Bill Ackman: Dealing with Haters, My Largest Trade Ever, and Sounding the Alarm for the Government
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Legendary activist investor, Bill Ackman shares new details on the biggest trade of all time, the lessons he learned from Warren Buffett and Charlie Munger, how going through a divorce affected him, coming back from the brink of failure, and for the first time details on his sleep, exercise, and nutrition habits
0:00 Start 02:33 Lessons from parents 04:46 Driven by independence 05:09 Overcoming failure 06:11 Hard earned lessons learned 07:20 Small improvements; Grounding yourself in the moment 07:51 The most important thing 08:35 Admiring Elon Musk 08:55 What Success Means? 09:19 Overcoming setbacks 11:49 On divorce 12:53 His sleep, exercise, and nutrition habits 15:40 What he watches on Netflix 16:03 What he reads 18:02 How he sources investment ideas 27:27 Index Funds and ETFs 33:04 Heroes 41:52 Herbalife in detail 44:28 Dealing with Haters 46:46 The biggest trade in history (26m to 2.6b in weeks) 56:00 Credit Default Swaps 01:00:16 Economic Implications of COVID 01:08:57 Economic bailouts 01:12:00 Are Malls Dead? 01:14:33 Predictions After COVID 01:16:51 Berkshire Hathaway 01:22:13 Lessons from Warren Buffett and Charlie Munger 01:26:16 The future of Pershing Square 01:27:29 How the SEC should operate
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Bill Ackman argues that success is fundamentally determined by how one deals with failure and persistence rather than avoiding hardship, and that concentrated, long-term investing in high-quality predictable businesses with wide price-to-value gaps outperforms short-term market-focused approaches.
- Nearly every successful person has dealt with significant hardship; success is a function of how well you handle failure, not whether you avoid it
- Long-duration capital structures enable time arbitrage—the ability to ignore quarterly pressures and focus on intrinsic value rather than marginal price movements
- Simple, predictable, free-cash-flow-generative businesses with durable competitive moats are identifiable through deep research and often mispriced due to short-term market noise
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John Rawls's veil of ignorance—the principle that a just world should be organized from the perspective of not knowing where one will end up in the genetic or geographic lottery—provides a compelling framework for thinking about why the privileged should give back.
“I read John Rawls theory of justice and he talked about you know how do you how should the world be organized well his argument is you should organize the world not from your perspective but from the perspective of not knowing where you end up in the genetic lottery and in the geographic lottery you know where are you born in New York City - you know well-educated parents and a upper-middle class home or are you born in sub-saharan Africa”
When you find yourself in a hole (whether investment or personal), the key is to make small progress every day; compounded progress will eventually dig you out, rather than focusing on the distant peak that seems unreachable.
“my business plan was just to make a little progress every day and if you make a little progress every day eventually that compounded progress will dig you out of the hole and what is difficult is you find yourself in whole whether it's an investment whole or in your personal life or otherwise it seems incredibly daunting to get back to you know if you will where you were and you're looking up at this peak where you were before and it's just you're never gonna get there but if you don't focus on the peak and just focus on you know one step at a time you know making progress eventually you know as the week's go by just make a series of smart thoughtful decisions”
Because Pershing Square manages a highly concentrated portfolio, they do not need to make investment decisions under time pressure and can go very deep on companies; they add only one or two new ideas per year, which means they can spend more time on each idea than most investors.
“because we manage a very concentrated portfolio we have the benefit of going very very deep on something and we don't need to make a decision there's no time pressure generally to make a decision so the benefits of concentration the benefits of being a long-term owner of companies if there isn't we might add one or two new ideas a year which means we can have we have the luxury if you will of doing more work than many many other investors”
The most important criterion for Pershing's investments is that the business quality is extremely high, defined as a simple, predictable, free-cash-flow-generative business with high degree of confidence.
“it starts with the framework of what we're looking for so the most important thing for us is that the business quality is extremely high and by business quality I mean we with number one we want it to be both high-quality business and one that we can predict with a very high degree of confidence so it's it's got to be what we call a simple predictable free cash flow generative business”
Shareholder pressure to 'optimize' balance sheets is misaligned with the actual interests of the board, management, and employees; this creates over-leveraging that makes companies fragile to external shocks.
“because shareholders are diversified they generally put pressure on companies to quote-unquote optimize their balance sheets but optimization is generally designed for the short term shareholder who has a diversified portfolio of other such companies it's not designed for the portfolio of ie you know the board and this management that you know oversee that company for the benefit of you know the employees and the other stakeholders and I think it does lead to an over leveraging of corporate America”
Berkshire Hathaway is primarily an insurance company; the core business is the insurance float, which has been compounded at ~8% annually and has a negative cost (insurance profit + float earnings).
“so bursar is really principally insurance company but half of the quality trinsic value of the business is an insurance company that was built beginning with a company called national indemnity many many years ago...and he structured it in a way both legislatively you know being a omaha-based insurer where he has the flux and and enlighted the the diversified nature of the overall company that unlike many insurance companies that have to keep their assets and something very close to risk-free or in a very highly rated corporate bonds he deploys and the flow from the insurance business and yours allowed to invest in equities and that's an you know generally an enormous advantage but in this interest rate environment and even greater advantage so you have the obviously the most advantaged insurance company in the world that has grown its insurance float over time at a nice you know higher single-digit I think something like eight percent compounded rate over time and the cost of that insurance float has been has been negative meaning the most insurance companies lose money on insurance and make money and flowed in this interest rate environment they you know they lose money on insurance and they can't hurt any money on on their investing the Buffett is really making money on both sides”
Warren Buffett's advice to Harvard Business School students was to identify the qualities you most admire in your classmates and decide to adopt them; character traits like hard work, discipline, honesty, and fair-mindedness are things you can decide to have tomorrow.
“if you want to be successful all you need to do is look around the room and think about the classmate or classmates you most admire and what qualities they have and just decide to adopt those qualities and if you do that your chances of being successful go up enormously and his basic point was you know if you want to play the violin you know it and you're not yo-yo ma and you haven't practice your entire life it's gonna be hard to pick up the violin tomorrow or cello tomorrow and India virtuoso but character and the qualities that enable you to be successful in business you know hard work discipline returning phone calls promptly after you receive them showing up at meetings on time being you know honest and straightforward fair-mindedness these are all things you can have to if you don't already have them you can have them tomorrow by just deciding that you're gonna adopt these characteristics”
The mark-to-model valuations in venture capital are incentivized by the desire of early-stage fund managers to show progress to their investors, creating perverse incentives where later-round investors use funky securities with preferential rights to avoid explicitly downmarking earlier rounds.
