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finance fun fact

@financefunfacts

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Why it worked

The video uses a narrative structure to explain a complex financial situation involving a prominent investor and a well-known university. The use of visuals, clear explanations of financial terms, and a compelling story about a potential financial loss for Ackman likely contributed to its engagement.

Summary

This video explains a dispute between activist investor Bill Ackman and Harvard University regarding a donation of Coupang stock. Ackman structured the deal with options for both parties, but Harvard sold the stock before the IPO, preventing Ackman from exercising his rights and leading to a disagreement over the proceeds.

Structure

1Introduction of Bill Ackman's dispute with Harvard over a stock donation.
2Explanation of the deal structure involving Coupang stock, put options for Harvard, and call options for Ackman.
3The IPO of Coupang and the resulting value of Ackman's donated shares.
4Harvard's decision to sell the shares before the IPO, and Ackman's argument against it.
5Ackman's claim that Harvard's actions were economically unsound and his belief that he still has rights to the excess proceeds.

Product placement

The video features images and mentions of Bill Ackman, Harvard University, Coupang (an e-commerce company), and financial concepts like stock options and endowments. It also shows a graphic of university endowments and a definition of portfolio management.

On-screen text

finance fun fact activist investor Bill Ackman is currently beefing with Harvard which is his alma mater so the story goes out in 2017 Bill Ackman gave Harvard $10 million of a private startup that was venture backed called Coupang which was doing ecommerce in South Korea but being the financier that he is Ackman structured the deal in a pretty interesting way so if the donation of Coupang stock went below $10 million Ackman would personally make up the difference but if Coupang stock went public and its value exceeded $15 million then Ackman would have the right to tell Harvard how he wanted those excess profits to be spent in other words Harvard had a put option at a strike price of $10 million and Ackman had a call option at a strike price of $15 million you fast forward to 2021 $CPNG indeed goes public and the value of the shares that Ackman donated is worth $85 million so Ackman must have been feeling pretty good but then he discovered that Harvard had actually sold their Coupang shares back in March 2020 Ackman argues that this decision was economically unsound because Coupang had made significant progress in their business between 2017 and 2020 and what's more because Harvard did not tell Ackman that they sold Ackman didn't have the chance to buy back the stock for his own portfolio so Ackman says because Harvard has a massive endowment they didn't need the $10 million of liquidity therefore it was nonsensical to actually dump the shares in March of 2020 but from Harvard's point of view these illiquid shares in this random startup doesn't really fit their endowment's investing and portfolio management strategy so I guess they were just doing some spring cleaning and to this day Ackman believes that he still has the right to allocate the $70 million of excess proceeds to the Harvard related initiative of my choice

Original caption

Bill Ackman is feuding with Harvard: how a $10 million donation of Coupang’s stock led between a billionaire investor and the world’s largest university endowment. Billionaire activist investor Bill Ackman is currently beefing with his alma mater, Harvard, over a donation that he gave. The story goes that in 2017, Ackmann wanted Harvard to bring the economist Raj Chetty onto its faculty, but Ackman was going through a divorce at the time and “had no liquidity” But he did have stock in a private, venture-backed Korean e-commerce company called Coupang Inc. Instead of cash, Ackman pledged $10 million worth of Coupang Inc.’s private stock. But being the financier he is, Ackman structured the donation in an interesting way: - if his donation of Coupang stock fell below $10 million, Ackman would make up the difference - however, if Coupang went public and the value of Ackman’s $10 million donation exceeded $15 million, Ackman would be able to tell Harvard how he wanted the college to use the excess profits In other words, Harvard had a put option at a strike of $10 million & Ackman had a call option at a strike of $15 million. Fast forward to 2021, Coupang went public at a massive valuation, and Ackman's gift ballooned to a staggering $85 million. But then Ackman discovered that in March 2020, Harvard had quietly sold the stock back to the company for $10 million. Ackman argued this decision was economically unsound, as Coupang had made significant progress, and Harvard missed out on potential gains of $75 million. What's more, because Harvard failed to inform Ackman of the stock sale, Ackman was denied the opportunity to buy back the private shares, which he says he would’ve happily done. Ackman argues that Harvard, with its immense endowment, did not urgently need $10 million in liquidity, making the sale nonsensical. But from Harvard’s POV, these illiquid shares in a random startup didn’t fit into their endowments portfolio, so Harvard was just trying to do some spring cleaning. And to this day, Ackman believes that he still has the “right to allocate the $70m of excess proceeds to the Harvard-related initiative of my choice.” $CPNG #AckmanVsHarvard #CoupangSaga #HarvardInvesting #FinancialDrama #InvestmentAgreements #PhilanthropyGoneAwry #BillAckman #CoupangIPO #HarvardEndowment #FinanceStory #InvestmentStrategies #StockSaleDilemma #FOMO #fyp #fypage