one day in my last presentation I said, oh, by the way, no one believes me on this, they say, well, you're short, so how can we believe you because are you going to make profits? in the fall, so I said in a conference that I said yes, I hereby pledge to donate 100% of any personal profit I make from this investment, that day was the peak for the stock and it went from 73 to $3 per action and the credit protection went from 13 basis points to 2,500, we earned one billion, six hundred or seven hundred million dollars.

I personally made a hundred and fifty million dollars and the 150 million dollars seeded was actually maybe the second or third big subsidy that Pershing created. Square Foundation, so the Oxford program is an indirect beneficiary, the failure of MBIA, the financial system actually has a positive side. I love it, so the problem with short selling is something that, although it's perfectly legal, it's something that people feel some degree of discomfort with. You know, it's almost perceived as un-American to bet against a company, and by the way, we only do it in very rare circumstances and only when we think it's good for America for the company to go away and it's good for the world, so in this case.

There was a company that was taking on more and more credit risk and had only tiny capital. B had five billion in capital and one trillion dollars in obligations that they guaranteed because they had a triple A rating, the banks and other institutions had no capital. against these exposures because the regulators say if you have a triple a rating you don't need adult capital so this was actually created in my testimony to the SEC if there really is a book called confidence game that is about my battle with the company and if you go to the trust game website, all my SEC testimony transcripts at the Attorney General, actually online, you can read them and there, and this is early 2003, I said there will be a credit crisis if you don't close . this company went down, no one paid attention anyway, so I came across a company, so I think the delivery of profits made people say, look, maybe this guy really believes what he's saying, people paid attention a little more attention and I think it helped, he probably gave the money away anyway so it's easy to give it away when you don't have it after getting a hundred and fifty million then it's really okay so the second round of consequences is a company called River Life and Herbalife is a company. that's ported lis in the nutrition business they sell protein powder shakes they sell vitamins they sell herbal tea they sell some nitric acid type things that are supposedly good for the heart these are all commodity products they are made by five six ten different manufacturers that you can buy You can buy them at your local pharmacy at your local G and see if they have them here.

You can buy them at your local supermarket. The price you paid at your supermarket is approximately one quarter to one third of the price you pay for the Herbalife product. So who in their right mind would buy this expensive stuff and Herbalife's number one product is called Formula One? You know, no one has heard of Formula One other than the race and it competes with a product called Slim Fast which I guess a lot of people in the room. You may have heard of it. The product manufactured by Unilever Slim Fast sells 100 million one hundred and fifty million a year.

Herbalife apparently sells two billion of the same product. How is it possible that Slim Fast sales have been decreasing every year and the Herbalife product is increasing? I sold what the bike calls a direct sales model and the way it works is your name is Mary Ann, so Mary Ann calls me Bill, right? I look great. I have been losing weight. I have this product. I've been wearing it and I said, well, you look fantastic and chef, would you like to try it? I'm sure a friend comes up to me, you know, and she's like, hey, until you try it, and then she's like, hey, would you like to make a little extra money and on this? economy that I wouldn't want to make a little money on the side and she convinces me to become a Herbalife distributor and tells me that if I sign up five friends and each of them signs up five friends and each of them signs up five friends very soon I'll be collecting royalties and I'll be able to retire rich or, if I'm less ambitious, I can make some extra money and I'm an unsophisticated, unemployed, low-income person, which is Herbalife's target audience, this kind of someone's speech.

I trust that it sounds attractive and the unfortunate thing is that something like 99% of people lose money, there are around 50 who earn five or ten million a year, there are around a thousand who earn a few hundred thousand a year and the another three point six million lose, you know, between three hundred dollars and three eight ten twenty thirty thousand dollars and it's actually a money transfer scheme, it's a pyramid scheme, it's like a chain letter when you get one when you're a kid , you know send a penny to the next eleven people on the mailing list and then in three weeks you will have a thousand dollars if you think about what a Ponzi scheme is it is a money transfer scheme without a product a pyramid scheme is the transfer scheme of money from the product and they do smart things like putting the Herbalife logo on soccer jerseys of famous soccer stars and they support various teams, which is very attractive to the communityHispanic, which is actually the target audience that our pyramid schemes have been very successful with now, unfortunately.