“the problem with many venture funds is because of the life expectancy of many companies you won't know whether a venture capital firm does well for a decade and venture capital funds particularly startup venture funds tend to be small and the founder really can't make a living until you know their first fund starts to generate some realization events and that can be years out and so the incentive on the part of many of these sort of earlier stage funds is to have markups in the portfolio because it's a way of showing to your investors that you're making business progress and I think it does encourage you know certain kinds of behavior that's not ideal and a lot of this dynamic between the desire for the early venture fund investors to you know show a markup to their underlying investors and the desire for a new investor to come in you know at the lowest possible valuation and the way those issues are generally solved by creating these sort of funky securities that give the later investors you know preferential rights over the earlier investors and I think a lot of times those features are not accurately considered and valuing different around a versus around C or D”
As index funds gain control of corporate America, their voting power can be a deciding factor in governance contests; however, index funds face pressure from shareholders to oversee the businesses they own despite historically being seen as passive vehicles without governance focus.
“the impact on investors who care about governance in particular sort of activist investors is you know over time as you know index funds effectively come to control corporate America you know their vote can be the deciding factor you know in a contest and so that's one way that index funds play a major role the other side of that is index funds are also because of their growing influence under a fair amount of pressure from their shareholders to oversee the businesses that they own people thought about the index fund investment business as a business almost without governance where governance was not a focus at all and then they're increasing ownership of corporate America global you know global securities puts more pressure on them to be thoughtful”
Ackman did not sell all his positions and buy back on dips because: (1) Pershing has board seats and management involvement, so abandoning companies in a crisis would be unsupportive; (2) they owned illiquid positions that are difficult to rebuild quickly; (3) they would incur large tax liabilities; (4) the timing risk of missing the recovery is high.
“we are a long tour investor we get to know our companies and their management teams well we often play a role and putting the CEO in the seat so in Tripoli we put four directors on the board reform eight directors when we joined the company and we helped to recruit Brian Nichol to become CEO of the business and we've been a supportive shareholder of the company so we still have a director or representative of the firm that's sits on that board so one it's not a very supportive thing in the midst of a crisis to if you will abandon companies that you've supported and helped build and that's really true for many of the companies we own so the one I don't love doing that the second thing is you know our view was if you looked at what was going on in China there is a straightforward solution to how to deal with you know pandemic...we could sell everything and then you know wait for the markets to go down buy everything back there's a lot of frictional costs associated with that we you know what if the stock market doesn't decline as much as we think it might and what if it declines very briefly and we don't we're not we don't have an opportunity to rebuild stakes and these great businesses we've owned we incur a huge amount of tax liabilities because we have you know big embedded gains and the companies that we own so there are a number of reasons why we just didn't like the idea of of selling”
The index fund business is a commodity business: the only way to compete (e.g., S&P 500 index funds) is by lowering fees, which have fallen to a few basis points with some funds now charging zero fees; this commoditization makes it hard to scale governance resources.
“the problem with the index fund business is it's really a commodity business you know if you run an SP 500 index fund the only way that you can compete with other SP 500 index funds is by lowering your pricing and you know the pricing is now in the few basis points in fact there are index funds today that charge no fees and it's hard for them to scale at scale up to have the government's resources necessary to make thoughtful decisions about about running businesses”
The negative side of short selling is when short sellers attempt to cause harm to a company (beyond identifying overvaluation) in order to profit from their short; this crosses a line and is where short selling becomes problematic.
“whereas a negative is the problem with being a short seller if you all you do is short stocks you want your companies to fail no matter what and you know some short sellers will take steps to actually cause harm to a business as a goal you know in order to make their short unsuccessful and so that's where it crosses the line”
The value of a financial asset is the present value of the cash that can be taken out of it over its life; in a low interest rate environment, you need to be able to predict cash flows for many years to determine what the business is worth, which is impossible for most companies because complexity means you cannot know cash flows even three years out.
“the reason for that methodology is you know the the value of a financial asset is the present value of the cash that you can take out of it over its life and particularly in a low interest rate environment you know you need to be able to predict the cash flows for many many years in order to figure out you know approximately what the business is worth and for many companies we have no idea because the complexity of the business means we don't know what the cash flows will be three years out let alone you know years four through fifty which which matter in terms of determining what the business is worth”
The government should not be afraid to allow over-leveraged companies to file for prepackaged reorganization, where creditors become equity holders; this is how the bankruptcy process is supposed to work.
“we shouldn't be afraid to let companies that are over levered pre-crisis you know file for a prepackaged reorganization where the creditors end up owning the equity that that's how the process is supposed to work”
Charlie Munger famously said 'capitalism without failure is religion without hell,' emphasizing the need for consequences to exist in market systems.
“I think it was Munger Charlie Munger who said capitalism without failure is religion without hell she's better with words or not but it's”
Malls are challenged because tenants have not innovated as quickly as markets have changed; legacy department stores (100+ years old) have not sufficiently innovated to attract customers and must be replaced with interesting, engaging tenants.
“the problem is that the tenants have not innovated as quickly as the markets have changed and the result is you have old-line department stores that have been around for 100 years that haven't sufficiently innovated to attract customers”
Success is not a straight line upward; almost every successful person has had to deal with some degree of hardship, whether personal, health-related, or business-related, and how successful you are is really a function of how you deal with failure and whether you persist.
“success is not a straight line up and you know if you read the stories of successful people almost every successful person has had to deal with you know some degree of hardship...I've always had the view that how successful you are is really a function of how you deal with failure and if you deal with failure well and you persist you know you have a high probability of being successful”
Good friends, a loving relationship, a supportive family, and staying healthy (through exercise, good nutrition, and sleep) are crucial for dealing with stress and recovering from setbacks.
“having good friends being in a loving relationship having a supportive family and staying healthy you know huge believer in exercise good nutrition sleep as a way to deal with stress”
Short selling is an essential and generally positive function for markets because short sellers identify fraudulent companies; regulators and journalists find fraud rarely—it is usually short sellers who identify fraud because they have a huge economic incentive to find bad companies.
“I think short selling is a essential and generally positive function for markets I give a lot of credit to the folks of muddy waters with an earth a meaningful number of fraudulent companies and have yet to find an example of a regulator a finding a fraudulent company it's either a journalist often being fed by a short seller or a short seller that has been is you know the one to identify fraud because they have a huge economic incentive to define bad companies or certainly fraudulent businesses so I think that function is a great function for the capital markets and I think if you know if I were running the SEC I would make sure that my enforcement division was talking closely with the best short sellers hearing their favorite ideas and that would be the best way for the SEC to uncover fraud so I think that is a very effective and good thing”
Ackman believes sovereign debt accumulation is a permanent negative that will be a burden for a long time, but this does not prevent near-term recovery; it is a longer-term drag on economic growth.
