Key Points Summary
Bill Ackman runs one of Wall Street's most concentrated hedge fund portfolios: $14 billion invested in just 11 stocks, with the top five holdings making up 78%. In a recent interview, he revealed some specific moves: recently sold Alphabet, increased stake in Microsoft by $2 billion, and placed a bet on the AI infrastructure trend among hyperscalers. He didn't beat around the bush, with the core logic being simple: buy companies with strong predictability to earn compound returns. His biggest market concern is not valuation but the moment when highly leveraged players are collectively forced to liquidate. Regarding Bitcoin and gold, his exact words were, "I don't know if it's worth $50,000, $70,000, $5,000, or $1 trillion, but I don't need to know. Investing is about knowing what you know and what you don't know."
Key Insights Summary
AI Is the Main Theme, Everything Else Is Noise
· "We are at a very unique point in history. AI is driving a lot of entrepreneurship, providing highly affordable intelligence to a very wide audience."
· "The biggest companies are competing to build models leading to superintelligence. They are snatching land, building data centers, and stacking GPUs. This is a 'land grab.'"
· "I am not eager to bet on cutting-edge model companies. Open-source models are getting better, and people will soon be able to access models that are good enough to solve most problems at a low cost or for free."
Each Stock in the Portfolio Is Carefully Selected
· "Some companies we have always wanted to buy but were previously too expensive, including Amazon, Meta, Uber, and Microsoft. A lot of capital is chasing 'new new things,' semiconductors, memory; money flows where there is profit. We are focused on areas that can achieve a high compound return over the next three to five years."
· "Uber is currently very cheap because the market believes Tesla's self-driving taxi will disrupt it. I think consumers will still open the Uber app to call a ride. What they want is the cheapest and fastest ride from point A to point B."
· "Want to know which giant will win? SpaceX is the only place where you can rent 100,000 GPUs, and the returns are extremely high. The only concern is the price, as the imagination space shrinks when the market cap is $6-7 trillion."
Avoiding Bitcoin and Gold because they are speculative
· "Satoshi Nakamoto is a genius. If I had read the whitepaper at Bitcoin's 20 cents, I might have bought some. But I didn't buy because it doesn't generate income. The value of a business is because it can generate future cash flow, while gold and Bitcoin are only worth how much someone else is willing to pay. This is not called investment, it's called speculation."
· "I have indirectly invested in some blockchain companies through VC funds. I am very interested in the technology. But speculating in various coins is not my thing."
Market's biggest fear is not overvaluation
· "The market is indeed expensive in some areas, but looking at the overall PE ratio doesn't make much sense about whether it's expensive or not. The current top companies, like Nvidia, Microsoft, Google, are of much higher quality than the top companies 20 years ago and should rightfully enjoy a higher valuation multiple."
· "My biggest concern is that there are too many leverage players in the market. If some external shock occurs and people panic sell, those leveraged will be forced to liquidate, triggering a chain reaction. If you are not leveraged, holding good companies and you don't need the money to spend tomorrow, then a big drop is actually a buying opportunity for you."
· "Don't borrow money to speculate in stocks; that's how you get wiped out. Carl Icahn leveraged his own stock and turned his $20 billion wealth into three to four billion. Even the rich can lose big money."
Avoid day trading options
· "I don't like the day trading options trend; it's pure gambling. No one can predict whether a stock will go up or down in a day, unless you have insider information. It's just a crazy game."
"We are not predicting the future, just noticing things that others overlook."
Nicole Lapin: Your actions in 2008 made people feel like you could foresee the future. What did you see?
Bill Ackman: The so-called foresight of the future is often just carefully studying the present and finding similar cases in history. In the years before 2008, we saw a group of companies doing crazy things: bond insurance companies holding AAA ratings as good as government credit, but they went to guarantee high-risk mortgages, collected premiums, and showed all profits on the books. This was not sustainable. It's not predicting the future; it's seeing the current problems and knowing they will eventually explode.
