Bill managed a historic turnaround of his hedge fund, and today he’s a leading voice on Wall Street who is worth over $8 billion.
He’s also amassed a huge online presence with 2.7 million followers, where he candidly shares his sometimes very controversial beliefs on business, politics, and culture.
In a new episode of Fortune 500: Titans and Disruptors of Industry, Fortune’s Editor-in-Chief Alyson Shontell sat down with Pershing Square CEO Bill Ackman to discuss his approach to shareholder activism; his relationship with President Trump and outspoken views on politics and societal issues; and how he’s thinking about AI, his new Brain Research Rehabilitation Institute, and the future of Pershing Square.
On markets and AI-driven speculation
- Why Ackman says rising speculation, from one-day options to sports betting, calls for caution, while AI-fueled growth at big tech companies still justifies today’s valuations
On his biggest current stock bets
- Why Ackman is buying Uber, Microsoft, Amazon, and Meta, betting they’re cheap because investors are focused on chipmakers instead
On trillion-dollar IPOs and private markets
- How Ackman thinks about pricing SpaceX, Anthropic, and OpenAI, and why he worries about companies that need constant new capital to survive
On speaking his mind publicly
- Why Ackman says his outspoken views on politics, DEI, and universities aren’t calculated, just things he feels strongly about
On philanthropy versus capitalism
- Why Ackman believes capitalism creates jobs more efficiently than philanthropy, and how his new Brain Research Rehabilitation Institute mixes both models
On surviving Pershing Square’s near-collapse
- How a $300 million personal loan from J.P. Morgan helped Ackman rebuild Pershing Square after the Valeant and Herbalife losses, and his history with Carl Icahn
On building Pershing Square’s culture
- Why Ackman credits a small, carefully chosen team and shared equity for the firm’s low turnover
On longevity and the future of AI
- Why Ackman thinks AI will transform education and healthcare by making expert-level intelligence available to everyone for free
Read the transcript, which has been lightly edited for length and clarity, below.
Bill Ackman, it’s a pleasure to be here with you today. Thank you for spending the time.
Of course.
On markets, AI, and his biggest bets
The first thing I’d love to hear from you is your market update. What are you looking at? What’s interesting? What’s going on? And what are some of the risks you’re seeing?
Markets are always interesting, but it seems like a particularly interesting time in history—amid a couple of important wars at the same time, and major technological change. AI is the story of the moment, really the story of the next many years, in terms of the implications for business, for the economy, for companies, for employees. In terms of markets, there’s a fair amount of speculation right now. On the negative side, you have the growth of one-day options, these kinds of leveraged ETFs, and all the money being spent betting on sports. Speculation is increasing, and that’s a time to be a little more cautious.
At the same time, if you look at market indices, people point out that multiples are higher. But the S&P is a market-cap-weighted index, meaning the biggest companies have the biggest impact on valuations—and the biggest companies today are amazing businesses with much higher growth trajectories than businesses of even a decade or two or three ago. So it’s a different market today than one where you’d look at average multiples. We’re finding cheap stocks. In fact, some of the best—what we call durable-growth—companies in the world are available at prices we find compelling, because they’re not at the cutting edge and not dead center on the demand for chips, memory, or even land and real estate for data centers.
As you said, the new thing seems to be energy fueling this whole economy, with chips and semiconductors pouring in. Some of the recent big tech stocks you just bought: Uber, Microsoft, Amazon, Meta. I’m curious about your strategy there—and I have to admit, as someone who looks at the AI landscape a lot, that’s not necessarily where I’d put my AI bets, since I believe you sold some Alphabet, which seems like a pretty good company to own.
I’m less interested in the frontier itself—intellectually, I’m interested in frontier AI companies and models—but we try to find businesses we can predict with a very high degree of confidence over time. That becomes harder when there’s major technological change, but certain businesses have a market position that’s very difficult to disrupt. Uber is an amazing business. Look at the cash-flow metrics, the growth, the earnings trajectory, the revenue growth—even the mind share. When a company becomes a verb, that’s a pretty good sign it’s in a dominant position.
But Uber stock is extremely cheap for a business of this quality. Why? Because people are nervous that Tesla’s robotaxi is going to completely take over the autonomous-vehicle market and mobility overall. Uber is both a mobility company and a food-delivery business, and they’re closing a transaction now that will make them even more dominant in that space. Our view is that you’re going to want to open your Uber app to decide how you get from one place to another, rather than your Tesla app or your Waymo app or another self-driving company’s app. You want a ride in the shortest time at the lowest cost, and you want a brand you can trust—you don’t want to put your information into a bunch of different apps and scroll through them. We think their position is very strong. We want to own a business at a price that meaningfully discounts the future. Microsoft, Meta, Amazon, and Uber are cheap today because everyone’s eyes are drawn to Micron and some of the semiconductor companies instead.