“what's permanent is we're adding a lot of debt to you know sovereigns governments and that's a burden that will exist for a long time so that's a that's a negative and that that will hold back you know somewhat the global economy”
Work-from-home has psychological costs: loss of separation between work and home, inability to fully disconnect, constant interruption from family; psychological benefits of going to an office (focus, then break) are diminished.
“because you know here I'm talking to you from the den you know I'm hearing you know buy her my wife and baby in the kitchen mom and dad are constantly walking into that of and there is no break you know one of the nice things psychologically about going to an office is that you go you focus and then when you come home it's easier to leave it behind and it's much hard to do that when your office phone is in the TV room”
Public company governance creates discipline through quarterly reporting requirements, SEC disclosures, and quarterly earnings calls that allow shareholders to ask questions—providing transparency that private/venture-backed companies lack.
“there is a certain discipline that comes from being a public company you know today public companies have to you know report on a quarterly basis the SEC does a pretty good job in various requirements of the disclosures you need to make most companies have adopted a quarterly conference call format where you can ask questions of management and I think there's a lot of just inherent transparency in that process and whether you're on one chair or millions of shares everyone gets the same information”
After understanding a business and modeling it, Pershing compares the price to intrinsic value; a wide gap between price and value is necessary. In Starbucks' case, the investment thesis turned on whether recent same-store sales weakness was a blip or a structural problem.
“and then the next most relevant consideration is price and price what matters here is that there's a wide gap between price and value and so once we understood the business and we could model the business we could look at where it was trading and compare those two and at the time of our investment there was uncertainty because the recent same store sales had constant flattened and this was a company that had delivered consistent sort of mid-single the same store sales over a very long period of time and our analysis of the kinda crux the analysis was is this a blip is this an indication of things about to go awry and that's really where we spent our time”
Markets frequently move securities to crazy prices driven by quantitative traders, hedge funds, and 'fast money' that react to short-term noise; Pershing avoids this behavior and exploits mispricings that result from it.
“and that kind of activity whether it's driven by quantitative traders or computers or you know fast fast money so to speak moves securities around occasionally to crazy prices and Starbucks was trading as if the business had fundamentally changed”
Real estate impact: street-level retail in NYC is not getting rent today, but as tenants open, rents will resume; commercial landlords are deferring rent (rent holidays) rather than forgiving it, spreading deferred payments over time.
“if you own a street retail in New York City you're probably not getting rent today but as soon as your tenants gonna be open and operating they'll start paying rent again I talked to a friend at one of the major real estate private equity firms and what they're doing is in cases of hardship they are giving tenants a you know up to a several month kind of holiday we're kind of a rent holiday where it's really they're deferring the rent and my guess is they'll end up spreading it out over time to kind of recover what they've what they didn't collect”
What would cause Ackman to change his mind: (1) inability to stop the virus leading to constant shutdown cycles, or (2) massive sovereign debt burden hindering recovery; the solution is testing and antibody detection to identify immune individuals.
“what would cause me to change that view would be we can't be back the virus and we're constantly shutting down you know the the globe and I think the the way we solve that issue is really just testing and there are a lot of testing you know companies and just yesterday I learned about this pregnancy like test that's in sort of a emergency authorization mode where you can prick your finger and in five minutes find out whether you have antibodies or not I think once you have something like that we'll be able to see where the virus is people can start going back to work”
The credit spread landscape changed significantly post-2008: synthetic CDOs and bond insurers writing cheap insurance artificially tightened spreads before the financial crisis; that dynamic is gone, so a 70 basis point spread tightening is implausible without artificial manipulation.
“the all-time tight levels were achieved at a time that there were artificial subsidies that caused credit to be very tight there were these things called synthetic CDOs and bond insurers were writing synthetic CDOs creating this huge supply of cheap you know very inexpensive spreads and that that had really gone away during the credit crisis so I just it was really a one-way bet”
Democracy has both strengths and weaknesses in responding to crises: strength is the ability for people and media to surface problems without fear; weakness is the inability to take extreme measures (like nationwide lockdowns) as quickly as authoritarian systems like China.
“it's really been an education in in the what's good about living in a you know democracy and what's bad democracy so you look at how China now the negatives of China is they you know the the government officials the local government officials were too afraid to go public with what was going on or when they did they got you know whether you were a doctor or a public official you got you know shut down by by the system you know that allowed the virus to propagate to it became a serious issue in China the good news is the dictatorship allowed them to very aggressively you know shut down the virus”
COVID's economic implications are much more harmful than the health implications; the only way to stop a virus is to shut down the economy, which Ackman has never seen before in his lifetime.
“My concern about the virus I was less concerned about the health implications because I thought it would affect relatively small percentages of people and for the most part people who were already obviously every life is an important life particularly to the close friends and family but the economic implications I thought could be much more harmful even in the health implications and that's because the only way to stop a virus is to shut down the economy and I had never in my lifetime seeing what a an intended shutdown of an economy look like”
Ackman would not use taxpayer money to save structurally declining businesses like department stores; it makes no sense to prop up companies that would otherwise die.
“there are businesses that prior the coronavirus were structurally challenged you know sinc department stores so the notion that you'd want to save these businesses I don't think makes a huge amount of sense to me that you it makes sense to take taxpayer money and try to save a otherwise dying business”
If the government bails out a big company like an airline, the government should earn an adequate return on the capital and get equity upside; the government should not provide free capital to shareholders who benefited from buybacks.
“any capital that was injected into an airline or another business the government should earn an adequate return on that capital and get equity upside for business recovers you know I just think that you know Boeing needs to be saved you know Boeing had issues prior to this Boeing spent many many tens of billions of dollars on Cherry purchases I do think you know if Buffett doesn't want to the government shouldn't come in on terms that are more favorable than where Warren Buffett would provide the company with capital”
Some investors (like Larry Tish) withdrew $400K from Buffett's partnership after his letter, which would today be worth ~$4B; Ackman's business plan was to follow Buffett's model: give up short-term incentive fees for long-duration permanent capital.
“some number of people Larry Tish apparently withdrew four hundred thousand dollars back then from the partnership which today would be home and you know whatever four hundred million probably more probably four billion and some people you know rolled their capital and what's interesting is Buffett gave up the twenty five percent share of the profits for the right to run what he called a crappy textile company with a 40 million dollar market cap for a hundred thousand dollar salary but what he got was stability permanency of capital and that was not lost on me and so we've basically you know our business plan was basically to do the same thing over time and we're you know largely there today”
WeWork represents an egregious example of problems in venture-backed private companies, where founder control and lack of disclosure created disastrous value destruction that would have been caught earlier by public company governance requirements.