They are illegal Now here is a pyramid scheme It has a market capitalization of over seven billion It is traded on the New York Stock Exchange It has been around for 33 years How is it possible that this company could be a pyramid scheme The answer is that is it and in fact? They have used their mandate as a public company and listing on the New York Stock Exchange and the approval of a noble Nobel laureate who was paid $50 million to serve as representatives of the company and has no regulatory regime in the US .U.S. allow this pyramid scheme to grow to a huge size and the profit pyramid schemes run out of victims and inevitably collapse and I can actually prove to the audience very quickly that this is a pyramid scheme and I will do so by asking you have a question. , then Herbalife entered the UK in 1983, thirty years ago.

Pepsi has been in the UK for a longer period of time, but after 30 years, Pepsi had a good quarter in the last quarter and they increased their sales by 3% in the UK. I think Herbalife increased their sales last quarter in the UK. Let's guess the audience. Raise your hand. There is no risk of making a mistake. Yes. 1%. Alright. Someone else. 140 percent is interesting. quarter and how is it possible that I mean maybe people get fat at an incredible rate here, I mean, but without that the reason I grew very quickly is that they found the new immigrant population to chase and this it's a product that where there's a boom as people are recruited and then very quickly as the population becomes saturated it collapses right now you know the UK business grew enormously and then it collapsed and now it's starting to grow enormously.

I don't know, maybe it's the Vietnamese population. I know I was with my investors and I said, "You know, I think the women who work cleaning the office are Herbalife distributors and I met with them and people are convinced to become Herbalife distributors that you have to buy $3,000 in inventory to get started." get these royalties and what it is effectively is an inventory loading type scheme, so anyway, that's the business we did, you know, probably 18 months of work before we went public, we hired one of the best country law firms, Sullivan. & Cromwell do their own independent evaluation if I'm going to say publicly come to the pyramid scheme I would certainly like the legal backing of one of the top law firms in the country and both of us at Sullivan concluded that there was a pyramid scheme and on December 20 we made a public presentation and there is a website called facts about Herbalife that you can see In the presentation there is a lot of other data and so far so good until Carl Icahn came and bought 16% of the company, he said he was totally wrong and all eyes seem like every day I go on CNBC and say it's a great company and every time it says the stock goes up a couple dollars more and meanwhile that company is reporting very good financial results, but I'll make a prediction and I don't know if I'll come back here in a year, maybe Adam will invite you.

Back, okay, this business will close, okay, this business will collapse. I can't give you the exact date, but we will have moved in that direction within 12 months, so that's my prediction for today and the proceeds will go to the Pershing Square Foundation and maybe Peter was some other idea for another Oxford show, There you have it, which is a big transition, so Bill, you know you and Karen know if you sign the doors, Buffett is committed to your family has made a substantial commitment. giving away your money and we can talk about it in general terms, but let's make it more personal.

You were kind enough to fund these 1+1 scholars. The point of this is that you know people will study in depth and breadth and then go. Go and change the world in 25 years you will be 70 years old. I guess I hate to admit that yeah, okay, 72 to be exact, there you go, so you're still young enough to be on stage in 25 years. Have a stage full of one of Pershing Square's academic graduates, what will they have accomplished? What do you want these people you are funding to do in the world? So the interesting thing is that there is a huge influence on people that one person is fine. there are people who change the world and a good example of that, I'll give an example of someone who might go on the show one day or someone like this, so earlier we were talking about Wendy Kopp: Wendy Kopp founded something called Teach for America.

