Transcript:
Caroline Woods
Markets are near all time highs. And Bill Ackman is launching a new fund right into it. So why now? Joining me is Bill Ackman CEO of Pershing Square. Bill congratulations.
Bill Ackman
Thank you so much.
Caroline Woods
Big day for you. You actually have two funds. We have Pershing Square Inc. and then Pershing Square USA. Your closed end fund. That’s us.
Bill Ackman
Actually, if I can. Correct. Oh. Go ahead. So, PS, USA is a closed end investment company or fund purchase. Where Inc is a company. An operating company? Not not. Yes. It’s like like a Blackstone or a KKR or an Apollo is an alternative asset management company that collects fees from the businesses that we funds, that we manage.
Caroline Woods
So PS is the management company, the parent company PS us is your PSA the fund? Thank you for clarifying. You’ve said you want to build up modern day Berkshire Hathaway. Why now?
Bill Ackman
So, the entity that we’re we’re building a modern day Berkshire Hathaway is a company called Howard Hughes. That’s one of three permanent capital vehicles that comprise the underlying assets of Pershing Square, Inc.. Why today? Because we’ve never had a US listed. We’re. You know, I’m an American. Our offices are here. We invest in U.S. companies.
Bill Ackman
But today, if you’re a US person, or yesterday, there was no way for you to invest with us. Because the rules around closed and funds limited our ability to launch one. It’s one of those rules change, beginning a few years ago. And that began a process for us to someday have an entity where someone with $50 can buy a share of our stock.
Bill Ackman
And that was why. And as soon as we could get through the process, we got the IPO done. And in terms of why now, it’s actually a great moment to put capital to work. A lot of the best businesses in the world, we think are trading at very attractive prices in the backdrop of a war and uncertainty and volatility.
Bill Ackman
With some very strong economic,
Caroline Woods
Undercurrents and with stocks near all time highs. And I do have to point out that Berkshire has been sitting on this massive pile of cash because they haven’t found the right opportunity or the right value. So what gives you the confidence that now is the time to deploy capital?
Bill Ackman
So this company, Pershing Square USA, is going to own basically the same portfolio as the other Pershing Square core funds that pay much higher fees and incentive fees. So it will be a very low cost version of Pershing Square. And we believe our companies have a you know, we’re going to offer a very attractive compound return from here.
Bill Ackman
So we think actually there are many companies today. The market is very disparate. There’s some companies that are very highly valued. There’s some stocks that are very cheap and there’s some somewhere in the middle. And we are very concentrated investor. So it’s about the dozen or more dozen to 15 companies that we own as opposed to the market generally.
Bill Ackman
This is not an index fund. It’s a very concentrated portfolio. We get very deeply involved in our companies work to help make them, you know, be more successful. And we’re going to perform very differently from the market. If you look over a long period of time, we’ve generated, you know, 19% compound return, excuse me, for 22 years and it’s been about 25% for the last eight, but it’s not been a straight line up.
Bill Ackman
You know, it’s volatility. So, investing with us is, you know, we’re looking for people who want to be investor for the long term, we think will do very well over the long term. But I can’t tell you how we’re going to do over the next 90 days.
Caroline Woods
So give us some examples of names you want to own right now for us.
Bill Ackman
So this is going to be a replica of our existing portfolio. We also have some investments we have not yet publicly disclosed. So if you look up the other Pershing Square, it’s a lot of disclosure about companies we’re invested in, but advised today not to talk about specific companies. But, it will be our core, holdings.
Caroline Woods
Okay. So some of the core holdings include Hilton, universal Music, Chipotle, alphabet. Oh. So. Okay.
Bill Ackman
It’s gone. Okay, so it’s actually a pretty refreshed portfolio.
Caroline Woods
Okay. Okay. So in terms of the risk that investors need to think about on day one, what is that?
Bill Ackman
Day one you’re investing in a pile of cash. We’re going to deploy this is Pershing Square, USA. We’re going to deploy that capital in very high quality, what we call super durable growth companies. The risk is, you know, are we going to invest in the right companies and, we’re going to be successful in helping them succeed?
Bill Ackman
You know, I would look at our track record over, you know, a couple of decades to form a conclusion about that. Pershing square, Inc. is a asset management business. It has very different risks than a typical asset management business, because 98% of the capital we manage is in these permanent capital vehicles. The typical asset management from the risk is that the investors take their money.
Bill Ackman
That’s not a risk in our business because the money stays in these entities because they’re corporations. Investors, if they want to add more they buy stock. If they want to exit they sell stock but the capital stays. So the risk for the business is what kind of returns are we going to generate over the next five, ten, 15, 20 years?