“but you know the quality of the information you get the lack of disclosure the how these boards sort of operate is far from ideal particularly when you compare them with their public company equivalents I mean the you know we work I just think was the sort of first opportunity for people really to see what's been going on”
Hedging was elegant because if nothing bad happened, the downside was limited (small premium cost); if bad things happened, the hedge would become very valuable and could be cashed in at the bottom to redeploy; meanwhile, Pershing maintained relationships with portfolio companies.
“the hedging is kind of elegant because if nothing happened we would have lost very little money but if we expected to happen and we would you know the hedge would become very very valuable we could cash it in the more the market went down the more valuable the hedge becomes we could cash it in hopefully at the bottom or as close to the bottom and redeploy the money buying companies that we like and that's what we chose to do”
Venture capital-backed private companies have stayed private too long due to Softbank and other mega-funders injecting capital and marking up valuations, allowing founders to avoid public company discipline while being handed godlike control despite potentially needing professional management.
“the venture partners and they may be talented entrepreneurs and they may have been the right person to start and build a company from scratch but the business may now be at a stage where it needs more professional you know management and it can't happen or it's difficult for that to take place in a in a private context and so Softbank injecting you know a hundred billion dollars in marking up the value of companies and giving them capital than they could use to postpone going public I think I think it's fundamentally been a disservice to the capital markets and probably to those businesses”
Industries that will benefit from COVID: Amazon (massive growth during and permanent behavioral change), video conferencing companies, cloud-based software companies; however, Ackman notes that most people are sick of video conferencing and work-from-home lacks psychological benefits.
“Amazon Amazon we don't know an Amazon but I do think that you know obviously they're gonna have the greatest several months in their history but I do think they're they're gonna change a lot of behavior people who used to shop in a normal fashion obviously its nursing these video technology companies cloud-based software companies will be beneficiaries of this you know long term although I will say that pretty much everyone I speak to is completely sick of video conferencing and would like to get and actually this whole work-from-home thing it's not so great because you know here I'm talking to you from the den you know I'm hearing you know buy her my wife and baby in the kitchen mom and dad are constantly walking into that of and there is no break”
Herbalife is a pyramid scheme and continues to cause enormous harm despite SEC settlements; Ackman was not the first to identify fraud, and Herbalife has continued to operate after paying only 20 million dollars in SEC fines.
“super belies by the way is a pyramid scheme okay it's continuing to operate and caused enormous harm the stocks actually not that up that much from the price we shorted it be sure that split adjusted $23 and share and today it's probably 30 or something like that so it's not been a great investment for for anyone”
The rest of Berkshire is a collection of wholly or mostly-owned subsidiaries (Burlington Northern Railroad, Precision Castparts) held for durability and quality; some have been great successes, but Buffett has also made notable mistakes (World Book Encyclopedia, Dexter Shoe).
“the rest of Berkshire is a collection of serve wholly owned or 80% owned subsidiaries like the Burlington Northern Railroad Precision Castparts businesses that Buffett has collected over time for their you know durability and quality and it's a mixed bag the biggest one generally are the highest quality businesses offering a lot of stability you think the utility energy utility part of his operation in the railroad a very durable big profitable businesses and then businesses he's just collected and held on to over many many years so which have have been great and remain great businesses like these can the others you know if you go back and read the Berkshire Hathaway annual reports he was glowing about the World Book Encyclopedia and you know other businesses that have disappeared Dexter shew he was you know skipping into work thinking about you know the Dexter shoe company the worst investment probably he ever made so even mr. Buffett makes mistakes which is instructive and of itself”
Businesses must have capital set aside for rainy days; companies that live on the edge to maximize short-term ROE will die during crises, while companies with prudent capital reserves will be the survivors and will have the strength to invest during downturns.
“every business has to have capital put aside if you will for the rainy day and you know the companies that live on edge to kind of maximize their return on equity and then die the businesses that will be the shoulders we heard the most from this period will be the companies that just were too aggressive in the way they finance themselves going into the crisis”
This crisis is a 'Depression' in the psychological sense (generational trauma around financial leverage and risk-taking), even if not a Great Depression economically; it will cause boards to rethink super-aggressive capital structures.
“you know I do think this is a depression or a moment in the sense psychologically the same way that the generation of people that went to the depression thought very different about some differently about financial leverage you know then the generations that came after them I think the same thing we Tru here and I think it would be true for for corporate America you know the because shareholders are diversified they generally put pressure on companies to quote-unquote optimize their balance sheets but optimization is generally designed for the short term shareholder who has a diversified portfolio of other such companies it's not designed for the portfolio of ie you know the board and this management that you know oversee that company for the benefit of you know the employees and the other stakeholders and I think it does lead to an over leveraging of corporate America and I think every business has to have capital put aside if you will for the rainy day and you know the companies that live on edge to kind of maximize their return on equity and then die the businesses that will be the shoulders we heard the most from this period will be the companies that just were too aggressive in the way they finance themselves going into the crisis and I think that will cause boards to rethink you know super aggressive capital structures”
Amazon will benefit most from the coronavirus crisis due to increased e-commerce demand, particularly during shutdown periods, and this benefit will persist as behavior changes stick.
“Amazon Amazon we don't know an Amazon but I do think that you know obviously they're gonna have the greatest several months in their history”
The recovery from COVID will be V-shaped in general but slightly slower (1-18 months to normalcy) with friction, compared to the depression which was endless; government and community support will help rebuild small businesses.
“I don't think it's a you know as I say a v-shaped recovery I think it's a little bit slower kind of coming out of this but there is an end date where we're back to normal I think within a you know reasonable period of time and back to normal could be a year it could be it could be eighteen months but there is an end date whereas the depression you know you go back to the 1930s it's it's sort of unending”
Ackman is NOT concerned about a Great Depression-like event because: (1) this is an intended temporary shutdown driven by health, not economic reasons; (2) governments are stepping in with economic support to individuals and businesses; (3) the entire globe is in shutdown, so reopening can be coordinated.
“I am NOT concerned about a great depression like event taking place really for a couple reasons one that this is sort of an intended somewhat artificial temporary shutdown not driven like economic reasons but driven by health-related reasons just to stop the spread of the virus so that's a very important distinction the other thing is that governments around the world of taking this incredibly seriously not just the health implications but the economic implications and the government is basically stepping in to provide economic support to everything from a you know low wage or unemployed worker to you know businesses as a bridge to get us through the crisis and the the bridge doesn't need to last eighteen months because the entire globe is basically in shutdown so I think we can start reopening this country you know beginning in June type timeframe”
Pershing Square's biggest competitive advantage is its capital structure: 85% comes from a public company (permanent capital), so they don't have to worry about quarterly returns or investor redemptions, giving them a time arbitrage advantage over investors with daily, monthly, or quarterly liquidity.
