Billionaire investor Bill Ackman said it is a good time to invest in high-quality companies but warned not to commit all your capital immediately.
Ackman is one of the world’s richest hedge fund managers. He founded Pershing Square Capital Management in 2004 and made many winning investments during his career.
Speaking to Interactive Investor this month, he admitted that making money in the current environment with rising interest rates is difficult.
However, he is confident that central banks around the world will get high inflation under control.
It creates a positive outlook, which means investors can do well if they find high-quality companies and buy them at an attractive price.
“Today is a good time to buy stock and a good entry point,” Ackman said.
He equated it to March 2020, when stock prices plummeted and offered investors a great opportunity to buy good companies at low valuations.
“This is another good moment. I don’t know how well you are going to do over the next six or twelve months, but over the next few years, it is a good place to be an investor,” he said.
However, Ackman advised investors to pick carefully. “You want super high-quality, well-capitalised, dominant businesses that you know will be here 30 years from now.”
Although there may be short-term volatility, the stock prices of good companies will rise over the next few years. “Prices are fair to cheap,” he said.
He advised investors not to immediately commit all their capital and keep some of it in reserve.
Commenting on Pershing Square’s trading in recent months, Ackman revealed that they have stocked up on Universal Music.
Pershing Square has also sold its stake in Domino’s Pizza, but they do not have firm plans on what to do with the cash yet.
“We are looking for a great company to invest in. We are also using the money to buy back stock and keep a small amount for interesting hedges,” he said.
He said they are looking at a few interesting companies, but nothing is cheap enough yet for them to start buying the stock.