Bill Ackman: Concentrated Investing, Permanent Capital, and the Value of Being Challenged

What's the best way to get conviction and investment idea? Find the best short seller in something that you own and and hear your... Their arguments. If you can rebut each of their arguments, then you can feel more confident in your investment. And the same thing is... Should be true for your other views. Find the person who makes the best case for why you're wrong. The best hope we have to get to the truth is hearing from all sides and then sorting through who's got the better argument. Hi, everyone. I'm Nikola Tangen, the CEO of the Norwegian sovereign wealth fund. And today, I'm in really good company. I'm in New York with Bill Ackman, the founder of Pershing Square. Bill is one of the best known investors in the world, and he does it in a very unusual way because most funds own hundreds of companies, but you own very few. Compounding, very strong at 16%, and you've been doing it for a long time. So great to have you here. Thanks for having me. What's a good company? Good or great? Great. A great company is a business you could buy today, the markets could shut for twenty years, and you know with an enormous degree of certainty that you'll own something that's enormously valuable ten or twenty years from now. And what kind of industries are they in these great companies? You know, I think it's less industry specific than the structure of the business. Mhmm. They're amazing businesses in in many different sectors. And so what kind of structure does it need? We love businesses that look like royalty collecting companies, like annuities, where can be very confident that the annuity will grow at a high rate over a very long period of time, and the cash that's generated from the business doesn't need to be reinvested in the business. Actually, Pershing Square, I can... I'll give you the pitch. We'll talk about that. We'll talk about that a bit better. How many of those companies are there in the world, you think? The answer is there aren't a large number of big ones. So in the... From the perspective of Pershing Square, we're allocating not the kind of capital you allocate, but, you know, writing pretty big checks. That's why we're concentrating, because, one, there's a limited number. There are probably actually a couple 100 Mhmm. To 300 really great businesses, but it's not so often that a really great business becomes available at a price that makes it a great investment. Mhmm. And so that's why we're concentrated. Concentrated. How do you come up with the idea? Where do you find these things? You know, just, you know, we love investing, we love learning about businesses. We read the newspaper, so to speak. But we we sort of built a library of companies we admire. Mhmm. And, you know, business that has great economic characteristic, high rates of growth, managed by …