“a big part of our competitive advantage today comes from the fact that our capital structure compared to a typical investment firm is very different you know 85% of our capital is in the you know comes from a public company and as a result we have very very long duration money and we don't to worry about this quarter or this year in making decisions and that I think is a huge advantage in a world in which most other investors have their they give their investors either daily or monthly or quarterly liquidity having you know permanency to a very large percentage of our capital base allows us to make a very long-term decisions and that that time arbitrage is a big part of our advantage”
A major positive externality of COVID is that for the first time ever, all people across countries, races, and socioeconomic status face the same problem simultaneously, attracting the world's best talent to work on solutions.
“the inspiring I guess silver lining in this is for the first time ever we're probably all faced with the same problem it doesn't matter what country you're in or what race you are what socioeconomic status you are the best and the brightest people are gravitating towards working on this”
Buffett built the most profitable, best-capitalized, unique insurance business; for certain kinds of insurance, Berkshire is the only place you can call, giving it a very unique, very profitable, near-monopoly position.
“over time we built the most profitable best capitalized unique business and if you know for certain kinds of insurance Berkshire is the only place you can call and so it's a you know I don't like to use the word monopoly but it's a very unique very profitable business”
Sugar is poison; minimizing sugar consumption helps tremendously, and Ackman's family has a super-high sensitivity to sugar intake or carbohydrates.
“I think now is one we start with I think sugar is poison so you know minimizing your sugar consumption I think helps tremendously...I come from a family where managing your weight has not been an easy thing you know for my father's side of the family let's say and I feel like I finally I finally figured out what the issue is and just you know at least our genetics we have a super high sensitivity to sugar intake or carbohydrates”
Ackman had conviction in the timing of the COVID crisis (weeks, not months or years away) but less conviction on long-term implications; given this timing confidence, the premium cost should be viewed as a 90-day cost (125M), not a 5-year cost (2.5B).
“this was one of the few cases in my life where I had a very negative view on where the stock market would go and I also had a very good sense of the timing you know I had a very very few back in oh seven and before of where things were headed in terms of and I thought we could be headed for credit crisis I just didn't have a good sense of timing here I thought the timing was weeks away and so that made the commitment to make premium payments a much lower risk commitment”
Most people who attend top business schools like Harvard Business School have not had to deal with failure, which is a major problem because the single most important thing you need to understand for success is how to deal with failure.
“they've done you know top of their class in high school and they went to a great college and they've done great at summer jobs they have great recommendations from their teachers and I've never failed you go to Harvard Business School and they're then they're about to go out into the real world and the problem with that approach is the single most important thing you need to understand is how to deal with failure and the vast majority of people who got to Harvard Business School or pick your favorite you know top business or law school has not had to deal with failure and that is the determined I think of success”
There needs to be a partnership between activist investors (who have resources to lead campaigns) and index funds (who have votes but not resources to govern), because index funds do not have the resources to lead activist campaigns.
“I think that requires more entrepreneurial type investor so you know there's in a way there has to be a partnership between activist investors and you know index funds to make sure that we're governing companies correctly and you know seem a number of the top firms over time take these issues much more seriously and and we've had a good experience working with with most of these major owners”
Index funds, by taking shares out of the float and removing them from active trading, reduce liquidity; the marginal trader can move a stock more because there is less float available to trade, meaning hedge funds and active investors push securities around more, contributing to volatility.
“index funds really in a way they they take more and more of the float out of a out of a security so the marginal trader can move a stock more because there's less float if that makes sense it's almost like having having index funds as major holders of securities in stable market conditions actually reduces the liquidity of companies and it means that sort of hedge funds and a more active investors who are making day-to-day buy and sell decisions actually push securities around more some of the volatility you know that you've seen I think can be you know is somewhat due the fact that there is you know limited you know less liquidity in securities today because there's you know the greater percentage of shares that are held by index funds”
People will be desperate for human connection after COVID and will want to go out to eat, drink at cafes, watch movies, and go to entertainment venues as soon as it is safe to do so.
“I think people will be that much more desperate for human connection after this experience than they were before...I do think that you know for every community having a place where people can come and you know gather and have fun and bring their kids I think is important and so I think the real estate you know long-term is probably fine...I think people will desperately want to go out to have a drink go to a cafe go to a restaurant go to a movie be entertained and they'll be desperate to do it as soon as it's safe to do so”
Ackman has largely forsworn public short selling and coined the phrase 'return on invested brain damage' to describe the high cost of public short selling campaigns, where you gain no allies and face opposition from shareholders, management, and employees.
“I've like forsworn short selling for the reasons you described the calculus I think I invented this phrase that you seem to be adopting but I called a return on invested brain damage and return on invested brain damage for short selling is is quite challenging and public short selling is the worst because you know unfortunately if you go public and say a company is violating the law everyone hates you you know the shareholders hate you the management takes you the employees hate you you have no friends”
Malls will survive because: (1) people need community gathering places; (2) innovation in tenant mix (food courts, restaurants, entertainment) is already happening; (3) malls will be restructured with mixed-use (retail + office + residential).
“I do think that people will desperately want to go out to have a drink go to a cafe go to a restaurant go to a movie be entertained and they'll be desperate to do it as soon as it's safe to do so I think one of the byproducts of this is like we feel less like we're part of something that we used to before right we're less attached we're more attached to our family but less attached to our community less attached to our sort of City...the problem is the the capital cost to take an old-line old-fashioned shopping mall with you know Sears and a JC Penney and the Macy's and make it into something that's gonna be exciting for the next generation is you know wasn't contemplated when they put a mortgage on it...You'll see restructurings where the lender to the mall ends up with the asset someone entrepreneurial decides you know what we don't need this much retail when they can see with a hospital medical facility office apartments and then they'll be this great you know foodcourt restaurant entertainment movie theater you know type of thing”
A higher-fat, higher-protein, lower-carbohydrate diet of real, unprocessed foods (including avocados, nuts, meat, and fish while cutting back on sugar and carbohydrates) has helped Ackman feel better, think better, and manage his weight more effectively.
“I think you know I'm better off with kind of a higher fat higher protein lower carbohydrate diet you're eating real foods as opposed to foods that come out you know anything that comes out of a package or is processed I generally avoid so real food kind of higher fat you know avocados nuts things like that but I eat you know meat and fish and I've really done my best to cut back on sugar consumption and in carbohydrates and that served me you know sort of well I feel better I think think better also able to manage my weight much more effectively”
People feel less part of something since the pandemic—less attached to community, city, state, or country, despite (or because of) going through it together; this represents a psychological shift.