Bill Ackman
You know, I think we’ve had an incredible run over the last eight years. We’re probably the best performing, certainly the best performing as a close and by far the best performing average. Closed end funds generated a 7% return per annum of the last eight years. We’ve generated a 25% return per annum over the same period.
Caroline Woods
But why not just invest in the S&P 500? Because that’s done pretty well over the past one year. Or why not get a hold of your holdings when you deploy this cash and just buy the individual companies?
Bill Ackman
Sure. So, how do you invest in the S&P? In January of 2004, we launched, you invested $10,000 back in 22 years ago. At the end of last year, you would have had $90,000. That sounds pretty good. But had you invested in Pershing Square, USA, the, in our strategy, the fee structure across our strategy, you would have had, you know, $460,000.
Bill Ackman
Right. So we’ve compound.
Caroline Woods
Minus a 2% fee for.
Bill Ackman
No, no, that’s kind of all that of all fee. So our net returns have vastly outperformed the S&P over a very long period time. So that’s why that’s the difference. Now can you buy stocks after we disclose them? Of course you can. But you can’t buy them at the price we acquired them in. And we did it analysis years ago.
Bill Ackman
And the average increase in price, over the last, you know, 20 something years that you would have had to pay versus the price we acquired the stake had you paying a big premium, because of the market response generally when we announced a stake in a company and that day the stock goes up a lot, and we’re able to accumulate it in the months prior without having to make a disclosure.
Bill Ackman
So when you get our our cost as opposed to what you have to pay when a stock starts trading. And second, we also hedge risk. So one of the things that we’re best known for buying big stakes and well-known public companies and helping solve problems like Chipotle is a good example. Or event buying Hilton when the market, I would say underappreciated the business.
Bill Ackman
But the other thing we do is we look for what we call black swan risks. Beginning in 2005, we started seeing triple A-rated companies guaranteeing subprime obligations. We said, this is not going to end well. We bought an instrument called a credit default swap, of course.
Caroline Woods
And was well known for that.
Bill Ackman
Way for us to bet against that risk. And when the markets blew up, we made a fortune, relatively speaking. We took that capital, we bought stocks. And then a decade later, in February 2020, our concern was Covid. And we said, look, this is going to be a pandemic. It’s going to have significant economic effects. We bought a very like a hedge with about 74 billion of this, CDs index hedge.
Bill Ackman
We made $2.6 billion in in ten days. And then we took the money, we bought stocks. And then we did something similar, nine months later when we said, look, we’re going to have massive inflation. We bought instrument, call it interest rates option that enable us to hedge made 2.6 billion on on interest rates on options. This will be the first investment fund a retail investor can invest with in history that has that capability and that hedging capability.
Bill Ackman
But we get the.
Caroline Woods
Benefits on day one, though, because it’s a giant pile of cash.
Bill Ackman
The answer well, why did people why do we raise 5 billion in the IPO? Why do people sign up in advance to raise. And the answer is not only do they get a pile of cash in an investment vehicle with a good long term, strategy, but they also received an interest in our business for free. And Pershing Square, Inc. is an amazing business, and I expect it to compound in value at a very nice rate over a long period of time.
Bill Ackman
But, I think there’s really never been a bad time to invest in Pershing Square. As long as you have a long term horizon.
Caroline Woods
I want to get your market view because you’re obviously deploying capital and putting money to work. Do you think the current market rally that we’ve been seeing is justified, or do you think that stocks are due for a reality check?
Bill Ackman
I think it’s justify.
Caroline Woods
Why.
Bill Ackman
I think the economy is going to be very strong. And I think the kind of second half of the year in particular. And part of that relates to, just that kind of policy. Right. We have a tax bill that’s going to be very pro. It is very pro investment. We have a president that’s made deals with lots of different countries, using tariffs and other levers to get them to commit to open factories.
Bill Ackman
Here. We have a massive AI infrastructure buildout. We have a massive energy infrastructure, build up. All of these things are pro economy. And then I itself is this very powerful productivity force. Every company today is trying to figure out how to use AI to enhance their business. And so there’s a very large, you know, enormous, talent.
Bill Ackman
And I and, you know, when you look at the S&P 500 and you say, oh, it looks expensive historically, you have to look at the composition of the companies. You know, today we have some of the biggest companies in the world growing at the fastest rate. Usually in the old days, only small companies could grow as fast as some of the biggest companies in the world today.
