Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Now the big deal of today, and it's a day
Speaker 2: that's been years in the making for Bill Ackman and
Speaker 2: his hedge fund, Pershing Square. Pershing has raised a five
Speaker 2: billion dollars for a US dual IPO in pursuit of
Speaker 2: a Warren Buffett investing powerhouse, and for our radio and
Speaker 2: TV listeners. I want to welcome Pershing Square CEO and
Speaker 2: founder Bill Ackman.
Speaker 3: Bill, thank you so much for stopping buy today.
Speaker 4: Of course, thank you so.
Speaker 2: As I mentioned this, this has been years in the making,
Speaker 2: out at least two years. It's had fits and starts,
Speaker 2: much like this American IPO market itself.
Speaker 3: What was it like to get this over the line.
Speaker 1: It's great, it's a great day, but it's really you know,
Speaker 1: it's the beginning, right, beginning of a journey.
Speaker 3: So it's the beginning of a journey. And now armed
Speaker 3: with five billion, how quickly can you put that to work?
Speaker 1: Actually, we think it's a very good time to put
Speaker 1: the capital of work, and we invest in the most
Speaker 1: liquid companies in the world. So it's really it's weeks,
Speaker 1: not months.
Speaker 3: So it's weeks.
Speaker 2: But there's this question, so some of the companies that
Speaker 2: you own in your other PORTFO for example example Uber Meta.
Speaker 2: They've had a good run and you're already very long then,
Speaker 2: so the question might arise, is now the right time
Speaker 2: to be doubling down?
Speaker 1: Actually, I think the companies you mentioned are very cheap
Speaker 1: stocks today. Interestingly, some of the best businesses in the
Speaker 1: world are training at the lowest multiples they've traded that
Speaker 1: in some cases in history. Actually those multiples bottom maybe
Speaker 1: two weeks ago, so we're a little bit off the
Speaker 1: the all time bottom. But you know, very bullish on
Speaker 1: the economy, and you know there are some amazing businesses
Speaker 1: available at really cheap prices. This will be kind of
Speaker 1: a continuation of what we're doing now. So we're going
Speaker 1: to just add to existing positions which will give us
Speaker 1: more ownership and our strategy we like to be a big,
Speaker 1: big shareholder.
Speaker 3: As you said, very liquid stocks.
Speaker 2: So the market is there, What about for like a
Speaker 2: Fany or Freddy where they trade OTC. How does that work?
Speaker 2: How do you dive back in without moving the market.
Speaker 1: We're going to be very thoughtful about the way we
Speaker 1: deploy the capitol, and we're not going to tell anyone
Speaker 1: on TV what we're going to do.
Speaker 2: I'd see you don't want to front run anyone. Perhaps
Speaker 2: perhaps wise decision. And look, you've discussed you were talking
Speaker 2: about it earlier this morning on CNBC that closed end
Speaker 2: funds they trade at a discount to Now that's not
Speaker 2: a surprise. So what does success look like in this
Speaker 2: scenario is, for example, like a ten percent discount.
Speaker 4: Okay, So I want to give you a new construct
Speaker 4: to think about.
Speaker 3: Please.
Speaker 4: Okay.
Speaker 1: So there's hundreds of closed end funds, but they're a
Speaker 1: very different animal from what we're doing here. We're adopting
Speaker 1: the closed end structure, the legal structure, the corporate structure,
Speaker 1: because it's the most flexible and most tax efficient corporate
Speaker 1: structure in America. It's never been used for the purpose
Speaker 1: that we're going to use it for.
Speaker 4: But if you think about.
Speaker 1: Our business as a business, think of us as an
Speaker 1: investment holding company. It's a business that's earned a nineteen
Speaker 1: percent return on equity for the last twenty two years.
Speaker 1: If you look in Bloomberg, someone should do a search
Speaker 1: real time. Find me a business that's earned nineteen percent
Speaker 1: of equity for the last twenty two years. It trades
Speaker 1: for less than two times book value, and we're taking
Speaker 1: the company public at book value, so we think that's
Speaker 1: going to be a cheap price now at the nature
Speaker 1: of IPOs are such that in the first couple of days,
Speaker 1: I can't tell you exactly what's going to happen. But
Speaker 1: over time, we're going to compound this book value or
Speaker 1: navy as some people call it, if we do anything
Speaker 1: like what we've done in the past a high rate
Speaker 1: over time, and it's going to compound, and it's going
Speaker 1: to grow, and we're going to run it like a
Speaker 1: real company.