“we feel less like we're part of something that we used to before right we're less attached we're more attached to our family but less attached to our community less attached to our sort of City less attached to our state or country”
Small businesses will be destroyed in a multi-month shutdown but can be rebuilt with philanthropic and for-profit investment; Ackman considered starting a venture/private equity fund to back restaurant reopenings in New York City.
“the negative however is that you know small businesses that certainly can get destroyed in a several month shutdown and it takes time for them to rebuild you know think the small restaurant the small corner store and there is a lot of friction and disruption but I do think that governments are going to do everything they can and communities are do everything they can to help rebuild you know if you think about New York City I think the moment that people can go out to eat again you know going out to eat in New York City is you know sort of part of what it means to live in New York restaurants gonna be reopening that actually had an idea maybe we start a venture or a private equity fund to back the reopening of restaurants in New York”
Starbucks represents a 'simple predictable free cash flow business' with durable competitive advantages because people have strong coffee habits they don't like to break, Starbucks has built an exceptionally durable franchise, and once you understand the economics of one store you can extrapolate to thousands of locations, creating high predictability.
“we think about coffee you know people have their coffee habit Starbucks has built a week than our view of very durable franchise they are in very high returns on you know every store that they build and it's a it's a habit that people don't like to break and so we had confidence in the durability and you know the benefit of the quality restaurant business is once you understand the economics of one box and then you have a company that's built you know thousands of boxes over time it becomes more predictable and easier to understand what that business will look like over a very long period of time”
Testing and rapid antibody tests (like the pregnancy-like test in emergency authorization that gives results in five minutes) combined with Google/Apple contact tracing apps will be key to reopening the economy safely and preventing constant shutdown cycles.
“what would cause me to change that view would be we can't be back the virus and we're constantly shutting down you know the the globe and I think the the way we solve that issue is really just testing and there are a lot of testing you know companies and just yesterday I learned about this pregnancy like test that's in sort of a emergency authorization mode where you can prick your finger and in five minutes find out whether you have antibodies or not I think once you have something like that we'll be able to see where the virus is people can start going back to work so I just think technology is going to help a lot here you know the Google Apple sort of apps that you have on your phone you know that combined with testing you know hopefully we can start going back to a more normal lunch”
Ackman does not believe companies should stay private too long; many companies have stayed private too long, and the governance and capital structures of private venture-backed companies are not as good as public company governance.
“I think that a lot of companies have stayed private too long and so I'm actually a fan of the public markets and a fan of public company governance versus the kind of governance that you've seen certainly in many of the Metro backed companies”
Airplanes won't stop flying because airlines go bankrupt—the lessors and bondholders will end up controlling the airlines; therefore, taxpayers shouldn't bail out airlines if they can be restructured through bankruptcy.
“airplanes are not gonna stop flying because airlines go bankrupt what will happen is you know the owners of the planes the lessors of the plans and/or the bondholders will end up you know controlling airline”
China appears to have handled the coronavirus by managing cases and deaths, though there are questions about the accuracy of their reported data; Ackman doesn't think the data is materially different from what China described.
“if you looked at what was going on in China there is a straightforward solution to how to deal with you know pandemic you know China did it they've been able to manage their cases and deaths and again you have to question some of the data of China but I don't think the data is materially different from what they've described”
In a federal system like the US, states make the decisions rather than the president mandating a national shutdown; Ackman would have preferred a federal order but accepted that state-by-state shutdown was the federal system's way of achieving the goal.
“living in a federal system with the states make these decisions I'm happy we finally got there although it took longer than I would like...I was expecting the President to basically order a countrywide shutdown”
Burlington Northern Railroad should be the largest, most profitable, highest-margin railroad in the world, but it isn't; Ackman attributes this to Buffett's reluctance to actively intervene, despite having done so successfully with other businesses.
“just looking at the Burlington Northern Railroad you know a lot about railroads by virtue of our experience at Canadian Pacific it's the largest you know it should be the most profitable highest margin grower in the world it's not and I think a bit of that is its warrants very you know kind of his reluctance to get to actively involved with businesses that he owns”
Ackman still charges fees (unlike Buffett), which enables him to hire and retain highly compensated talented people; Buffett runs a one-person shop with accountant support, making him a better bargain.
“you know unlike Buffett who you know runs read really a one-person operation and you know as an accountant and a couple of assistants you know the way we've built our business is you know I've hired a lot of super talented highly compensated people you've actually charging fees enables me to incentivize and pay the people I work with but yes Buffett is a better bargain than we are because we do charge these oh wait I want to get to that in a second but where do you think Pershing Square will be in ten years”
In 10 years, Pershing Square will likely have 90-95% (eventually 100%) of capital in a public enterprise (Pershing Square Holdings), where Ackman will be the largest shareholder; the goal is to compound at a high rate long-term and become one of the best investment records ever.
“I think in ten years you know we're we now have a pretty clear path right the vast majority of our capital today it's 85% in overtime that will be 90 or 95 or eventually 100% of our capital will be in a public enterprise that were the largest shareholder of we own 22% of our of our public company Pershing Square Holdings today and our goal is to compound Pershing Square Holdings at a high rate over a long period of time by investing in you know the kind of businesses we invest in today and over time we'll become bigger shareholders of these kinds of companies will be a very long duration holder I think we'll do similar things to the things that we do now then hopefully we'll do them better but I think you know I'd love to have you in terms of ambition you know the goal is to have one of the best investment records ever”
Ackman believes Boeing needs to be saved but only on terms that Warren Buffett would offer; if Buffett won't save it at a certain valuation, the government shouldn't either.
“I just think that you know Boeing needs to be saved you know Boeing had issues prior to this Boeing spent many many tens of billions of dollars on Cherry purchases I do think you know if Buffett doesn't want to the government shouldn't come in on terms that are more favorable than where Warren Buffett would provide the company with capital”
The current crisis is a 'dreamlike opportunity' for companies with cash and prudent leverage to take on 'multiple big elephants' and gain significant market share.
“this is like a dreamlike opportunity for them in some ways you could say with all that cash and prudent leverage and sort of the ability to take on multiple big elephants if you will”
Ackman went on CNBC on March 18 to make a bullish case: shutting down the country for 30 days would kill off the virus, allowing the market to recover; markets are a discounting machine that will look forward and recover as soon as you start the shutdown.
“I went on TV to give a very bullish message which was you know look I think markets are going to soar we just need to stop the virus there's a really simple solution stopping the virus it's locked down the country for 30 days you kill off the virus you open carefully continue to practice social distancing but you know the stock market is a discounting machine it will look forward and as soon as we do this the markets will recover and that's why we're buying stocks”
Ackman has come back from failure or the brink of disaster twice in his career—shutting down his first fund and after Valiant losing significant assets—and does not find this to faze him.