Bill Ackman
And that’s a very significant difference in terms of the composition of the index. So I think the I think index funds are great, and I think they will likely continue to do a good job. But we’re we pick the best of the S&P 500. We only ten companies 12, sometimes 15. And even among those we concentrate the top three, the top four can be half the portfolio.
Bill Ackman
So we’re doing a lot of research on the companies we invest in. We’re investing in businesses and helping make them more successful. So that’s why we’ve been able to beat the market over a long time.
Caroline Woods
What’s the position or theme that you don’t think the market is fully appreciating right now?
Bill Ackman
I’ve been advised today not to talk about individual positions, but I.
Caroline Woods
Think.
Bill Ackman
I would say I would say people are underestimating how strong the economy could be this year.
Caroline Woods
Which would benefit.
Bill Ackman
Every company, every company.
Caroline Woods
What could break this market?
Bill Ackman
You know, I think we’re beyond the place for an adverse outcome in Iran. I think getting that resolved, is a that’s really the one remaining overhang on the market. I think we resolved the war in Iran. Energy prices start to come down. The fed can get more constructive on lowering interest rates. And I think, you know, rates are really too high.
Bill Ackman
I understand the fed not wanting to, lower rates at this moment because with, you know, energy the problem with energy, higher energy prices is it sort of bleeds out into other parts of the economy. You know, fertilizer costs affect the cost of food. Yeah. So I think that’s kind of a one issue that needs to be resolved to have a real, take a levels.
Caroline Woods
In oil, be at in the market can continue to move higher. What’s the highest level it can be?
Bill Ackman
The answer is it’s less about what the highest level is and how long it stays there. Okay. The market and the economy because of short spikes. But, you know, oil in the mid $100 range for an extended period of time would not be good. That’s probably the biggest risk for the economy. Okay.
Caroline Woods
Just finally, your your best advice for all of our audience retail investors who are listening in. Maybe they missed out on the April rally, maybe they are fully invested. But thinking about where they want to put their cash to work.
Bill Ackman
My best advice is, one start investing early because compounding is this incredible force. But you want to compound for as many years as possible. So, start investing early. Take care of your health. Because if you live a long time, that’s also another way to extend the Warren Buffett. One of the reasons why has an amazing record is he’s 95 years old, still just recently retired.
Caroline Woods
But still going to the office.
Bill Ackman
So many still still going to the office. And then also taking a longer term view. The market is moving more and more short term. A lot of professional investors, famous ones like Citadel, millennium, are very short term oriented. Jane Street, you know, these are and these are profitable strategies. But I think the benefit of long time individual investor has is the ability to take a long term view.
Bill Ackman
You know, if you’re 25 years old, you’re 30 years old, you’re putting away money that you know, for if you create it, have some capital that you don’t need to touch for the next three years, five years, ten years. And that’s how you can have a real competitive edge investing. Okay. Take a look at Pershing Square USA and Pershing Square Inc, Suez.
Caroline Woods
And yes, thank you for clarifying that. Before we let you go, we like to play a rapid fire game of this or that on the street. Okay. Quick questions, quick answers. Ready? Yes. I’ll delete the, specific company questions that I had for you because I don’t need to get rejected again next 12 months. Bullish or bearish by an hour.
Caroline Woods
Wait for a pullback.
Bill Ackman
Right now.
Caroline Woods
Markets fairly valued or stretched. Fairly recession risk. Real or overblown.
Bill Ackman
Overblown.
Caroline Woods
Consumer resilient or tapped out. Resilient rates higher for longer or cuts ahead comes ahead. I bubble or boom boom. Big tech earnings make or break. Make concentrated conviction or diversified safety.
Bill Ackman
Concentrated conviction.
Caroline Woods
Force one for you. Quality or value? Quality. More upside from here U.S. or international stocks.
Bill Ackman
I’m a huge believer in the American experiment.
Caroline Woods
Gold or oil?
Caroline Woods
Pass gold or Bitcoin?
Bill Ackman
One. I don’t have a view. Okay.
Caroline Woods
How much cash does you have in your portfolio?
Bill Ackman
You should have enough that you don’t feel stressed when the stock market goes down.
Caroline Woods
One word to describe how you’re feeling about the market for the rest of 2026 I’m excited. Bill Ackman, thank you so much. I appreciate you playing this or that and for your perspective. And congratulations again. Thank you. Appreciate it. That is Bill Ackman CEO of Pershing Square. If you enjoyed this interview check out our street talk with Jim Cramer.
Caroline Woods
He breaks down exactly where he’d put money to work right now.