So with Uber, it sounds like you’re focused on it as a platform rather than as an autonomous-vehicle play.
We think they’re a big beneficiary. Autonomous driving will reduce the cost of getting from one place to another, and it will reduce insurance costs—and that will drive more demand as the price comes down. I think learning to drive will become something people do as a hobby, for people who are interested in cars.
There are several trillion-dollar IPOs on the horizon—SpaceX, and we expect Anthropic and OpenAI as well. How should investors think about that? And I’d also like your take on the private markets more broadly, since valuations seem insane by the time companies go public.
The way investors should think about any IPO is: does the price I’m paying make sense in light of the future of the business? There’s often a lot of hype and excitement around IPOs, and you have to be cautious about that. An IPO can be a way to become an investor early in a company’s trajectory—that’s traditionally what an IPO has been. Once you get to a trillion dollars, the question becomes: are you really early in that trajectory?
SpaceX is an amazing company. I’m a big Elon fan—I’m a bit conflicted, since I indirectly became a SpaceX shareholder. I was an investor in X and in xAI, and a small investor in SpaceX, so I now have a decent-sized personal investment in the company. I don’t invest personally in public companies, so I’m stuck investing in private ones, which is fun and useful for seeing what’s coming.
The unfortunate thing is that when Amazon went public, it had a relatively tiny market cap, so public retail shareholders had the chance to make a fortune. It’s harder to make a fortune starting from a trillion-and-a-half market cap. That said, SpaceX is going after massive markets. As a space company, they have an incredibly dominant advantage—more uniquely positioned than almost any company in bringing large amounts of cargo to space at very low cost. Starlink is an amazing product; I use it myself. I actually have a Starlink kit that I sometimes take when I go fishing.
It’s changing air travel too—United’s Wi-Fi has never been better.
It’s amazing—you can actually be productive on a flight now, and they’re in a dominant position there too. I’d say SpaceX is a little farther behind on AI, but from an infrastructure standpoint, no one builds infrastructure more quickly at lower cost than Elon Musk. It’s an amazing business, though pricing it requires assumptions about the future, and I wouldn’t bet against Elon.
What’s fascinating about Anthropic is I’ve never seen a business grow this quickly. And apparently they’re EBITDA-positive—if true, that bodes very well, since they’re growing that fast and doing it profitably. My question about OpenAI—and I don’t have any inside information, just what I read in Fortune or elsewhere—is that their business model has them losing a lot of money and consuming a lot of capital, tens of billions and perhaps hundreds of billions over the next several years. I wonder how long markets will keep funding that.
I think the single biggest risk in both private and public markets is investing in businesses where you keep having to put in more and more capital over time. I like businesses that may require a large amount of capital up front, but have a clear point where the lines cross and they become materially cash-flow positive. Look at Uber—it burned enormous amounts of cash, and credit to Dara for what he’s achieved since taking over the business, which now generates enormous capital. So yes, you can invest in a company that’s losing money and burning cash, as long as there’s a point where it turns cash-flow positive. At various times, markets are willing to let companies lose money for extended periods, and sometimes they wake up and decide they’re not willing to do that anymore. That’s the risk—especially when the numbers get extremely large. That’s the question I have about OpenAI, though again, I don’t have the detail to know.
On speaking his mind and his relationship with Trump
You’re obviously not just a big investor—you also have a huge following, and you don’t use it only to talk about business. I listened to your Lex Friedman conversation twice, where you said, “I’m attacking the president, DEI, and elite universities—I’m going to make some enemies.” As you think about the impact your words and your followership have, how do you decide where to weigh in, knowing you have an opinion that a lot of people will disagree with, and how that will affect the world?
It’s not strategic. I just get interested in an issue, or I come to some insight and think, “Why isn’t everyone talking about this?” There’s often pushback, and I feel like I’m in a somewhat unique position—I’m not going to lose my job, so I can say exactly what I think. Elon Musk will be remembered for many things, but his purchase of X and making it an open platform stands out. Some people hate it for that openness, but it’s a place where you can share views broadly and hear the other side of the argument. I read the comments.
The good, the bad, the ugly.
Yeah. The ad hominem ones I don’t spend much time on, but if someone thinks I’m wrong, that’s how I learn. Going back to your point about boards—I’ve always wanted people who would tell me I’m wrong, and it’s the same at Pershing. We have an environment of extreme candor, and you want people willing to challenge accepted norms—like the kid who says the emperor has no clothes. On some of these issues, what might have started as a well-intended idea—DEI being one—actually increased racism, in my view, and led to discrimination and things that weren’t legal or in the country’s best interests, and no one was talking about it.