I was at the Teach for America organizational meeting in 1990, a friend invited me to go and she gathered a group of friends together to talk about the education system in America and how you know the best and the brightest haven't gone into education. teaching for a long time. Over a period of time, how I wanted to change that, how I had an idea to solve the problem and I wanted to start something called Teach America, it wasn't really Teach for America back then until they decided to form this and then I don't know. Months later, someone else had the name Professor Teach America, so they changed it to Teach for America anyway, so Wendy Kopp has created a massive organization that recruits, you know, tactics, sort of like an order of 10,000 children fresh out of university to dedicate themselves to teaching for a time.

Typically a couple of years in very tough neighborhoods and they teach math and science and they teach you something related to their college degree, they get exposed to the teaching and they significantly improve the quality of the teaching, you know, a lot of the schools in the who participate and a very high percentage, something like 65 percent of them, pursue careers, whether in teaching or school management or just in the field of education in general, so if you think about the multiplier effect of what Wendy Kopp has achieved, I think it has been something very big. for our country and now he's doing something called teach for all and he's launching Teach for America in China and other countries around the world, so I think he's a great example of someone who could scale a business like that again and it's a business Even though it's a non-profit business, it's something he had no experience in and she was lucky to have good board members and directors and work as a team with the right people, but there are a lot of people who They have amazing ideas on how to do it. change the world but you have no experience and you know that some of the people with the best ideas have the least amount of experience and you know that the idea behind you know that an MBA program is to try to give you in a short period of time an experience from the real world that you can then apply for and when it's a good example, another example could be a guy that we've backed called Andrew Yoon and Andrew Yoon started something called the one acre fund and Andrew was in Kenya, I think on a holiday , and he realized everything. these one-acre farmers who are basically women mothers who feed their family, you know, nine ten months a year based on the production of the acre of land that the government gives them and then their family goes hungry the other two or three months. of the year because the crop production is not enough to feed the family and they use very primitive farming techniques and they use very primitive seed and fertilizer technology and the result is a very inadequate harvest year after year.

What Andrew said was: what if we could teach people? better farming techniques, better irrigation techniques give them access to better seeds, more resistant to viral viruses, etc., and he created an organization called the one acre fund and now he has trained a hundred and thirty or forty thousand of these one acre farmers. and he and he actually built an organization that has a field, you know it has an organizational structure like a big company that serves these 130,000 farmers. He's grown something on the order of 50 percent composite over the past five years. One of the fastest growing companies and it's law, it's almost He's self-financing because what he does is he takes the initial production, his average production was many bushels of corn and he says, look, I'll give you better seed technology, better fertilizer, better access to markets and you give me half of the increase in production as compensation for what I give them and farmers sign this agreement so we can reinvest the profits from these more profitable farms into helping more farmers and we provide them with which is equivalent to a job, a revolving working capital loan that used to buy seeds and fertilizers and then get the capital back when you know when the harvest is ready again.

A brilliant idea and growing at a huge and fast pace. He has a shot at the Nobel Prize. I think that's another potential. Imagine what you could have absolutely achieved with your Syed degree and let me give you one more example because not all of them are going to be nonprofits and a quick thought about nonprofits. I think nonprofits are generally a worse way to approach a business problem than a for-profit, if you think about the typical nonprofit, they usually have people who were undercompensated and have no purpose. profit, so in many cases it is difficult to impose a fine.

