The Knowledge Project PodcastBill Ackman: “Some Dominant Companies Will Just Disappear”
The Knowledge Project Podcast
Lucy's brain hemorrhage 0:00
Bill Ackman describes how his daughter Lucy, an otherwise healthy young woman, suffered a brain hemorrhage caused by an arterial venous malformation, a rare structure where blood flows directly from an artery into a vein without slowing through capillaries first. Too much pressure built up until a vein burst, flooding her brain with blood inside the confined space of the skull, which pushed down on the midbrain that controls breathing and heartbeat. She was found unresponsive in her Williamsburg apartment after missing a trip to a friend's wedding in Abu Dhabi, discovered by Ackman's oldest daughter after hours of failed attempts to reach her.
Delayed diagnosis and emergency surgery 4:31
Paramedics did not know which hospital to take her to because they could not immediately tell what was wrong, and she sat for a time before a CT scan revealed the hemorrhage. Surgeons needed to remove about 40 percent of her skull to relieve pressure on her brain, but by the time this happened roughly 19 hours had passed, far beyond the normal 5 hour window doctors use before assuming brain death. Ackman says he gave the medical team what he calls his dare to be great speech, offering unlimited resources and access to the latest technology, and Lucy has since regained cognition, her sense of humor, and is slowly relearning speech and showing signs of recovering vision and movement.
Building a brain institute 9:00
Motivated by Lucy's case, Ackman and his wife are converting a vacant biotechnology building on 65th and 11th Avenue, a 3.4 acre site bought within 60 days of first discussing the idea, into what he hopes will become the world's greatest brain institute. The plan draws on advances like brain computer interfaces similar to Neuralink and on AI's growing ability to interpret brain data, with goals such as restoring vision through camera glasses linked to the visual cortex. He argues that neurologists are often too nihilistic about recovery, that insurance and hospital economics discourage adequate rehabilitation, and that most patients with similar injuries end up in nursing homes and die soon after, unlike Lucy who has had unconstrained resources and constant support from family and friends.
Nutrition and hospital care gaps 15:00
Ackman continues describing the brain rehab, recovery, and longevity institute, noting that hospitals are poor at nutrition, sometimes serving heart attack patients pancakes with syrup the morning after. In his daughter Lucy's case, the family made food for every meal, and the planned institute will prioritize quality food as part of recovery.
Personal habits and balance 17:02
Asked how he keeps his mind healthy, Ackman says playing tennis almost every morning is his main form of focus and meditation, alongside good sleep and family time. He mentions he meditated during his divorce but has not kept it up recently. He also describes how Pershing Square now runs with almost no staff turnover, with the same investment team in place for nine years, which he says builds trust and transparency. Colleague Ben now handles much of the business operations, freeing Ackman to focus on strategy and occasional new ideas rather than generating most of the firm's investment ideas himself.
Company structure and governance 20:32
Ackman explains Pershing Square's public entities, including the management company Pershing Square Inc. and two publicly traded funds with independent boards. He contrasts this with typical closed-end fund boards, criticizing the practice of the same directors sitting on dozens of boards, such as one firm where six directors reportedly serve on 86 fund boards, versus the usual four-board limit recommended by ISS. He says Pershing hires real, well-paid directors instead, and notes he owns about 45 percent of the company, with the team owning roughly 35 percent.
Balancing family and ambition 22:01
Ackman admits setting up the Aman Oxman Institute has taken significant mental energy recently, comparing it to running a proxy contest, since he is assembling a team and will chair its board without managing daily operations once it launches.
Defining and spotting bubbles 25:00
Ackman describes a bubble as forming when human nature and fear of missing out push more money into the same trades until valuations overshoot and eventually collapse. He says AI is genuinely transformational but shows bubble-like behavior in venture investing, citing a company he met that raised funding twice within weeks, first at a 400 million dollar valuation and then a billion, and another series A priced at a 5 billion dollar pre-money valuation.
Avoiding FOMO and advice to founders 27:01
He points to Warren Buffett's discipline during the internet bubble, when Berkshire's stock hit lows because he refused to chase gains others were making. Ackman advises founders to raise capital now while it is available but to spend it carefully, recalling how a Barron's article once listed internet companies by their cash burn just before the market crashed. He says disciplined companies with years of runway will survive a future reset, while those needing money again in three months will disappear.
Public markets versus venture investing 28:00
Ackman contrasts public market investing, which targets durable, profitable, dominant companies where a weak CEO can be replaced, with venture investing, which bets heavily on the founder's ability to turn a cash-losing company into a profitable one over time.
Betting on the founder, not the idea 29:31
Ackman says he weighs the person more heavily than the original business plan, because the first idea often fails and the founder has to pivot. His best venture bet was Bom Kim, whose original plan to build a Korean Groupon Ackman thought was a bad model, but he liked Kim and backed him anyway; Kim went on to build what became the Amazon of South Korea, with a business that had little to do with the original pitch.