But I assume there are people close to you who feel both ways—some send thank-you notes, and some say, “Bill, how could you?”
What’s interesting is when I walk down the street, including today, someone thanks me almost every day. It’s rare that I get the opposite, but yes, some people don’t like me, and many disagree—that’s okay. I’m focused on what I believe is the truth, and I’m happy to hear your argument if you think I’m wrong. I’ll course-correct if you convince me.
One area where you made a call loudly was on President Trump—shortly after his assassination attempt and after Elon Musk endorsed him, you said, “I’ve looked at the empirical data, and he’s pro-business, so I’m going for Trump.” That didn’t mean you agreed with everything he’s ever done. What’s your relationship with the president like these days, and how would you rate his presidency so far?
I have an excellent relationship with the president, partly because I always tell him the truth. When you’re in his role, you can find yourself surrounded by people who tell you what you want to hear, and I think he respects people who tell him the truth. He’s made some mistakes, like all of us, but I think he’s generally done a very good job—even on things where he’s going to get enormous criticism from half the country no matter what. I think the execution of the Iran operation has been, if you look at each of those military operations, some of the best-executed I’ve seen under any presidency.
One of our biggest challenges as a country is that almost half the country isn’t participating in the growth in value created by capitalism—the stock market. Either they don’t have 401(k) plans or they don’t own stocks, and you’ve seen a move toward publicly pronounced socialist candidates winning things like the New York City mayoralty. Part of that is people feeling left behind—wages can’t compound as quickly as stocks, so everyone needs to participate in the market to believe in capitalism.
A number of years ago, I came up with the idea that every baby in America should have $6,500 in an account that compounds into a million dollars.
Your birthright account—I believe you wrote an op-ed about it in the New York Times in 2020.
Yes, and the president has basically done that with the Trump baby accounts, and now there’s the Trump savings plan.
Did you talk to him about that?
I didn’t talk to him about the baby accounts, but I did pitch him on what’s now the Trump savings plan, which I think will be very important. It’s basically a 401(k) for every American. If you’re an Uber driver or restaurant worker whose company doesn’t offer a 401(k) or other tax-exempt plan, you can now set one up easily, and the government will provide a match. Australia and even Mexico have pension systems requiring people to set aside a meaningful percentage of their earnings into an account that compounds for retirement. The average Australian now has multiples of the savings of the average American because of that power of compounding, which solves a lot of problems. We need to get every American saving from birth. Some people say, “I’m not going to open a Trump account because I don’t like the name”—that’s stupid. Overall, I think he’s done some very good things there.
What if people don’t have the disposable income to do it?
Then you put aside less money—there’s a $1,000 match to start. But you have to start saving for retirement somehow. If Mexico can do it with much lower wages and an even bigger required percentage, we can do it here.
On capitalism, inequality, and philanthropy
One quote you gave us in a recent story was, “I think significance in life is ultimately measured by how positively you affect the largest number of people, and you can do that just by being a capitalist.” I agree—at Fortune, we think capitalism, done well, can solve a lot of problems. But given the wealth divide and the affordability crisis, why does it often not feel good to working Americans to live in a capitalist society?
Let’s use New York City as a microcosm, starting with the cost of housing. It’s so high because left-wing mayors have made it very difficult for developers to build here, and Mamdani, by freezing rents, is just going to make the problem worse. In many New York City buildings, roughly half the tenants are in rent-stabilized apartments with frozen rent, and the other half are at market rate. So landlords raise rents on the free-market half to generate enough cash flow to cover their interest expense. That’s bad policy contributing to the affordability problem.
Why are energy costs so high in New York State? Because we’ve shut down nuclear power, it takes 15 years to get a pipeline approved, and we’ve banned fracking—so we’re importing natural gas from Pennsylvania. That’s just bad policy, and we can fix a lot of it with better policy. Look at Florida—an incredibly well-managed state that recently voted to eliminate real estate taxes, purely through good policy. Or Austin, where rents have come down significantly because it’s easy to build. If you make it hard to build where people want to live, and you don’t let landlords recover renovation costs, they’ll pull units off the market. That’s what happened in New York—about 60,000 units are off the market because renovation costs can’t be recovered under rent regulations.
“Wages cannot compound as quickly as stocks, so everyone needs to participate in the stock market in order to believe in capitalism.”
Pershing Square CEO Bill Ackman
You want people like Ken Griffin locating Citadel here—spending $250 million on an apartment, because that purchase makes a building economically viable, which creates construction jobs and brings in wealthy residents who pay taxes. The system can work well. You want the top earners—who are a small share of the population—paying a large share of taxes; something like the top 10% generate 70% of tax revenue. That’s not particularly unfair. But you don’t want to discourage people like Elon Musk from locating their businesses here. Look at what’s happening in California right now with the wealth tax—they say it’s “one time,” but it’s never one time. Income taxes started out small too and only applied to a few people.
