Superinvestor Bill Ackman’s journey to $13 billion
Billionaire Bill Ackman manages through his company, Pershing Square, a $12.9 billion portfolio, which includes investments in Google, Nike, Chipotle, and Hilton hotels.
Bill Ackman’s investment journey began in his early years when he interned at a real estate development company in his hometown of Chappaqua, New York.
He later attended Harvard Business School, where he honed his investment skills and developed his investing philosophy.
After graduating, Ackman founded his own hedge fund, Gotham Partners, which focused on value investing and activism.
In 2004, Ackman launched Pershing Square Capital Management, where he continued using his unique investing approach to build a highly concentrated portfolio of carefully selected stocks.
Ackman is highly respected in investment circles. For nearly two decades, his Pershing Square Holdings hedge fund has compounded annually at a rate of 16.1%.
Ackman’s investment strategy is focused on identifying companies with strong growth potential that are undervalued by the market.
He looks for companies with a competitive advantage, a strong management team, and a clear growth path.
Once he has identified a company he believes in, he takes an active approach to investing, using his influence as a shareholder to push for changes he believes will increase the company’s value.
This approach has been highly successful for Ackman, with many of his investments resulting in significant long-term returns.
Despite his success, which has generated billions in returns, Ackman’s portfolio is notably small, consisting of just a few carefully selected positions.
This is because he believes in investing only in companies that he has thoroughly researched and understands rather than simply diversifying his portfolio for the sake of it.
This approach allows him to maintain a deep understanding of the companies he invests in, giving him an edge over other investors who may be spread too thin.
Ackman’s investing principles

As an activist investor, Ackman has eight principles that determine when to invest in a company. He has even gone so far as to get these principles engraved on a piece of stone, placed on each of his employees’s desks.
- The business must be simple and predictable.
- The company must be free cash flow generative.
- It must have a dominant market position.
- There must be big barriers to entry for competitors (MOAT).
- There must be a high return on capital.
- The company must have limited exposure to extrinsic risks they can’t control.
- The business must have a strong balance sheet and not need access to outside capital to survive.
- The company must have an excellent management team and good governance.
“When we have veered from these eight principles, we have lost money,” Ackman said. “In each case where we compromised on business quality or complexity, we were harmed.”
He referred to a difficult period in 2015 and 2016 where Pershing Square Capital Management’s performance was poor and lost money for investors.
Ackman said they have learned from the mistakes over this period which sparked a monent of reflection for the firm.
Ackman went back to the eight core principles that drove the success of the firm and even had them engraved on stone tablets that now sits on everyone’s desk at the office.
“We have adhered to those principles ever since, which helped us to return to the success we had over the first twelve years of the company.”
There is a particularly strong focus on business quality with predictable cash flows.
“If we can’t predict the cash flows, we don’t know what it’s worth. If we don’t know what it’s worth, we can’t invest,” he said.
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