AI and the risk of disruption 31:30
Investing is about predicting what a business will look like ten, twenty, even thirty years out, and AI has sharply raised the risk that today's dominant companies get disrupted. Ackman notes that even Warren Buffett failed to foresee how the internet would upend businesses like World Book encyclopedias, and says everyone will eventually look foolish about some company they didn't see AI disrupting. He points to a firm called Cognition, whose AI can rewrite old banking code (like COBOL) in days instead of months, potentially cutting costs at big financial institutions, though whether those savings stay as profit or get passed to customers depends on pricing power. He also expects AI to let many new entrepreneurs build businesses that weren't possible before, citing Meta's newly released Muse tool as an example of how fast and easy AI agents have become, with updates arriving in days rather than years.
How Pershing Square picks investments 37:31
Ackman describes building a long-running library of admired companies, waiting for a macro shock like COVID or the 2022 software sell-off to make valuations attractive; that repricing let them buy Microsoft cheaply. Two team members typically do a deep dive using SEC filings, expert networks, and conversations with former employees and competitors before building a financial model and presenting to the full team, with Ackman and CIO Ryan doing independent checks. AI currently serves mainly as a research tool, not for model-building, since Ackman believes real differentiation comes from human insight and contrarian moves AI wouldn't suggest, like buying credit default swaps before a pandemic or shorting a AAA-rated company before the financial crisis.
Discipline after a big loss 39:31
After a large loss around 2015 to 2016, Ackman says the firm wrote its investment principles down like rules on a stone tablet, favoring simple, predictable, cash-generative companies with strong management and durable competitive moats, run by large-cap, liquid public firms. He explains he never liked short-selling because losses are unlimited while gains are capped, and recounts shorting a company he calls a fraudulent pyramid scheme, expecting an easy win, only for Carl Icahn to buy in against him, turning it into a costly, personally brutal fight that included public attacks and a hedge-fund squeeze against him.
Personal use of AI 43:31
Ackman describes using artificial intelligence more heavily after his daughter faced a major health incident, saying it is an incredibly powerful tool for vetting medical decisions. He suggests every doctor should be checking their own work against an AI system as a matter of course.
Brookfield and sports team investing 44:32
Asked whether infrastructure-heavy companies like Brookfield become more valuable in an AI world, Ackman calls Brookfield an AI winner, since it builds and finances data centers and power for what he sees as effectively infinite demand for compute. On the trend of buying sports teams, he says he is a fan of Josh Kushner but is not sure how much of the recent baseball investment is Thrive-related versus personal, and he notes that sports teams are valued more like artwork than financial assets, since most owners accept low current returns in hopes of far greater future cash flow. He says he personally will not buy a sports team.
From loud activist to behind the scenes 46:00
Ackman explains that Pershing Square shifted from public activism to working with management privately because, twenty years into the business, they now have credibility and a track record as long-term investors, so companies welcome them instead of resisting them. He argues activists should not be legally required to hold shares for a set period, but believes activism aimed at short-term stock pops at the expense of a company's long-term health is harmful, comparing extreme cases to greenmail, and says large index-fund holders like Vanguard and BlackRock, as permanent owners, won't back initiatives that damage long-term value.
Advice for ordinary investors 49:00
For everyday investors, Ackman says active investing requires real time, study, and homework on companies, so those unwilling to do that are better off with index funds, which have beaten most active investors over long periods. His main advice is to start investing young to harness the power of compounding, and not to sit on cash simply because the market looks expensive.
Stock options versus cash pay 50:00
On why mature companies like Meta or Microsoft still use options or restricted stock instead of paying cash, Ackman points to vesting as a retention tool and to the alignment it creates, since employees who hold stock care more about the share price. He notes Pershing Square's own management company does not plan to issue meaningful options or restricted stock, since about eighty percent of its equity is already spread widely among the team, though a future generation without ownership might eventually need such tools.
Buying, selling, and rebuying Netflix 51:01
Ackman recounts first buying Netflix after a subscriber guidance miss crushed the stock, meeting with management, and finding them fully aligned with his thesis, including their firm insistence they would never add an advertising tier. Weeks later, management reversed course after another subscriber miss and announced they would launch advertising, which Ackman took as a sign the thesis had broken, since Pershing Square requires high-certainty companies and the range of possible outcomes had widened. They sold, booked a tax loss, and redeployed into Alphabet, but Netflix went on to execute well, build a successful ad model, and win the streaming wars against rivals like Disney and Paramount, eventually trading at a high multiple before the stock was cut in half again, at which point Pershing Square bought back in at a price that made sense.