You’re worried it’ll come back for more.
That’s a certainty. We have two big problems: enormous waste and fraud in government, and bad economic and tax policy. There are plenty of things about tax policy that could be fixed, but the answer isn’t socialism—socialism is a disaster. Watch what happens to New York City if Mamdani succeeds in implementing these plans.
I agree there’s a lot of policy that could fix unaffordability. As both a CEO and a billionaire, is there more that people running big companies can do to make things more tolerable for their employees?
You don’t have to worry about Pershing Square employees—we run a very profitable business with a small team, though our impact goes well beyond our 40-some employees because we’re major shareholders in a number of large companies. I’ve spent a fair amount of time on philanthropy, and it’s vastly less efficient at solving problems than capitalism. You create far more jobs through capitalism than through philanthropy. Businesses that use other people’s money without best-in-class governance and oversight can end badly—and that describes many nonprofits. They often lack the discipline of a for-profit enterprise, making it harder to hire the best people; there are no equity incentives and no market pressure or M&A activity to keep them sharp. So you have to be careful with philanthropy—you can waste a lot of money, and organizations can get taken over and become political vehicles instead of sticking to their original mission.
You say this as someone who’s been in philanthropy for 20 years and given a billion dollars in grants and investments. Jeff Bezos recently said that if he does his job well, he can create tremendous economic value for people just through Amazon—not that he wouldn’t also do philanthropy. As you think about your legacy and plan to give away a significant portion of your wealth, how do you think about deploying it most effectively, given the shortcomings of both capitalism and philanthropy right now?
Our big new initiative is what we’re calling the Brain Research Rehabilitation Institute. It’s funded initially with nonprofit capital but will have for-profit elements, focused on brain-related longevity and relief issues. That research should lead to devices, molecules, and techniques that become the basis for businesses delivering that technology to patients over time. The goal is to use philanthropic capital to build something sustainable using for-profit, capitalist principles—without people having to make an economic sacrifice to work here at what we’re calling the AOI. We’re going to share the equity value created by these spinout businesses broadly with the people who work at the institute, the same way we’ve done at Pershing Square.
I’m hoping this captures the best of the nonprofit model—there are things you can achieve as a nonprofit, like hiring certain people or partnering with institutions that will only work with nonprofits, that would be harder as a for-profit. I’ve learned a lot over 20 years of philanthropy about what works and what doesn’t, and I’m sure there’s more to learn. The goal is to focus on gaps in the capital markets—problems without a for-profit solution yet—and there hasn’t been enough investment in helping people deal with traumatic brain injuries or strokes. I’ve been very close to that issue over the past six months or so.
Buffett says diversification is protection against ignorance, and our Pershing Square Foundation was extremely diversified in its earlier years. More recently we’ve focused on scientific research, because that’s an area with a real gap in the capital markets—there’s venture money for healthcare startups, but a lot of basic science research is too far from revenue or a company to attract venture funding. So it has to be government-funded or philanthropic. We’ve built a couple of scientific advisory boards and learned a fair amount, both good and bad, which we’re applying to this new institute. In fact, we just closed today on the building that will house it.
Congratulations!
Thanks.
Before we get into all of what Pershing Square is, I want people to understand how you became who you are—going back into the archives a bit. One thing that stood out in my research is that your dad told you that you weren’t going to get a penny of his inheritance, so you’d better earn your own money. You set ambitious financial milestones for yourself and actually hit them. There’s also a yearbook quote where you were called very verbose, and your friend said, “A closed mouth gathers no foot.”
No foot, yes.
So clearly, you were never shy or afraid to speak your mind. What created the Bill Ackman we see today, going back to your foundational upbringing?
My parents played a very important role—I don’t want to undersell my mom. She was an activist. I grew up in Chappaqua, New York, where diesel locomotives from the 1950s took my dad back and forth to work. We weren’t allowed to start dinner until Dad got home, and often that was after 8 p.m. because the train was delayed. My mom ended up joining a grassroots organization called the Upper Harlem Line Commuter Council, eventually becoming its head. She ran a petition drive, and they got the railroad redone, which massively cut Dad’s commute. So I saw activism at work early on—I even helped count the signatures on that petition drive before Mom delivered them to Albany. That was a significant moment.
Dad was in the real estate mortgage brokerage business—an “eat what you kill” business. I watched him have some very successful years, and also a couple of years without making much money, though I wasn’t closely aware of that at the time. He was big on the idea that I needed to stand on my own two feet, so I never got an allowance. If I wanted money, I had to start a business. I had a little car-waxing business, did lawn care, tree care, ditch digging—various projects.