Speaker 4: Closed M funds are kind of a backwater.
Speaker 1: No one actually wakes up and gets excited about investing
Speaker 1: in a close den a traditional clothes and IPO.
Speaker 4: They're kind of generic. You don't know who runs them.
Speaker 1: I bet Bloombergs never even run a story, and they
Speaker 1: don't have convers sculpt where their shaholders, they don't have
Speaker 1: particularly distinguished boards of directors. If this were a sea corp,
Speaker 1: no one will be asking me whether it should trade
Speaker 1: it a discount or not. But we can't deploy our
Speaker 1: strategy in a sea corp, which is why we've chosen
Speaker 1: this structure. And it's more tax efficient than a sea corp.
Speaker 1: It's a flow through entity for tax purposes, so more
Speaker 1: tax efficient, and then we fix the things that are
Speaker 1: problematic about clothes and funds. So it's the lowest cost
Speaker 1: compensation for a management firm like us to manage this
Speaker 1: pool of assets. In fact, we charge our other funds
Speaker 1: incentive fees. We don't do so here, we're not permitted
Speaker 1: to do so here. So it's the lowest cost version
Speaker 1: of Pershing Square. You take our record over the last
Speaker 1: eight years since we've had permanent capital, it's been a
Speaker 1: twenty four point nine percent return. That's a very high
Speaker 1: rate of return relative even to the stock market, which
Speaker 1: did you know about a ten percent per annum not
Speaker 1: as well. So it's a liquid way to invest in
Speaker 1: Pershing Square at very low cost, and we're going to
Speaker 1: build a value this.
Speaker 4: Entity over decades. Well, and I know you've said, by
Speaker 4: the way, that's just one of the companies we took public.
Speaker 3: Today, that's true.
Speaker 2: And you have Pershing Square the holding company, the hold co,
Speaker 2: and you also have ambitions to maybe list more funds.
Speaker 3: How quickly can you ramp up aum?
Speaker 2: I know you said just by the nature of what
Speaker 2: you're doing, by compounding that you could get to a
Speaker 2: trillion in twenty years.
Speaker 3: Do you have your own internal targets you're thinking of.
Speaker 1: So the first priority is to compound at a high
Speaker 1: rate for a long period of time. That's a much
Speaker 1: easier thing than doing an IPO right. IPOs can take
Speaker 1: management time and attention. So we're going to focus on investing.
Speaker 1: We're going to focus on getting our universal music deal done.
Speaker 1: We're going to focus on helping the administration figure out
Speaker 1: Fanning and Freddy. We're going to help our companies succeed.
Speaker 1: And the beauty of that is it grows our aem
Speaker 1: and the beauty of this of persons where the management
Speaker 1: company some people call the GP, is it grows with compounding.
Speaker 1: Other asset management firms generally only grow with raising money.
Speaker 1: If you look at a KHR or the other sort
Speaker 1: of alternate investment management firms, if they stop raising money,
Speaker 1: they shrink because they're constantly sending money back to their investors.
Speaker 1: As they sell assets, they send money back. In our model,
Speaker 1: we build off a base and if we're up twenty percent,
Speaker 1: the assets will grow about twenty percent, and so that's
Speaker 1: a very fast rate of growth without the need to
Speaker 1: raise an exctional company.
Speaker 3: Can you rival the size of those?
Speaker 2: I mean, I know it's a very different model, but
Speaker 2: do you see yourself growing to a size of a
Speaker 2: Blackstone of an Apollo over time?
Speaker 4: For sure?
Speaker 1: And that was the point I was making. We'll have
Speaker 1: twenty five today, post the closing of this IPO, we'll
Speaker 1: have twenty five to twenty six billion of fee paying assets.
Speaker 2: Is the way you invest need to change then, because
Speaker 2: these are huge platforms that have many different types of assets.
Speaker 4: They invest in utifur strategy.
Speaker 1: We invest in the largest companies in the world, kind
Speaker 1: of large cap nega cap companies mostly based here. We're
Speaker 1: tiny in the context of the capital markets. We manage
Speaker 1: money on a concentrated fashion. But with twenty five billion
Speaker 1: of capital a couple billion dollars per investment, that's small
Speaker 1: in the context of the market we invest in.
Speaker 2: By the way, and this is quite unique, as you
Speaker 2: point out, there's not really another structure that's listed like this.
Speaker 2: How are you thinking about it though, in terms of
Speaker 2: having a listed structure, both Pershing Square and PSUs that
Speaker 2: it is centered around.