As for the future, the market will always fluctuate. I don't know the specific trigger point, but there is a massive amount of speculation in the market, with both professional investors and retail investors using a lot of leverage. If I could give you only one piece of advice: don't borrow money to invest in stocks. Also, don't gamble with the money you need to live on.
How These 11 Stocks Were Selected
Nicole Lapin: Pershing Square holds only 11 to 12 stocks, why such concentration?
Bill Ackman: We are looking for the best businesses in the world, those that can stand the test of time, at least those that won't be disrupted by AI, ideally those that benefit from AI.
We have some companies in our portfolio that we have always wanted to buy but were previously too expensive, until recently when they became more reasonable. Amazon, Meta, Uber, Microsoft are on this list. A lot of money is chasing what has recently made money in the market, such as semiconductors, memory, but we are focusing on assets that can bring us a high compound return in the next three to five years.
Brookfield also fits this model perfectly. It does asset management, private equity, real estate, infrastructure, especially in power and energy-related businesses. The construction boom of data centers will require a lot of infrastructure, and Brookfield is right in that position. It helps others manage money, taking equity and fees from it, which is a good business.
Nicole Lapin: You recently bought $20 billion of Microsoft and sold some Alphabet. Does this mean you are no longer optimistic about Alphabet?
Bill Ackman: Two things are very important to us: company quality and price. We want to buy at a price that offers a very attractive return. Sometimes, one of the stocks we hold reaches a level where the future return is below our threshold, so we sell it. Selling Google doesn't mean we are bearish on it; Google is still an amazing company. It's just that its price has reached a point where the future return is not as good as putting that money into Microsoft.
Right now, Microsoft is around $387 per share. If you want to buy Microsoft at $310, you don't have to wait for it to drop to that price; you can buy PSUs instead. PSUs are the publicly traded fund we manage, currently trading at a 22% discount to net asset value, and this basket holds Microsoft.
Ackman's Top Picks and Underperformers
Nicole Lapin: Let's play a game called "Bull or Bear". Gold?
Bill Ackman: No opinion. I don't buy gold, although I have bought jewelry for my wife. My dad bought gold many years ago, probably in the '70s, and he's been holding onto it. It's not a good investment. I told him to sell it when gold went over $4,000, and he listened. I prefer to hold onto companies that can compound growth.
The issue with gold is that its worth is only what someone else is willing to pay for it, providing no return. Every asset I invest in generates some form of return: profit, dividends, rent. I only see gold as speculation, not investment.
Nicole Lapin: What about Bitcoin?
Bill Ackman: Also not buying. Very similar, almost like gold. Satoshi Nakamoto is a genius. If I had read the whitepaper when Bitcoin was at 20 cents, I might have bought some. But I don't know if it's worth $50,000, $70,000, $5,000, or $1 trillion. The beauty of investing is that you don't need to have an opinion on every asset class, just know what you know and what you don't. I don't understand Bitcoin, and I don't understand gold, so I stay away from both.
I have indirectly invested in some VC funds focused on companies with blockchain and crypto at their core business, and I am very interested in the technology. But speculating on various coins is not my thing.
Nicole Lapin: What about Chipotle?
Bill Ackman: One of our most successful investments. We bought in when it was facing a food safety crisis and helped bring in Brian Niccol. He later went to Starbucks, and the subsequent management faced some challenges. I think the company is well-positioned in the long term, but I don't have a strong directional view on the current stock price.
Nicole Lapin: Starbucks?
Bill Ackman: Has a very talented CEO at the helm. However, Starbucks has pushed prices to quite high levels over the past long period, and I don't think there is much more room for upside. The consumer experience is also declining, and Brian is trying to bring it back.
Nicole Lapin: Government bonds?
Bill Ackman: Government bonds are where money goes to die. But if I had to choose, I'd rather hold high-quality companies for the long term than choose government bonds.
The Risk He's Really Worried About
Nicole Lapin: What is the next crisis? Will there be another 2008?
Bill Ackman: There's always something to worry about. First, the U.S. government is spending more than it takes in, we have around $34 trillion in national debt, and we keep borrowing to fill the deficit. To make matters worse, the AI infrastructure boom has led to a large number of companies also issuing debt for financing, causing a surge in credit demand, while the government itself is issuing more debt. With so much supply needing to be absorbed by investors, this could lead to rising interest rates.