And as a teenager, you told your dad you’d be a millionaire by 30, have $100 million by 40, and a billion dollars by 50.
Yeah.
And you hit those milestones ahead of schedule. Looking back over those decades, what do you think moved the needle most?
I was always a super-motivated kid. My sister went to Harvard a year ahead of me, so I decided that was the best school. I did well academically, stayed involved in sports and clubs, and I guess I wrote a decent essay—getting into a good school clearly helped. One early formative experience was at Harvard, where I took a job at Harvard Student Agencies selling advertising for the Let’s Go travel guides—a series of books where Harvard students wrote reviews of hotels around the world. It was a commission-based business, and I turned out to be a good salesman—I made $14,000, which felt like a huge amount of money.
Then I went to work for my father, which I wasn’t especially excited about. I liked real estate a lot, but not the service side of the business—I found the entrepreneurs and developers on the other side of the phone more interesting, and I decided I wanted to be an investor. My dad introduced me to a man named Leonard Marks, who recommended “The Intelligent Investor” by Ben Graham. That led me to Warren Buffett. I went to business school to learn how to be an investor and just followed that path—fortunate to find something I was excited about. I did a lot of reading, and the first stock I ever bought went up. If it had gone down, maybe I’d have done something else.
On his rise, from cold calls to Pershing Square
When you started Gotham, I understand you looked at the Forbes 400 list of the richest Americans.
It wasn’t necessarily billionaires back then—you needed something like a $400 million net worth to make the list.
And you cold-called them, and some actually invested.
Yes—four of the six investors we landed were on that list. I figured if I wanted to raise $10 million, with a $3 million minimum, why not go to the richest people in the world and ask for a relatively small amount of money?
With no track record.
That was the theory—a crazy idea, but probably nobody had tried it before. Really successful, entrepreneurial people tend to admire entrepreneurship in young people; it makes sense. So we knocked on a lot of doors and got a huge amount of rejection—probably 95 or 96% of people turned us down. But five or six people gave us the $3 million to start the business.
From there, you grew assets under management, made a bid for Rockefeller Center that ultimately didn’t succeed but put you on the map, and eventually had to unwind the fund. What was the lesson from those 10 years at Gotham that you carried into launching Pershing Square?
David Berkowitz and I started Gotham Partners with no experience, and we learned a lot—some things we did well, some we got wrong. One mistake: five years in, we expanded the mandate to include private assets, and mixing private assets into a hedge fund where investors can redeem capital creates a lot of complexity, even with mechanisms like side pockets. So at Pershing Square, I made sure we don’t make private investments.
I had the benefit of doing this a second time. Part of why Pershing Square has been successful is the case I made when raising money for its launch—that I was the most experienced hedge fund manager in America at age 37, having already started a fund, had a lot of success, and made some mistakes. That was part of my pitch. I think one thing I’ve been good at, over the course of my life, is learning from my mistakes. A lot of people don’t want to talk about their mistakes—they want to push them aside. At Pershing Square, we study them and treasure them, because there isn’t a businessperson alive who hasn’t made meaningful mistakes or faced significant setbacks. It’s how you deal with the setbacks and learn from the mistakes that improves your odds of long-term success.
I think that’s how you prove yourself through the good times and the hard ones. And you launched Pershing with about $54 million—$50 million of which came from your partner at Gotham, who was also involved in the unsuccessful Rockefeller bid with you.
Yes—Joe Steinberg, of Leucadia National, gave me that $50 million. That was the difference between launching and not launching, and it wasn’t just the money. Ian Cumming—who’s since passed away—and Joe Steinberg, still one of the most respected investors around, gave us their endorsement as a brand-name investor group, which obviously helped us get off the ground.
You’ve had some fantastic wins and some epic failures. On the win side: General Growth Properties—a huge, calculated gamble with a huge outcome—and Canadian Pacific Railway, where you weren’t given an easy time getting in, but you helped turn it around. What characteristics do your good bets share, and what do you look for when deciding where to put your chips?
The most important thing, initially, is that the underlying business is good—ideally great. In each case you mentioned, an otherwise great business had fallen on hard times, and we were in a unique position to help address its problems.
The world has changed in terms of how receptive companies are to ideas that didn’t originate in the boardroom or from management. When I entered this business, boards had a “not invented here” attitude and didn’t want to hear outside ideas. I think shareholder activism, broadly, has helped restore the balance of power between owners and the managers and boards who oversee them.