They define success to judge the progress of the business. Boards of directors tend to be less attentive. They tend to be too big. They tend not to pay as much attention. There tend to be many other companies in the same sector that are dedicated to the same areas but there is no activity. mergers and acquisitions, so it's not a typical nonprofit it's a dysfunctional, dysfunctional business, so the way we approach things at the Pershing Square Foundation is we say, look, is there a solution for of profit for this problem? finance it and only if we can't conceive of a non-profit solution and we think the idea is good, the management is talented and they are using business principles, we support a non-profit organization, but so let's think of an example for purposes for profit and me, someone who starts a company that can accept waste, there is a guy named Dean Kaman Dean Kaman is an inventor, he came up with the Segway and he also invented a device the size of a relatively small refrigerator that can be put on any type of fuel, whether it's oil, natural gas, manure or algae, and it will convert that algae into energy, so it will produce electricity and it will produce heat, and its idea is to basically take this energy into a small mini plant. some solar panels and you combine it with Internet access and some other things that you might need in a small town, you put them on a shipment, you know, one of these containers and you just drop it off in sub-Saharan Africa and it becomes Oh, and it also has a device that treats Fallas water and converts it into fresh water so that you have energy, you have heat generation and you know solar energy and then you have access to the Internet and clean water.

Dean Kaman, you know Dean's problem. came and he's a brilliant inventor, he hasn't come up with a business plan to introduce these devices around the world and in fact this device that converts creates clean water, he made a deal with coke and coke is actually spreading These little mini water treatment schemes in Africa are just getting started as we speak and there are big red things much healthier than your typical coke drink, but I think their thesis is that we start with water and eventually we will sell them coke. -cola, then you've given us a lot of inspiration for what you all can do over the next 25 years.

I'm going to ask one more question and you should think about the questions you want to ask Bill because that's what comes next. I'm going to give preference to students first, and since we're starting a little late, we're probably going to be a few minutes late, so Bill, I'd like to welcome you to the Oxford family. You know this is not your home university. You spent a lot of time in Crimson like me, but I'd like you to think of this as your family, but this isn't your real family, so I know I welcomed you and your wife this summer.

You are a loving father. and your dad is sitting there, so what influence has your family, both your parents and your other family, your own family, had on the person you are and the work you do? Let's start with dad, because in the room, that's what my dad told me. that I should never work for anyone else because they will never pay me what I'm worth and then he tried to convince me to work for him and I worked for my dad for two years and then I went to business school. I won't be back and he was upset about it, but in the end I think so.

That was a little bit of inspiration to be an entrepreneur and I was an entrepreneur when I was a kid and I had my car waxing business and I have my ditch. researching businesses and you learn about the relative metric measurements of different businesses and just some we made plates that you can dig yourself and so on,so I had a very early business education that I think was very helpful to me and a lot of that. I thank my dad for my mom, you know, I described myself as the most persistent person in America, but actually that belongs to my mom and usually when she wants me to do something she behaves that way, but my mom when I was probably 13 years old. years she was very unhappy with the quality of rail service to our hometown I lived in a suburb of New York City and we had these old diesel locomotives from the 50's that were always late and literally had rusty holes in them and my father never arrived home in time for dinner and the trip would take, you know, a very long period of time.

My mother was very frustrated by this and joined this kind of necen, but it failed in a kind of grassroots organization to improve the rail service and then it turned into something and ended up doing a petition campaign, got Oh, 17,000 signatures, which is a lot for a petition, he went to Albany and finally ended up getting something like a 700 million dollar grant to redo the entire railroad system and convert it to some kind of modern electricity. system and my mom ended up on the board of the Met, you know the MTA, which is the Metropolitan Transportation Authority in New York City, and you know people wanted her to run for government and everything else, but she decided to stay to raise her children and be a mom, but you know, I think this is quite an inspiring thing for a child to see, so I had to do it because of the great inspiration of mom, incredibly persistent, incredibly competitive.