“You've come back from failure or at least the brink of disaster twice in your career you've had to shut down your first fund and after Valiant you lost a lot of assets but it doesn't seem to faze you at all”
Experience is making mistakes and learning from them; Ackman has had the benefit of making a lot of mistakes and learning from them.
“experience is making mistakes and learning from them and I've had the benefit of having made a lot of mistakes”
Buffett started as an activist hedge fund manager in the mid-1950s, charging 25% incentive fees over a 6% return, holding large stakes and pushing for liquidations and management changes; he was quite active in the first 15 years.
“buffett started out in the mid 1950s as an activist hedge fund manager right he had a partner Jib he charged a 25% incentive fee over a 6% return and he was quite active he would buy steaks and businesses he would push for liquidations of of companies that had large security portfolios relative to the market value of their of their business he was really an activist investor”
After 15 years managing $100 million ($25M+ of his own), Buffett closed his partnership and instead invested his capital in Berkshire Hathaway, a 'crappy textile company' with $40M market cap, at a $100K salary, giving up 25% carried interest for stability, permanency, and capital lock-up.
“then 15 years in he had a hundred million under management I think 25 million if it was his anywhere does investors the letter and said okay you can have all your money back or you can have stock in this crappy textile company and I'm gonna take stock in the textile company but I'm gonna be a little less motivated than what's in the past I've made a lot of money markets aren't that attractive I can't promise anything but happy to have you if you want to go long take your money if you if you want your money back”
The global biotechnology and pharmaceutical industry is working on solutions to COVID (70+ vaccine and therapeutic trials underway), which increases the probability of a solution sooner rather than later and shortens the economic disruption period.
“you have the entire world working on solutions to the problem you know I got it just yesterday I read a piece saying you know there's 70 different you know vaccine related and therapeutic trials that are underway you know as we speak and you know so you have the world's best global biotechnology pharma companies looking for solutions and so I think that increases the probability that there's a therapeutic that is available sooner rather than later”
Ackman made a small investment in a company called 'Say,' which uses technology to return proxy voting rights to underlying shareholders (retail index fund holders) rather than centralizing votes at BlackRock or Vanguard, potentially enabling differentiation and better governance.
“actually I made a small investment in a company called say which is a business that wants to put the vote back into the hands of the owner and one of the opportunities for a Blackrock to differentiate themselves from for example a fidelity or for Vanguard is to transfer back the right to vote to the underlying holder in this company say sort of has a technology that enables that to take place”
Ackman's biggest driver from childhood was independence—not wanting to rely on his parents financially, intellectually, or in terms of freedom to live as he wished.
“one of my biggest drivers from the time I was a kid was independence here as much as I love my parents I did not want to be reliant upon them so everything from financial independence to the independence to say what I think the independence to you know live the life I wanted to live and so that's been a huge driver”
Ackman does not avoid any particular information; having the conventional perspective is helpful, and he does not believe he has access to secretive inside news that is particularly valuable beyond talking to respected business leaders for perspective on economic and business matters.
“is there information you avoid like information that everybody else has not really I think it's helpful to have kind of the conventional perspective and you know I don't think we have um you know have some particular access to you know some inside secretive news source that's valuable you know there are people that I talked to I talked to for perspective on things like the economy in business just people in business leader type people that I respect and compare notes with you know what's really going on in China that kind of thing”
Philanthropy is not genetic; it is learned, and something Ackman's father reinforced from the time he was a kid.
“I learned a lot of things my parents talking about philanthropy I think of philanthropy as something that is not genetic it is learned and something that my dad reinforced pretty much from the time I was a kid”
Herbalife used PR and legal mechanisms to discredit Ackman personally following his public short campaign; despite their negative campaign continuing even after Ackman covered his short, the narrative persists, illustrating the power of well-capitalized companies to control public messaging.
“Herbalife using their PR machine has done everything they possibly can or did everything they possibly could to try to discredit me you know in the press and what's fascinating to me actually if you were to google now we have not been short Herbalife for you know very long time Herbalife is still running a negative campaign about me personally which I find it's fairly remarkable”
Ackman reads a lot in the evening and spends a lot of time with his partner Neri; he does not have a formal bedtime routine and occasionally watches movies or interesting content.
“yeah read a lot in the evening spent a lot of time with Neri in the evenings you know occasionally we watch a movie occasional stay up and watch something interesting but you know no formal routine”
Between March 12 and March 18, 2020, Pershing invested 2.05 billion dollars buying stocks while simultaneously selling off the hedge (1.3B sold), resulting in a net long position increase of 3.35 billion dollars despite total equity of only 7.5 billion—a very aggressive deployment.
“we've invested two billion fifty million between March 12th and March 18th or 12:30 in the stock market buying you know addition adding to our portfolio blinds pre-purchasing Starbucks we had sold half the hedge for a billion three hundred a little more than half the hedge for a billion three hundred million so we were three billion you know three hundred fifty million more long stocks if you will then we were on March 11th and bear in mind this was a firm with total assets you know total equity of about seven seven a half billion dollars so adding three billion dollars of risk you know we were much longer than we were even before we had the hedge on so we were we had no short positions”
The most persistent person in America is Bill Ackman's father; Ackman learned never to give up on pretty much anything from living in a home with such a persistent person.
“my father is I like to scribe myself as the most persistent person in America but actually my father is the most persistent person in America so I certainly live in a home where you learn never to give up on pretty much anything”
Pershing's hedge during the COVID-19 crisis (early March 2020) protecting the portfolio required minimal research time—it was an urgent discussion among the team about the economic implications of the virus, and the decision was made to hedge because credit spreads were at historical tights.
“the just most recently our heads that we put on to protect the portfolio I guess I wasn't specifically doing work on that investment at all but I was thinking about the ramifications for example the coronavirus then came to a conclusion this was something we want to hedge and that it was really an our discussion among the team before we decided to implement the hedge in that form and in a way one of our more successful investments if you look at the the risk versus the reward the amount of time spent was minimal”
Herbalife's ad claiming Ackman funded the documentary 'Betting on Zero' is materially false; Ackman was interviewed for the film but played no role in financing, directing, or funding it; a documentarian approached him, he consented to be interviewed, and an unrelated hedge fund manager financed the film.
“a documentarian I never heard of called me up one day and said finding this whole Herbalife thing fascinating we'd love to follow you around and I met with him and liked him decided I would trust him and I thought it would be helpful in getting the story out of the company and I participated in the film by agreeing to be interviewed a number of times and he followed me around a number of times the film was financed by actually a hedge fund manager not me his his name is escaping me for a moment but it's if you google it you can find out his name but I played no role whatsoever in financing funding directing literally all I did was appear in the film”
Ackman became concerned about the government's handling of coronavirus in early 2020, put on a hedge (CDS positions) in late February, and went public advocating for a nationwide shutdown when the government had not yet done so.