In many of our biggest opportunities, shareholders had essentially given up on management. With General Growth, the stock was down 99.5%, the company had debt it couldn’t refinance, and in every other public bankruptcy of that scale, shareholders lost everything. We bought from people selling because they rationally believed this would be no different—we bought 25% of the company. I got on the board, though it wasn’t easy; Goldman Sachs actually advised against it. We led a restructuring where all creditors got their money back, principal plus accrued interest.
Chipotle was a food-safety crisis, and management was struggling to handle it. We bought 10%, were invited onto the board, convinced then-CEO Steve Ells to step up to chairman, and recruited Brian Niccol—a great CEO. A big part of our success has come from stocks beaten down because management screwed up or something bad happened, letting us come in and change management, strategy, cost structure, or capital structure.
More recently, we’ve made a lot of money in cases where the market overreacted to something with only a short-term impact. As markets have become more short-term-focused, stocks can drop dramatically, creating opportunities for us. We took a big stake in Hilton when the market reacted to negative macro conditions—Hilton, run by Chris Nassetta, is the dominant company in the hotel industry, arguably with the best operator around, but the stock was still cheap because of short-termism. Similarly, we’re buying Microsoft at what we believe is a very attractive price, and Amazon—one of the most dominant retailers and cloud companies in the world—got hammered when the president introduced tariffs.
Market volatility creates opportunities not just for investors like us but for retail investors too, as long as they’re setting aside enough to live on. They can hold permanent capital—money they’ve committed to markets that no one can pull out from under them—and buy when others are selling. Again: you don’t want to be a lemming in markets. You want to be the person looking the other way. Sometimes it does make sense to run, but you should reassess the facts and make an emotionally independent decision.
Another thing that stands out is how much you focus on governance. You’ve said that when a company is failing, it’s often the board’s fault more than the CEO’s—though the CEO is a decision-maker too. What makes a strong board, and are there people you’d want on every board you sit on?
You want some people who truly understand the industry, though you don’t want a railroad company’s board made up entirely of railroad executives, since they’ll constantly second-guess the CEO—some domain expertise is good, but not too much. Most importantly, you want people willing to speak the truth directly to the CEO, without worrying about whether they’ll keep their board seat. I’ve seen plenty of examples of people who’ll say things outside the boardroom but won’t challenge the CEO in the room, because their career depends on staying on boards, and they know the CEO will be asked for a reference before their next board appointment. A bad CEO will say a good director is one who never challenges anything.
What you really want is people who will challenge you and have skin in the game. On the Pershing Square board, we have five independent directors, chosen because we trust they’ll tell us what they actually believe, and all of them are meaningful shareholders in the company. So: skin in the game, good experience, good judgment, intelligence, character—but most importantly, they can’t be shy.
You had two IPOs recently of your own—congratulations. I wanted to ask about the process of taking those public, and how it fits your long-term strategy. You’ve said you followed the Buffett playbook and want to beat his 60-year career. How does this all fit together?
Pershing Square is an asset-management business—some call it alternative asset management. One of the companies we took public is Pershing Square, Inc., the money-management business itself, which has pretty unique attributes compared with other asset managers: effectively 98% of our capital is in public companies where we’re often the largest shareholder, including our own employees. That gives us what Mr. Buffett would call permanent capital. Berkshire is a corporation—when people want their money out, they sell Berkshire shares, but the capital stays in the enterprise, and Buffett has done a remarkable job investing it over time.
The business of asset management often conflicts with the business of investing—an interesting paradox. Many times the best moment to invest is exactly when people want their money out of the market. If you go back to caveman days, when everyone ran in one direction, you probably should run too, because something bad was coming—the herd mentality saved lives. In markets, herd mentality costs you money. So you want to look in the opposite direction of the herd, but that’s hard if the capital you manage can be redeemed whenever the herd runs a certain way.
We’ve built our business model around capital that can’t leave the system, which gives us an advantage. Most hedge fund capital today is very short-term. Think about the well-known multi-strategy “pod shops”—Citadel, Millennium—they make a lot of money, but by betting on a stock’s price over the next 90 days, not on an enterprise’s future over the next decade. That’s not that interesting to me. We like helping companies become more successful over many years, which requires assets that match liabilities.
Why take the management company public? I want the business to exist well beyond me—the public markets increase the likelihood that a business survives for the very long term. It wasn’t a liquidity event; no employee received cash as part of it, and I actually invested more in the IPO after the stock started trading. We structured it so the business has a higher likelihood of enduring indefinitely, and we did it at a valuation with plenty of room for growth, unlike a trillion-dollar valuation.
The other company we took public was another permanent-capital vehicle, Pershing Square USA. Our failure so far is not doing a good job telling the world about it—I’d argue it’s one of the best opportunities in the hedge fund space: a liquid hedge fund with an excellent 19% compounded record over 22 years, charging the lowest fees of any hedge fund in the world (2%, versus the typical 2%-plus-20%-of-profits). As a result of not marketing it well yet—though that’s about to change—it trades at more than a 20% discount to the underlying value of its assets.