Speaker 3: You and your very small team, which I know.
Speaker 2: Is you see that as a benefit to does it
Speaker 2: change how you communicate? Does it change what you put
Speaker 2: on social media? Because it could impact share prices? It
Speaker 2: does well, I guess legally, is one question.
Speaker 4: But beyond that, well, actually.
Speaker 1: I believe or not, I've been very constrained on social media.
Speaker 1: Maybe you find that a surprise. But with respect to
Speaker 1: talking about Pershing Square, there are a lot of limitations.
Speaker 4: Up until this moment in time.
Speaker 1: Now we have an SEC registered entity, our existing offshore
Speaker 1: clothes and fun, we're not allowed to talk about it
Speaker 1: in America, and that's where I spend the vast majority
Speaker 1: of my time. So it's something we can't talk about.
Speaker 1: The beauty of this entity is we're going to be
Speaker 1: able to make an investment. We can say today we
Speaker 1: bought a ten percent stake in company ABC. Here's why
Speaker 1: we own it, ticker simple ps US and investment. We
Speaker 1: can keep very close touch with our shareholders. And one
Speaker 1: thing that Elon Musk has done very well over a
Speaker 1: long period of time is he built a base of
Speaker 1: followers that you know, we're very supportive of Tesla over
Speaker 1: time reduced the cost of Tesla stock and that's been
Speaker 1: a competitive vantage that Tesla's had over time. We have
Speaker 1: already a very large base of followers in the capital markets.
Speaker 1: They haven't had a way to invest with us until now.
Speaker 2: It does sometimes make for more volatility, though, when a
Speaker 2: post can potentially move around share prices.
Speaker 3: How do you think about that, I.
Speaker 4: Mean, we're only going to post stuff that's true.
Speaker 3: I think that's I think that's a good rule to statify.
Speaker 4: Yes.
Speaker 2: At the same time, you know you've been pretty early
Speaker 2: in some major dislocations in this market, be it COVID,
Speaker 2: be the inflation that followed, and some really successful hedging
Speaker 2: strategies behind that. Do you see any dislocations like that
Speaker 2: at the moment and hedging strategies you'd want to deploy.
Speaker 1: No, Actually, I think we're in a pretty We're heading
Speaker 1: into a very good place. Obviously, we have a war
Speaker 1: still underway, but I think we have by far the
Speaker 1: upper hand. I think the Iran has been denuded of
Speaker 1: military capability and I think it's only a matter of time. Administration,
Speaker 1: I think is move of closing the straight I think
Speaker 1: was a kind of a kung Fu grip ty'd move
Speaker 1: on the part of the president, and I think it's
Speaker 1: putting a huge pressure on Iran. So I think we're
Speaker 1: going to get this resolved in the relative short term.
Speaker 1: I think that's really the biggest overhang on the market, right,
Speaker 1: you know, the you know we close the straight obviously
Speaker 1: has an impact. You know, some whever four percentage points
Speaker 1: or something of oil on a daily basis can can
Speaker 1: move a market, and that has an impact causes inflation
Speaker 1: in the short term. But I think it's a short
Speaker 1: term phenomenon, and I think once we're through it, I
Speaker 1: do see, you know, a federal reserve that should be
Speaker 1: able to reduce interest rates. We have massive you know,
Speaker 1: AI spending, we have massive energy spending. We have a
Speaker 1: tax bill that's driving investment every day. There's how many
Speaker 1: deals that are being announced if administration is very supportive
Speaker 1: of transactions as opposed to an FTC.
Speaker 4: Would which would stop everything.
Speaker 1: So there's I think you're going to see lots of
Speaker 1: reasons to be bullish on markets generally.
Speaker 2: You're pretty early in this call posting on X that
Speaker 2: any dips would be short lived, and they were.
Speaker 1: I didn't say any. I basically called a recent bottom.
Speaker 4: Let's put it the up.
Speaker 1: I thought stocks are getting stupidly cheap. So if you
Speaker 1: sort of called it out.
Speaker 2: I didn't even sell off ten percent. I feel like
Speaker 2: some people feel uncomfortable with that. I think oil today
Speaker 2: is trading somewhere around one sixteen, and stocks feel unbothered.
Speaker 1: See, you can't think about stocks. You're thinking about stocks
Speaker 1: from an index perspective. Okay, the index is like looking
Speaker 1: at the surface of the ocean. I mean sorry, the
Speaker 1: index is like looking at inside the ocean. But the
Speaker 1: surface is moving around a lot. And what I mean
Speaker 1: by that is there are you know, a lot of stocks.
