THEY had a glittering client list, dazzling reputations and smarts galore, but as 2002 drew to a close, William A. Ackman and David P. Berkowitz, hedge fund managers at Gotham Partners, were desperate. They had received a mountain of requests from investors asking for their money back and had suffered a devastating setback in one of their biggest investments. The men, who just a few years earlier had been at the top of the hedge fund world, were facing a run on the bank.
But Gotham had little in the way of liquid assets. What had begun in 1993 as a hedge fund specializing in undervalued stocks had morphed into a portfolio of private companies and thinly traded public ones, all exceedingly hard to sell. As 2003 dawned, Mr. Ackman and Mr. Berkowitz delivered the bad news to investors: their portfolios were being wound down and the assets would have to be sold at possibly depressed prices.
It is all a startling comedown for Mr. Ackman