If you like Uber today at $71 a share, you’d like it more at a 20% discount, which you can effectively get through this vehicle. We’re announcing earnings in mid-August and will walk people through the portfolio and our logic then. The thesis behind doing both IPOs together was to give people an incentive to invest in this new permanent-capital vehicle—we gave them, for free, a piece of the management company.
It wasn’t all roses—there was a two-and-a-half-year period where it looked like you might be done. It must have felt scary for the people who worked here too. First there was Valeant, then Herbalife and Carl Icahn, all while you were going through a serious personal situation and a divorce. You must have wondered, “Am I going to lose all my money? Could this somehow land me in jail, even though I haven’t done anything illegal?” Can you walk me through that period, and how you dug yourself out of something that deep?
Everything was going along well in the business, but we made a large passive investment in a company called Valeant Pharmaceuticals. We’d always avoided healthcare and pharmaceuticals as a firm, but we knew this management team from a previous, profitable transaction and had built confidence in them. It turned into a disastrous investment—questionable business practices emerged, and the business itself wasn’t sufficiently robust; it used too much leverage. We were a passive shareholder, but I made the decision to join the board to try to fix the problem. The right answer probably would have been to sell. By joining the board, the problem became ours to own.
Investors didn’t pull their money immediately, but after about 18 months of still dealing with that problem, plus the Herbalife short, people started redeeming capital. As I said earlier, a manager is only as good as his investors—once they start heading for the hills, there’s a bit of a lemming effect. Nobody wants to be the last one standing, so you end up in something like a bank run, forced to sell assets. People expect you to be selling, which hurts your stock and your performance—not quite a death spiral, but close, especially for a concentrated manager.
About a third of our capital was in our permanent-capital vehicle, Pershing Square Holdings—roughly $4 billion, even after being down about 30% at the bottom. I told the team: if all our open-ended fund capital leaves, we’ll have 100% permanent capital, which is actually a better base to rebuild from. But it’s only truly permanent if you own enough of the stock—public status alone doesn’t guarantee it. So I decided to borrow money.
Quite a bit.
I borrowed $300 million—the biggest unsecured personal loan JPMorgan had ever made to an individual, as far as I know. I used that, plus some capital I pulled from the hedge fund, to buy enough of a stake in our public vehicle to lock in permanent capital. I told the team we were better positioned than at any point in our history, because we finally had the holy grail: permanent capital. All we needed to do was stick to our core principles, work hard, and compound our way out of the mess—while treating all our investors fairly. Anyone who wanted their money back could have it.
Did you really believe that?
A hundred percent—and it was true. At our peak we had about $18 billion in capital; after returning money to redeeming investors, we were down to $4 billion, and that was the bottom. We’ve since had the best eight years in our history, running the business far more efficiently because we didn’t need armies of people constantly raising money—a huge distraction for most people in this industry. John Gray is an amazing CEO at Blackstone, a great investor, but he spends an enormous amount of time meeting with investors. Buffett got out of the business of managing outside hedge fund money partly because he didn’t want to be in investor relations all day. That was a critical turning point for us.
Personally, I got through it with a simple mantra: make a little progress every day. At the bottom, it feels like you’ll never get out, and progress doesn’t show up quickly. But daily compounding adds up—a very small slope at first that eventually goes vertical. That’s true in your personal life and your business life alike, as long as you make a little progress every day.
Missing from the story is Carl Icahn, your—I’ll say rival—who bet against you on Herbalife and helped squeeze you into a position where you had to sell assets you didn’t want to sell, ultimately borrowing that $300 million.
I wouldn’t blame all of that on Carl. Pershing was never really in the business of shorting stocks—we made a bet against Herbalife using credit default swaps, a much better instrument, because we believed we could prove it was a pyramid scheme and that regulators would investigate. Carl took the other side of the trade and bought about a billion dollars of stock.
You two had a falling-out before that, right—you told him something like “f you” at a public event?
I told him those were the only two appropriate words. We’d had other dealings where we were on the winning side—he didn’t keep his word, we had to sue him, and we won after eight years. Afterward he said, “Now we can be friends,” and I used that phrase, which apparently upset him. So there was some lingering tension. When we took a big short position in Herbalife, he knew nothing about the company but figured he’d buy a bunch of stock and force a short squeeze—which he ultimately succeeded in doing. When the Valeant situation hit, that added more pressure, on top of being short a stock with Carl aggressively on the other side. Challenging days.
Have you two buried the hatchet?
We have—we hugged it out, so to speak, a while back. Still not my first choice as a business partner, though.