“recently I was becoming more and more concerned that our government was not taking the coronavirus seriously you know I was gravely concerned a few months ago and you know took steps both to protect my father whose immune compromised my family the firm our investors with a hedge etc and then I you know by you know call it mid-march I said well there's just a really straightforward simple answer we just need to shut down the country and once we do that we can reopen carefully and go back to rebuilding an economy and rebuilding a country and I kept waiting for the president to go on TV and Nick and say okay guys we're shutting down the country and it wasn't happening so I figured okay that's when I went back to Twitter for the first time and I wrote a tweet saying look here's the simple answer and it went pretty viral”
Ackman put on a hedge in late February / early March 2020 by buying ~71 billion dollars of notional credit default swap insurance at an average cost of ~70 basis points per annum, committing to ~500 million dollars per year in premiums across 5 years (~2.5 billion committed).
“it's not credit default swaps are not like options so a CD as contract is a commitment to make payments over time and we at the peak had 70 billion actually 71 billion of notional insurance that cost about an average of 70 basis points per annum so about 500 million dollar committed to make 500 million dollars a year right okay in payments for five years so that's you know two and a half billion dollar commitment”
Ackman teaches his kids (ages 20-22 at oldest) lessons about hard work, education, treating others well, persistence, money management, and nutrition, though nutrition is a high-risk topic to address with kids.
“you mentioned you have four kids I think right and you're you're 53 what are the lessons the and you have quite the aged ranch right so you go from one - how old's the oldest 20 to 22 that what lessons do you try to teach your kids or instill in your kids so yeah there's a lot of the obvious ones you know hard work pays off education is really important treat other people the way you want to be treated yourself a basic perhaps somewhat biblical type type things you know persistence you know that we started the interview asking what I learned from my parents and and both mom and dad are super persistent and you recognize the wonderful qualities of persistence and then when you live with your parents for six weeks you there are sometimes associated with those qualities but you try to teach your kids about that try to keep teach your kids about the value of money and you know saving and you know minimizing waste and then also you know what more difficult topic is you're trying to keep teach kids about nutrition that's a very high-risk subject to talk with your”
Ackman reads traditional media sources (Wall Street Journal, Financial Times, New York Times, Economist, Fortune, Forbes, Grant's, Interest Rate Observer, Bloomberg) and uses Twitter as a newsfeed, finding it helpful for accessing news before it becomes mainstream.
“you know read a lot of traditional media sources you know Wall Street Journal Financial Times New York Times Economist fortune Forbes grants interest rate observer and beginning sort of as I got deeper into coronavirus I started using Twitter actually as a newsfeed and found it to be very very helpful to interesting almost having the experience of reading the news a couple of days before you read the news and the rest of the media Bloomberg and Bloomberg News of course”
As generational change happens at Berkshire, the next generation appears focused on extracting more value from the businesses Berkshire owns, compared to Buffett's more hands-off approach.
“I think the as the generational change happens at Berkshire it appears to us the next generation is getting much more focused on you know extracting the most from the businesses Berkshire owns”
Ackman had calls with 35 heads of major scientific institutions and research organizations; almost all of them redirected their work from cancer to coronavirus research, illustrating the talent mobilization.
“we had a call with 35 heads of major institutions and scientific researchers who normally focus on cancer research and basically all of them have redirected their work to corona bars”
Elon Musk is admirable because he takes on unbelievable challenges and succeeds; building a car company to compete with the big car companies is remarkable, and doing so while simultaneously launching rockets into space is even more remarkable.
“I admire people who take on unbelievable challenges and and succeed you know the notion of building a car company to compete with the big car companies is something that on its own I think it's fairly remarkable and if you want if you do that at a time when you're building a company you know - you know launch rockets into space you know I think it's even more remarkable so he's someone I have enormous respect for the world needs more people like Elon”
Warren Buffett was Ackman's gateway into investing; Ackman got into the hedge fund business after someone tipped him off about Buffett early on.
“you I got into this business because someone tipped me off about Warren Buffett early on so he's certainly obviously a hero to investors”
Ackman admires Joe Steinberg and Chia Ran, partners in Leucadia National Corporation, an interesting investment firm from which he learned a lot.
“I learned a ton for over the course of my career we're kind of supportive of me early on I named Joe Steinberg just likes being out of the headlines and his partner in coming ran a company called Leucadia national corporation you know a very interesting investment firm I learned a ton over time”
This crisis represents an opportunity for well-capitalized, prudent companies like Berkshire Hathaway; Ackman is surprised Berkshire hasn't made more visible acquisitions.
“this is like a dreamlike opportunity for them in some ways you could say with all that cash and prudent leverage and sort of the ability to take on multiple big elephants if you will exactly yeah so I think I think Berkshire I'm surprised they haven't done anything yet that's visible”
Ackman's guilty pleasure is dark chocolate (88% cacao, Endangered Species brand); he describes it as 'amazing' and plans to buy more.
“do you have chocolate in the house yeah I am a big dark chocolate fan I like this one it's called endangered species 88% and it's amazing 88% just seems too good to be true this it's sort of very very good so I that's definitely on my list this is my weakness tea I'm gonna run out and get some of that”
After Ackman's CNBC appearance, critics accused him of market manipulation, claiming he drove the market down; however, the market was already down 7% by the time he spoke and continued down afterward, meaning the timing of his appearance was coincidental to the decline.
“after I got off I noticed other commentators coming on and also on Twitter people saying I'll build drove down the market not what they forgot was the stock market was already down almost 7% by the time raid I went on birdie and you know an hour later was down more so simply because the market went down after I spoke didn't mean I call it the market to go down”
Ackman practices intermittent fasting: he generally doesn't eat before noon and finishes dinner by around 8:00 PM, with only occasional nut snacks.
“I've become a bit of an interim faster you know so I generally don't eat before noon and I usually finish dinner by around 8:00 I'll have nuts for snacks occasionally but not you know that's about it”
In the early days of Pershing, Ackman generated investment ideas and the team analyzed them; as the business matured, many ideas are now sourced by team members, and Ackman's role has become setting the framework for what is likely to be interesting and doing the '20% work' on each investment.
“I would say the early days of Pershing I would generate the ideas and the team would help me analyze them and as the business has matured and I really think it's a credit to the team and the maturity of the business many ideas are sourced by members of the team and my role over time has become one you know setting the sort of the framework for things that are likely to be interesting you know whether and whether something fits within the framework or not and then I'm usually the 20% person on every idea so 80% of the work is work led by a two-person subset of the investment team and 20% of the work you know the reading public filings conference call transcripts work that I do”