Speaker 1: There's enormous disparity in terms, there's enormous volatility. We have
Speaker 1: a lot of earning coming out in the next twenty
Speaker 1: four to forty eight hours, and you can see you
Speaker 1: could see massive moves in different directions. There's so much
Speaker 1: capital leveraged, short term focus, tightly risk managed, which means
Speaker 1: stop losses and things like this. And the result of
Speaker 1: that is that our capital markets you can see massive
Speaker 1: moves and share prices if you have the ability to
Speaker 1: be long term. Every once in a while, you know
Speaker 1: the price of a really high quality company gets stupidly
Speaker 1: cheap because someone gets it's forced to sell because of
Speaker 1: a bad print for the quarter or a guidance change.
Speaker 1: Really something that doesn't necessarily have any material impact on
Speaker 1: the long term business. And those are the kind of
Speaker 1: dislocations we take advantage of.
Speaker 2: But the dislocations, it sounds like, are over. The stupidly
Speaker 2: cheap moment has come in past.
Speaker 3: Is that fair?
Speaker 1: I would say we're above stupidly cheap bottom, But I
Speaker 1: still think there are a lot of very high quality
Speaker 1: Like the way we sort of model each of our companies,
Speaker 1: we build a model and we were are kind of
Speaker 1: go forward. Next three year IRR was something north of
Speaker 1: thirty percent at the bottom. You don't see that with
Speaker 1: really high quality companies. It's probably now in the mid twenties.
Speaker 1: It's still a very high rate of projective return for
Speaker 1: some of the best businesses in the world. And that's
Speaker 1: suggestive to me. The market's cheap, or at least cheap
Speaker 1: some of the This is a case where the highest
Speaker 1: quality companies are cheap. I'm not saying that energy companies
Speaker 1: are cheap today.
Speaker 2: Sure, so you have to avoid value traps essentially, and
Speaker 2: this market as it stands, that's I think.
Speaker 3: True of any market.
Speaker 2: Fair enough, you know, in this sort of quest to
Speaker 2: build a Berkshire Hathaway type model so you've listed these two.
Speaker 1: Let me clarify because I think it's a little confusion.
Speaker 1: So we're building an asset management firm that has some
Speaker 1: of the similar attributes to a Blackstone car, but it's
Speaker 1: extremely investment centric. We're going to grow this business principally
Speaker 1: by compounding as opposed to raising lots of funds. So
Speaker 1: that's one Buffett was not in the asset management business.
Speaker 1: Buffett was built a corporation over time. We have a
Speaker 1: company called Howard Use Holdings. We bought an incremental stake
Speaker 1: in about a year ago. I became executive chair, our CIO,
Speaker 1: Ryan became CIO. The full persioning Scare team became available
Speaker 1: to the company, and that's the company we talked about
Speaker 1: about building a modern day Berkshire Pathway. And the first
Speaker 1: step we took was we sign an agreement to buy
Speaker 1: a company called Vantage Holdings. That deal is going to
Speaker 1: close in the next you call it sixty days, something
Speaker 1: like this, and we're going to manage the assets of
Speaker 1: that insurer and we're going to work with management to
Speaker 1: make sure they underwrite very high quality, profitable insurance business.
Speaker 1: If you look at Berkshire over the last sixty years,
Speaker 1: it's built most of its value running becoming effectively an
Speaker 1: insurance holding company. That's what Buffett is built over time,
Speaker 1: and it was his successful management of the assets. So
Speaker 1: when you hear Buffett buying Apple, it wasn't Buffet buying Apple.
Speaker 1: It wasn't even Berkshire buying Apple. It was the Berkshire
Speaker 1: insurance subsidiaries buying Apple. And we're going to do the
Speaker 1: same thing. We're going to manage this. So the goal
Speaker 1: of Howard is to build a long term divers fight
Speaker 1: holding company akin to what Buffett is done over a
Speaker 1: long period of.
Speaker 2: Time, and in sort of defining what you know, your
Speaker 2: various holdings and your investments look like and what they're not.
Speaker 2: I know, one distinction you've made very clear, because there
Speaker 2: have been these nerves around retail funds, but it's been
Speaker 2: really centered around BDC's in private credit. You've really drawn
Speaker 2: a distinct line that these are not there's no exposure there.
Speaker 3: I wonder if part of that, though.
Speaker 2: Is skepticism of the asset class itself.
Speaker 3: Is there any skepticism of that asset class.
Speaker 4: Of private credit?