The second risk is more lethal: there are too many leveraged players in the market. If some kind of external shock comes from the side, people panic, sell off, and those who borrowed money will be forced to liquidate, triggering a domino effect of more selling. Stock prices will plummet.
But if you have an unleveraged portfolio, holding a group of high-quality companies, and you don't need this money tomorrow, this is your opportunity to buy more. If you have margin debt, you will be forced to liquidate at the bottom, which is the last thing you want to do.
Buffett's secret is longevity. He designed Berkshire in a way that it will never be margin called, so it can compound continuously. Some years we go up 30%, 40%, and some years we go down, like this year with a slight drop—it's okay. You don't need to make money every year. What you need is to survive and let good companies compound continuously.
Nicole Lapin: Is the overall market expensive right now?
Bill Ackman: Some areas are expensive. But to broadly say the market PE is now 21, historically averaging 17, and consider it high is not very useful. Market value depends on future earnings, and earnings have consistently exceeded expectations, with growth faster than most of history. Moreover, the current largest companies by market cap, such as Nvidia, Microsoft, Google, Meta, are far higher in quality and growth than the top companies 20 years ago, and they should rightfully enjoy a higher valuation multiple.
If Microsoft, Amazon, Meta are all cheap, then it's hard to argue that the entire market is expensive.
Roadmap for Young People
Nicole Lapin: If someone has $1000 to invest right now, how do you suggest they allocate it?
Bill Ackman: Find a few companies that are not heavily leveraged, that you love, that you admire, that make sensible decisions. And you have to really believe: if the stock market were to close for ten years tomorrow, you'd still be happy owning it for those ten years.
Don't invest in what's hot right now. Invest in what you think will stand the test of time. The value of a business is the present value of all the cash it generates in its lifetime, and you have to be confident that it can last a long time.
Where does one start? As a consumer, you often discover good things earlier than Wall Street. Many of the earliest Tesla shareholders were retail investors because institutions didn't understand how amazing it was. Think about the products and services in your life that you admire. Can they withstand competition? Amazon, every time I want to buy a book, I go to Amazon. You might have experienced a New York pharmacy, everything locked behind plastic. Amazon delivers in two hours. Who can compete with that?
Nicole Lapin: What are your thoughts on young people playing with day trading options every day?
Bill Ackman: It's gambling. No one knows if a stock will go up or down in a day. Unless you have insider information.
Nicole Lapin: What is the formula for success?
Bill Ackman: It's all the most basic things: showing up on time, doing a little more than what others do, keeping your word, underpromising and overdelivering. If you enter an industry, spend time becoming the most knowledgeable person in that industry. You will be noticed.
When I had my first real estate job, I went to the McGraw Hill bookstore for lunch every day to read real estate books. That knowledge took years for my peers to acquire. In the age of AI, you can have AI teach you anything, which is much simpler than flipping through books in a bookstore as I did back then.
The workplace winners I've seen are usually not the ones with the highest IQ. It's the one people like, trust, who does a little more, has some creativity, and never gives up. These are things you can have starting tomorrow. You can't change your IQ, but you can work harder than others, you can be honest, these are all choices.
Don't gamble away tomorrow's compounding with today's pocket change
Nicole Lapin: And last question, what advice would you give the audience on something they can "put in the bank"?
Bill Ackman: First, start investing early and contribute a bit of money to the market every month. If you don't have time to pick stocks, buy an index fund. If you have time, find the best company in the industry. Avoid buying heavily leveraged companies. Invest in companies that you believe will be much larger in five, ten, or twenty years. Buy companies that are unlikely to be disrupted by something "two Stanford girls just graduated and built in a garage."
The most powerful aspect of compounding is time. Most investors are short-sighted, while long-term players have a significant competitive advantage. Additionally, currently, the government only taxes you when you sell, allowing your profits to grow tax-free. If you can open an IRA or a Trump savings account, compounding remains tax-free.
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