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Bill Ackman, the founder and CEO of Pershing Square USA, Ltd., says investors should focus on businesses capable of creating significant value over decades, even when markets temporarily shut.
Ackman, during a podcast interview with Nicolai Tangen, CEO of Norges Bank Investment Management, published on Wednesday, said a great company was one investors could buy today and hold even if markets shut for two decades, with “an enormous degree of certainty” that they would own “something that’s enormously valuable” 10 or 20 years later.
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He said his preferred businesses are not confined to a single industry. He compared them with royalty-collecting companies or annuities that can grow rapidly for extended periods without requiring substantial reinvestment.
To evaluate a potential investment, Ackman recommended finding the strongest short seller covering a company an investor owns and carefully examining that person’s case against it.
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“Find the person who makes the best case for why you’re wrong,” Ackman said. Investors should then decide whether those arguments alter their view or can be methodically rebutted. “If you can rebut each of their arguments, then you can feel more confident in your investment,” he said.
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Pershing Square holds concentrated positions in companies including Amazon.com Inc., Microsoft Corp., Meta Platforms Inc., Brookfield Corp., Uber Technologies Inc., Visa Inc. and Mastercard Inc.. Ackman said that while 200 to 300 businesses may qualify as truly great, fewer are available “at a price that makes it a great investment.”
Ackman said investors often seek “get-rich-quick” strategies, while the asset management industry tends to be short-term focused, rather than taking a long-term view of businesses, as the legendary investor Warren Buffett does.
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Ackman said Pershing Square uses a checklist to identify companies with durable competitive advantages and predictable long-term cash flows. He avoids businesses he cannot confidently value over 10–20 years and prioritizes business durability over short-term earnings, steering clear of companies highly exposed to external factors they cannot control such as commodity prices, interest rates or regulation. “We keep it simple,” he said.