I'm a tennis player, but my mom is the most competitive tennis player, so you. Learn Competitiveness from Mom Entrepreneurship from Dad The other thing I would say is I'll actually tell you the most significant thing. I think I am, of course, my life. What are the most important moments? My dad won't remember this, but my dad's. car, the tire had a tire that, you know, lost its inflation and he asked me to change the tire and he was standing right next to me and our driveway was like this, it was on a slope and my dad probably, you know, go to change. the tire said dad I'm not going to change the tire with a car on a no no it's just a very slight slope it's not a problem I want you to go change the tire that's no dad it's really I think it's a very silly ideal I want you to do this right now and I'm 14 years old, my dad tells me to do something, so I put my jacket on the back, I raised the car with a jack, I started to undo the tire, but to remove it and the car gradually collapses fortunately I get out of the I walk just in time now I'm alive I didn't lose anything but it was a very significant moment in my life because even though he was my dad, you know that in the end you have to do it. he makes your own decisions and that was a very significant moment for me.

I'm in 12 and I remember when it was, but that was the moment you realized that okay, dad is fallible, okay, he can't complete, he can't completely trust him. I'll give you another one. I'm revealing all these family secrets, let's just leave it there and move on, so bill, we appreciate it, but hey, thanks in a minute, this is your chance to ask questions, you won't get as many. opportunities to bring someone of Beerus' character here and we are delighted that he is spending this time here in Oxford, so there are microphones with the people with the microphones, here we go, since you were used as a prop in the conversation even though You are not a student, although she is fine, please, of course, and there is a preference for students. but as I call this person, you can always say that I am a student of life.

I'm not sitting on how to be nice or anything. I can not hear you. My question is very quick. He asked me. Many critics say that some. Activist investors sell companies and make profits in the short term and not really in the long term. What is your response to that? First of all, I would say there are many different types of activist shareholders, but I think the ones that are successful because again we don't buy control of the companies, we buy a minority stake and if you think about what an activist does, we buy eight or we only buy 14 percent of Canadian Pacific, then you know that 86 percent of the shares are in the hands of others.

The only reason we were able to get and have the influence that we had is because the other shareholders are behind us, the other Cheryls are big institutions that aren't in it for the short term, their major index

funds

and others that aren't. We're not looking for a quick 3-month profit and they backed us because we have a track record of building things for companies that create long-term value and that's why we've made a lot of money on Canaan Pacific that we've sold. some of our stocks simply because they went from being in an 11 or 12 percent position to a 28% position due to appreciation, but we have only sold shares due to portfolio management and if you were to ask, all the changes are have produced. done to the credit rating of the company and you know it has significantly improved our credit metrics and it has significantly improved profitability it has significantly improved the companies made for the first time in its history it has agreements with all but one union, you know, contracts to long term five years employees are happy that the railroads run more efficiently your customers are happy you know these are changes that are a nerd of the company's long-term benefit if an activist investor is just going around buying a stake in a company and saying, "You know, sell yourself." I think it's a distraction and I think for most companies more value can be created by remaining public companies than by going private.

I think companies should only be privatized if they have reached the end of their strategic life, which means they have grown. to the extent that they can grow and you can't create more value as a standalone company and then it should be combined with some other business, but if you think about what private equity they do, they make changes in management and changes in the cost structure of the strategy . capital structure, all these things are available in the public markets, in fact I think it is a failure when a company is sold to private equity, it means that the company itself, the management, the board of directors and its shareholders could not figure out how create value. on their own, so I think good shareholder activism creates long-term value.

Bad shareholder activism, you know, drives short-term things that might create an increase in value in the short term but destroy long-term value. Sorry, what about the person in the center right, yes, you're wondering, given your relationship when you worked with 3G capital and Burger King, what was your initial reaction when 3G partnered with Berkshire Hathaway to buy Heinz in February this year? My initial reaction to REE was that they are going to make a lot of money just from the fact that there are 15 blue chip companies that make over 100 million or by selling them or more without looking at path three, if that sounds interesting to you, it would be a student trip, I don't even make it to Miami, but if you went to the Burger King headquarters and you got off on the eighth floor, there is no reception desk, you get off the elevator and you walk directly to the first desk, which is a desk that you could see. in a third grade classroom or just a flat desk with four legs, you could probably buy it at Kmart or something, it's the CEO and then about four steps to his left is the CFO and four steps to his right is the director marketing and literally the entire senior management team is in a completely open space there are no offices behind your desk there is a sheet of paper it has the five key things you need to achieve that year it has green, yellow or red dots depending on your relative progress this is the CEO's progress on each of the top reports across the office has their own metrics on things they need to accomplish with feedback for everyone to see.