Fair enough. You clearly took a lot of lessons from that period. I noticed a stone on many desks in your office with some rules written on it—I’ve heard you say you wrote them down so you’d never stray, and if you tried to, someone should hit you over the head with it, because straying would be a bad idea. What are those values, and how did you decide what Pershing would be rebuilt around?
It’s not really a values chart—we’ve always kept to our values. It’s more an investment checklist: things we will do, and things we won’t. It’s mostly about business quality—the characteristics we look for, and the things we avoid. Checklists are genuinely useful in life.
On Pershing Square’s culture and what’s next
The firm is now about 48 people. There’s a culture of being in the office every day except for two months of the year. How are you building a culture that rallies a team around a mission meant to outlast you—this longevity play you’ve described at Pershing Square?
I’m a big believer in being in the office—five days a week, ten months of the year. In summer, the investment team relocates together out east, in Bridgehampton. The rest of the firm has a choice to come in or work from home, unless something important requires everyone together.
Culture really starts with who you recruit—I’m a big believer in hiring only people of the highest character, people you actually want to spend time with, since you’ll likely see your colleagues more than your own family during the week. There are plenty of super-talented people, but combining talent with great character is the foundation of a great culture. We’re very careful about who we bring in, and we take a long-term approach to compensation, unlike the typical hedge fund’s short-term, “eat what you kill” model with individual P&Ls. Here, compensation is always based on how the overall portfolio performs—there are no individual P&Ls.
I’ve repeated often that this firm isn’t successful unless everyone—from the people at the front desk to Isabel, who cleans the space, to accounting, finance, technology, and legal—feels like an important contributor. It’s like a finely tuned watch: if any part breaks, it stops. I think everyone here accurately feels like a big contributor to our success, which lets us accomplish an enormous amount. Most firms managing $35 billion don’t run with just 48 people, especially since we do accounting in-house for multiple public companies—something that might require a 40-person team elsewhere.
When we went public, everyone here became a shareholder—there isn’t a person at Pershing Square who doesn’t own multiple millions of dollars in stock, whether they’re at the front desk or in another role. We take care of our people, including their health—from how we filter the air, to the food in our cafe, to gym access and healthcare. Because of that, people don’t think about leaving. In the last decade, we haven’t had a single undesired departure from the firm, which is very unusual in this industry.
You had those milestones for yourself growing up—millionaire by 30, and so on. Now you’re 60. What are the new targets—60, 70, 80, and beyond?
That was an offhand comment to my dad, but it’s still very helpful to set targets in life. Now I’m focused on longevity—staying healthy, no sugar, close to zero alcohol. I want to be around for my family; I have a seven-year-old daughter, so when I’m 80, she’ll be 27. You want to be around a long time, and it helps your impact and your investing too. Buffett is one of the greatest investors of all time partly because he’s done a good job—and partly because he’s lived a long time and stayed at it.
For anyone who wants a big career but doesn’t know how to get there, what would you say?
This is an era where you can learn anything—you don’t even need to read books anymore. You can ask AI to teach you whatever you need to learn. I think education and healthcare are the two obvious sectors that AI will transform. There’s arguably no better doctor today than a frontier AI model. A friend of mine had a father with a symptom the hospital couldn’t diagnose, and things were heading toward a bad outcome. He put everything into ChatGPT, which suggested an infectious disease—and that turned out to be the answer. I’d go there first; it’s cheaper and easier than seeing a doctor.
One thing we’re watching closely is whether AI is as transformative as something like electricity—but unlike electricity, it’s not clear yet what the actual business model is. Anthropic is trying to corner the enterprise market, OpenAI is doing the same while also building a device, but it’s not as clean as, say, Amazon and e-commerce. This feels like a new frontier, with a lot of money being spent in the meantime.
I think the model comes down to how much intelligence you get per token, or per dollar of investment, and what you can do with that intelligence. The challenge for frontier labs is that, as we’ve seen in just the last few days, a Chinese model—Kimi—is near the frontier and open-weight, rather than closed. I think that’s a positive thing for humanity: as more low-cost models become available, the cost of intelligence keeps falling, and we’re heading toward a world where superintelligence is available to everyone.
That’s a genuinely interesting world. The absolute frontier will still be expensive, maybe affordable only to big corporations, but for most things people need—where to go on vacation, questions about an upcoming medical procedure—you won’t need the absolute frontier. Those can already be answered essentially for free; you go to a chatbot and get a very good answer. We’re heading toward a world where a very high level of intelligence is basically free. It’s a pretty amazing world.
Bill, thank you so much for sharing your thoughts today on so many different topics. We really appreciate you spending the time with Fortune.
Thank you. I really enjoyed it.