Origins of Howard Hughes 54:01
Ackman explains that Howard Hughes was created to salvage an investment in General Growth, a mall company bought during the financial crisis after its stock fell ninety-nine percent, with Pershing Square buying twenty-five percent and pushing the board toward a chapter 11 restructuring that let shareholders retain value. To make General Growth resemble its rival Simon Properties, they split off non-mall assets, including large land developments called MPCs, into Howard Hughes, and unusually the parent company's stock rose rather than fell on the spinoff, prompting Simon's CEO David Simon to mock the new entity as junk.
Howard Hughes as master planned communities 56:02
Over time Pershing Square narrowed Howard Hughes's focus to its master planned communities, or MPCs, which Ackman describes as small cities, citing the Woodlands in Houston, home to about one hundred fifty thousand people with office towers, shopping centers, schools, and churches. He compares the business to the video game SimCity, with Pershing Square acting as a benign long-term owner of these communities.
Howard Hughes as a modern Berkshire 57:02
Bill Ackman explains that Howard Hughes owns vast tracts of commercial and residential land in fast growing places like Texas, Las Vegas, and Hawaii, land that could theoretically be worth trillions if held over a century, yet Wall Street has always priced the stock at a steep discount because land and development businesses have a poor long term reputation. Pershing Square built a 47 percent stake and is now turning the company into what Ackman calls a modern day Berkshire Hathaway, following the path Buffett took when he moved a dying textile business into insurance, banking, and other ventures. As executive chair, with Ryan installed as CIO, Ackman has already bought an insurance and reinsurance company called Vantage Holdings and hired a top team to underwrite risk while Pershing Square manages the investment assets.
Buffett's insurance playbook and Berkshire's edge 1:01:30
Ackman walks through how Buffett actually ran Berkshire, holding the cash needed to pay claims in short term treasuries while investing the rest of the float in common stocks, so the insurer earned money both from underwriting profit and from strong investment returns, a combination that can produce twenty percent annual returns when liabilities are effectively cost free. He notes Howard Hughes still sells off land and Hawaii condominiums, generating roughly 300 million a year in operating income, but instead of plowing that cash back into more real estate, it will now flow into growing the insurance side, with the business mix shifting from about seventy percent real estate today toward seventy five percent insurance within five years. Asked what made Berkshire work, Ackman lists control, a long term view free from short term shareholder pressure, permanent capital, no dividends, skill at picking stocks, strong hires, and minimal dilution from stock issuance, adding that Buffett's willingness to work for modest pay set an ethos that made compensation talks with others easier.
Permanent capital and the Raymont watch story 1:07:30
Ackman describes designing Pershing Square around permanent capital so the firm is never forced into decisions by outside pressure, citing employee ownership stakes across Pershing Square Holdings, Howard Hughes, and the newly public Pershing Square USA, and explaining that raising and defending capital for open ended funds once consumed so much of his time it contributed to his biggest investment mistake. He then tells the story of discovering the watch brand Raymont at a mall near a Howard Hughes board meeting, later rediscovering it before a London trip, buying watches as gifts, and writing a personal note to the founding English brothers that led to Pershing Square taking a small minority stake, an investment he treats more as a hobby than a core holding, done on character and trust rather than formal diligence.
Buying a Watch Company 1:11:00
Ackman describes taking effective control of a small watch company he had been involved with for twenty years, after a board fight over changes like a new logo. He put in more capital, joined as non-executive chair, and brought in his nephew to help fix things. He calls it his version of owning a sports team, highlighting a model called the Supernova with a phosphorescent face, ceramic bezel, and a high quality Swiss movement.
Finding the Right CEO 1:12:30
Asked how he recruits top executives, Ackman explains that hiring someone who has already done the job before is the lowest risk approach, citing how Brian Niccol's name kept surfacing during Chipotle's food safety crisis. He uses expert networks to gather 360-degree views from people who worked with or against a candidate, and says he has become a strong judge of character, looking for passion, capability, energy, and honesty, often assessable within an hour.
Reputation and Misconceptions 1:14:02
Ackman says people often expect him to be hostile based on his media image and Twitter posts, but finds him personable in real life. He believes the Herbalife short sale, from 2012, caused lasting reputational damage since short selling is widely seen as villainous, though he notes Pershing Square has not run an activist campaign since 2016.
Staying Involved Without Activism 1:15:01
Ackman doubts he will need traditional activism again, arguing that with a large following and strong reputation, dialogue alone can get companies to the right answer, and that boards would welcome Pershing Square's involvement given its long-term, constructive approach.
Defining a Significant Life 1:16:00
On success, Ackman says it means giving investors life-changing outcomes so they can retire comfortably and support their families. Turning sixty this past May prompted him to reflect on having twenty to twenty-five years left, hoping health advances extend that further, and he mentions a grandmother who lived to nearly 106. He defines success as having the greatest beneficial impact on the largest number of people, starting with family and extending through work like his institute.
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