Printers are automatically set to print on both sides. You are not allowed to print in color. They will not. allow presentations never allowed where the background is black and the letters are white because it consumes too much ink and the ink cartridge, I mean, all the executives fly economy class, they share rooms in cheap hotels, if you think about that kind of culture in comparison. to the typical big American private jet corporation and really a lack of consideration for the expenses that they're just going to find, you know, I think, if I remember correctly, the company had generated something like two billion dollars of operating income and I had something like 9 billion. dollars in sgna, my guess is that the 9 billion dollar number becomes 7 in relatively short order and the 2 billion opera revenue becomes 4 billion operating income and they bought the company with a lot of leverage even though it was a junk bond.

I think they borrowed money at 4% interest, so I think the total capital structure was something like 50% debt that was at 4% and Buffett put in this 9% perpetual preferred stock and then the equity was only about a third of the interest. total capital structure, so when you buy a business like that with as much leverage as they do and the leverage is long-term and, on average, very low cost and safe, you know very well that 9 percent is a big coupon if they can't. afford to pay it, there's no penalty for them, it just accumulates and you apply it, you know, a cost-driven restructuring of the company will double and triple the value of that capital over time, so I think they'll to make a fortune and since I am a friend of theirs, they very kindly allowed me to invest in the deal.

Well, let's see, maybe a little higher. Yes. For you, Victoria. Okay, Victoria. I have a question during our times, who do you think is the best? investor and why I think I hate being boring at this. Do you think Buffett is the better investor and the reason I think that is because you know this is a 50-something year, it's a 60-year track record of compounding at over 20 percent with a very modest amount of leverage. , you know, in the form of primarily insurance float and I just don't think there's a record that compares and I also think that what he does really creates value for the world, you know, I think George.

Soros is an incredible investor, but I believe that what he does as an investor does not create value for the world. No, I think what he does as a philanthropist I think creates a lot of value, but I think Buffett has the benefit. I mean, I think. Heinz will be a much better business when you know, as a result of Buffett's ownership, you look at what he did with Geico since he bought it. I think he has created a huge business. He has bought businesses well, but not incredibly well as he has done. be quite large, but it has made those businesses much more valuable and I think it has also created a lot of messages that have affected the way people think about executive compensation and derivatives, so I think it has made a huge contribution, so I think it's a long-term combination. you know, a long attitude, you know, and the achievements that he's had, so I think he's by far the best, okay, maybe two more questions or happy more, well, I won't run out of energy, it depends on you, so I'll probably have to pee, so someone else wants the room, yeah, something else wants the room bill, how about this young man here?

Okay, I'll have a very difficult question: what do you have? I'll try, I'll try. Um, you talked about how dealing with failure has defined you if you hadn't failed, how do you think your decision processes would have been compromised, and can there ever be long-term value in engineering failure? Well, tough question, look, I don't know. You know every day you know that in the course of your existence you make several mistakes, whether socially or in business, but the ones you really remember are the biggest ones, so the JCPenney one certainly made many of you aware of the problem. .

With our strategies we are very focused, we manage 11 or 12 billion of capital, so when we make a mistake, it will be very big. The numbers are there, we lost $500 million at JCPenney, that was 4% of our capital. It sounds a little smaller, but that's not how the press is going to present it, but it's very useful to have errors that you can notice, so I wouldn't go around dwelling on engineering errors, what I would do instead is assess them. true, I think the natural tendency to make the mistake is to try to forget it as quickly as possible when what you should do is the opposite, you should study it and you know business schools, you know that the case method is largely about that .