Speaker 1: Generally yes, Look, anytime you have an asset class grow
Speaker 1: very very quickly, with a lot of participants competing, you know,
Speaker 1: return you either have to accept lower returns or more risk.
Speaker 1: That's the only way you can kind of grow in
Speaker 1: that environment. And there's, like everything else, there's a continuum
Speaker 1: of quality in terms of sponsorship. I don't think there's
Speaker 1: inherently something wrong with private credit. I think the one
Speaker 1: thing I would say is investing in ill liquid assets,
Speaker 1: you really should have very long term capital or permanent capital.
Speaker 3: And here you are on your quest to obtaining more
Speaker 3: more permanent capital.
Speaker 1: Is so much capital is managed where the underlying asset
Speaker 1: is long term. A company, a stock is a long
Speaker 1: term asset. The vast majority what's caused the stock market
Speaker 1: to behave the way it does is the vast majority
Speaker 1: of asset management firms have very short term money. They
Speaker 1: have money that can leave in a minute an etf
Speaker 1: they have money that can leave overnight in a mutual
Speaker 1: fund or even a hedge fund.
Speaker 4: You know, when we local assets.
Speaker 1: Or hedge funds, about half the money can leave every year.
Speaker 1: It's hard to be a long term investor if your
Speaker 1: money can leave overnight.
Speaker 2: So one of the arguments for that though, of being
Speaker 2: able to redeem, is.
Speaker 3: Just your accountable to shareholders. How do you keep that?
Speaker 2: How do you keep accountability to shareholders when they're not
Speaker 2: able to redeem assets out of the fund.
Speaker 1: The shareholders have more liquid than they do in any
Speaker 1: fund because they have a stock that trades and they
Speaker 1: can buy and sell over time.
Speaker 2: What needs to go right on the flywheel because if
Speaker 2: you do have any sort of discount, nap, does that
Speaker 2: make it more difficult?
Speaker 3: Well to list other vehicles like this.
Speaker 1: We're going to focus on doing great job for the
Speaker 1: PSUs shareholders, and if we do a great job, we
Speaker 1: communicate to them, well we deliver the kind of performance
Speaker 1: we have over time, we deserve to trade it a
Speaker 1: premium as opposed to discount.
Speaker 4: Right again, the average.
Speaker 1: Clothes and fund, the second the best performing closed then
Speaker 1: fun over the last eight years, generated a fourteen and
Speaker 1: a half percent return. As time we generated a twenty
Speaker 1: four point nine percent return.
Speaker 4: That's a huge disparity.
Speaker 1: And by the way, that fund trades at a fifteen
Speaker 1: percent discount, sorry, fifteen percent premium.
Speaker 3: Do you think you could trade it at premium?
Speaker 1: Here's my argument, right, business, that's that earn the kind
Speaker 1: of return that we've generated over time, traded two to
Speaker 1: three times book value. Should we trade it a discount
Speaker 1: book value? It makes no sense. And we have a
Speaker 1: tax advantage, right, we have a favorable corporate structure, much
Speaker 1: more flexible, much more tax efficient liquid listen New York
Speaker 1: stocks change.
Speaker 4: I mean put.
Speaker 1: Aside, I don't know what happens in the first couple
Speaker 1: of days after an offering, you know, but with good
Speaker 1: shareholder communication, keep people informed, good performance, this can become
Speaker 1: a core holding. And by the way, the bulk of
Speaker 1: this entity is sold to very long term holders, and
Speaker 1: so now with so much of the stock held by
Speaker 1: long term holders, it's the marginal buyer and seller that
Speaker 1: will move the price around.
Speaker 2: By the way, are you as excited as everyone else
Speaker 2: is about getting to hear from you quarterly now when
Speaker 2: you give quarterly updates?
Speaker 3: Or do you wish it was semi annually?
Speaker 4: No?
Speaker 1: No, I'm very happy to enjoy communicating, and I certainly
Speaker 1: enjoy communicating with people who've entrusted their future to us.
Speaker 4: We actually operate.
Speaker 1: You're not as aware of this, but today we do
Speaker 1: quarterly conference calls for our existing vehicle. We're not going
Speaker 1: to be able to do them on shore. We're able
Speaker 1: to answer questions from shareholders the way that you would
Speaker 1: want those questions to be answered.
Speaker 3: Very much so looking forward to that. Bill, Thank you
Speaker 3: so much for your time this morning. We appreciate it.
Speaker 2: Bill Ackman, CEO and founder of Pershing Square