Bill Ackman, the founder of Pershing Square, credits Warren Buffett as the primary inspiration behind his successful 20-year-old hedge fund management company. In a recent virtual presentation during a roadshow to pitch Pershing Square USA Ltd., Ackman reflected on how discovering Buffett’s writings in his early 20s significantly influenced his investment philosophy. Ackman acknowledged learning from the unconventional career trajectory of the “Oracle of Omaha,” noting that Buffett’s early partnership letters were particularly insightful. This discovery served as the driving force behind the establishment of Pershing Square as Ackman delved deeper into the world of value investing.
A Shift Towards Permanent Capital
Unlike traditional hedge funds, Ackman has strategically transitioned towards managing permanent capital, a move that aligns with his long-term investing approach. By concentrating almost 90% of Pershing’s assets in a permanent capital format, Ackman has minimized the unpredictability associated with investor redemptions and the subsequent need for continuous fundraising efforts. This strategic shift allows him to focus more on the portfolio and adopt a more deliberate investment strategy, akin to Buffett’s approach at Berkshire Hathaway. By emulating Buffett’s ability to manage a permanent capital entity successfully, Ackman has positioned Pershing Square as a formidable player in the asset management industry.
Bill Ackman’s admiration for Warren Buffett is evident in his pursuit to emulate Buffett’s investment principles and strategies. Ackman describes himself as a “Buffett devotee” and considers the legendary investor as his “unofficial mentor.” Attending Berkshire’s annual meetings and studying Buffett’s career trajectory has provided Ackman with valuable insights that have shaped his investment decisions over the years. As Ackman aims to build a legacy similar to that of Warren Buffett, he maintains a steadfast commitment to long-term value investing and prudent capital allocation strategies.
As Ackman continues on his quest to manage a permanent capital entity akin to Berkshire Hathaway, he is poised to introduce a closed-end fund on the New York Stock Exchange. This strategic move not only diversifies Pershing Square’s offerings but also sets the stage for a potential IPO of his management company in the future. By leveraging his experience and expertise in value investing, Ackman seeks to create lasting value for his investors while upholding the principles that have guided Warren Buffett to legendary status in the world of finance.
The profound influence of Warren Buffett on Bill Ackman’s investment philosophy is evident in Pershing Square’s strategic evolution towards managing permanent capital and adopting a long-term investment approach. Through his admiration for Buffett’s principles and his commitment to emulating the Oracle of Omaha’s success, Ackman continues to navigate the complexities of the asset management industry with a vision of achieving lasting value for his investors. As Ackman’s journey unfolds, his dedication to building a legacy inspired by Warren Buffett serves as a testament to the enduring impact of mentorship and learning from investment luminaries.