In these cases you know what you should do when faced with a failure or an error and that is why it is the best type of errors, they are those that you can practice without knowing it theoretically, but the ones that you really learn are the ones in which you feel that you know. something in your stomach or your wallets or some combination of the two looks. I think thatone of the biggest mistakes our generation is making when raising children. I don't know how many people in the audience are at that stage, but you know? I think the ability to deal with stress, what people call determination, for example, is a little lacking in our generation of children because I think it's a tendency for parents to keep saving our children when they were about to fall. .

The way playgrounds are designed you know where, if you fall, it's padded, you know, but it's an extreme example. I mean, you don't want daggers lying on the ground, yes, but I think we're buffering too much. our children and we should allow them. You know my wife is a landscape architect and you know that some of them kids love the players in a playground called the adventure park in Central Park that would never be built today because you know the plaintiffs in the litigation. You'll probably have fun with it, but you know kids love it because it's actually a challenge, so I guess I don't know about engineering mistakes, but I think by not putting away your kit, you know they went to a class. . this year and they break up with them, they don't have friends and they hate their teachers, well, you could transfer them to another school or you could do that, but you know, make them put up with it or they're in the you know. volleyball team and the coach never plays against them, you know, you go to the school principal and ask them to fire the coach or you say, hey, you know life can be like that and you know you have to deal with it, so I think yeah I think Kalia we need a little more Darwinism okay then one last question Darwin was right by the way the woman in red in the back well I can tell us she is a risk taker , this is the only person. in red to entire audience Hello, I want to ask you as a

hedge

fund manager, how is h1 defined in the simplest term and what is your opinion on insider trading?

Okay, so the hedge fund is actually an incentive structure. Therefore, a hedge fund manager, compared to an institutional manager, is compensated largely based on profits, so we get 20% of the profits from capital management. Now what a hedge fund manager does is very, very broad: it ranges from being an activist shareholder to being a commodity. trader to be a macro trader to be a short seller, so it's really a compensation structure rather than an asset class and people make that mistake. My thoughts on insider trading, you know, I think it's very bad for the hedge fund industry.

I have a story every day in the newspaper about some hedge fund manager who is accused of insider trading or having committed insider trading. I think that's somewhat unfortunate and there are some interesting debates about whether there should be something other people have argued that insider trading should be legal, in fact that would increase the chances that the price of a security accurately reflects its value if participants allowed all internal information to enter the market. I think the problem with those types of arguments is that if people believe that the markets are an unfair or rigged game, then the largest source of capital markets, which is the retail investor, will basically exit the market, so I think that the rules are generally correct.

The problem I have with a lot of regulation, at least in the way that In the United States there are many people accused of a crime where that accusation is made very publicly, it is leaked by a regulator, etc., and That puts enormous pressure on the individual to settle and, you know, it also damages their reputation. in their businesses and others, and the government has enormous power over any individual and I think that dynamic is a little dangerous and I think that all investigations should be private and if, ultimately, it is determined that someone has committed a crime, then well, it should be in the newspaper, but I think this notion of using the press and again, I don't know Steve Cohen well at SEC Capital, but if you follow the press about SEC capitalUltimately, with respect to one's own Steve Cohen, there was never any evidence presented, at least publicly, that he was guilty of anything, but there was enormous pressure on him, you know, to settle and it destroyed his business and we'll never know.

It takes years to find out if someone is guilty or not, so I think that whole dynamic is very unfortunate. Bill thank you very much from preferred convertible to parenting from investing to philanthropy to what the government should do. Thank you for giving us a window into your life. and your thought and thank you for making it possible for someone here and some of us to have the ability to change the world by being an academic on behalf of Pershing Square. Thank you very much and I can tell you as a teacher to see his students succeed beyond measure.

All your wildest expectations are probably the greatest achievement an educator can have. Everything I know, I learned from Peter. Excellent.