Bill Ackman on Charlie Kirk, Israel & Where He's Investing Next

Well, thanks for having me.

Well, let me start by saying, you know, I think this is a very, if you will, just war and an important war, and I think everything from, you know, taking out the beginning with taking out Iran's nuclear capability and also setting the regime back militarily, I think it's critically important for the world. Obviously, uh a regime change would be a And I guess there've been multiple regime changes. The problem is that each successive regime is part of part of the same, you know, evil ideology. But, you know, I think it's very difficult without, if you will, boots on the ground to have real regime change, and I think that is a no-go for the United States. And, you know, I think the president I clearly thought that there was a deal that could be made. And also, I think he, you know, he does not want this war to go on, you know, into the midterms. You know, politically, life gets more difficult for the president uh and the Republican Party, obviously, in the event that the the Congress you know, switches direction. You know, so I think that is certainly on his mind, but, you know, ultimately, he's dealing with a party that has not capable of keeping their word. And to his credit uh you know, they attacked us again, or attacked a few ships. And so, he's, you know, the only thing they seem to respond to is force. And so, I think that's what's going on.

Yes, in fact people were talking about a massive massive oil surplus.

Right. The the world is really the US is kind of all of the places in the world other than Iran have kind of kicked into gear their, you know, productive uh capability whether it's Venezuela, the United States or or otherwise and uh you know, I don't think that's going to go away. And so, you know, the the uh the closure of the strait has kind of proven to people that, you know, you cannot rely on you know, this you know, oil that comes through the straits. We have to find other ways to deliver and we have to find other sources of oil. And uh you know, I so I do think any increase in oil prices is temporary as opposed to a permanent phenomenon or a or a longer-term phenomenon.

Right. I think that I think that's been uh to your point, I think it's been proven wrong. Actually, the fear now is the oil prices were going to go too low. That's what people are concerned about.

I look, I think uh Israel has proven itself to be one of the most resilient uh countries in the world militarily uh and economically. Um and you know, if you think about the way what is driving value in the world right now, it's sort of technology and AI and cyber and defense, right? Defense tech. I don't think there's a country better positioned in each of those uh you know, spaces uh than Israel. Uh and I think you're going to see more and more uh interesting you know, kind of startups scaling incredibly quickly in Israel. I mean, the biggest, you know, negative for Israel what you would think of kind of traditionally from a military point of view is the tiny country, right? With a small population. But, you know, uh look at what Ukraine has been able to achieve with drone warfare even in the last week. It's been pretty remarkable and I I would argue the you know, the the war has definitely tipped uh in their favor and I think Israel has similar capabilities. I don't think it's about, you know, apparently uh you know, in a week uh I I I don't know, something like 35,000 Russian soldiers were killed. Um you know, human life is not uh you know, it's not the size of the army anymore. It's the the quality of the technology. So, I feel like Israel is extremely well positioned economically, militarily, and I think we are heading to a safer Middle East because of Israel and and very importantly because of President Trump and you know, the uh his you know, finally uh someone taking the Iran threat uh uh seriously other than Israel. So, uh credit to President Trump and to the US military who which by the way, another great opportunity for Israel and the United States to work together. Uh you know, the the uh Secretary of War could not have been more uh positive about the the partnership on the battlefield uh with it with Israel.

100% I I I've actually I've made this point. I mean, I think, you know, uh you've got uh one of the most resilient countries in the world, and then you have a labor force uh which, you know, military training is uh all right, it's a good military training. It's about the best leadership training, resilience training, but you know, grit, all these things that are important in in life and in business, you learn the military. And so, you know, the last uh couple years here have been uh you know, a very good training ground for the next generation of uh talent. And uh you know, is very, you know, the various 8200, you know, various parts of uh um military units are known for their kind of technological prowess, and these days when you uh you know, you're looking at backing a company, if they list, you know, they'll list uh which divisions they were part of, and that's, you know, part of their CV for raising capital for their next uh AI initiative.

Of course. So So we did something actually a bit unusual. We took two companies public. So our business is the business of managing investment funds. Uh and our the way we structure our business is the investment capital we manage is also in public companies. So we have you know basically today three public companies. Um one in that trades in London, Pershing Square USA which trades in the New York Stock Exchange. Uh and a company called Howard Hughes Holdings which is a New York Stock Exchange listed company. A more traditional corporation real estate business that we're transforming as we say into a a modern day Berkshire Hathaway. And each of those businesses if you will pay us fees to oversee and manage them. And in each case we're a major investor in the company. So I'm the largest investor in our London listed vehicle. Um we're the largest investor now in the uh in the IPO of of PSUS. So we're it's a you know that's kind of the the business uh model. In terms of the IPO itself of course building a business uh taking it public you know let it let the market tell you what it thinks it's worth. Um you know business you started really with no capital. Uh today Pershing Square has a market cap of something like 13 14 billion dollars which is you know it's not the trillions of Nvidia, but you know we're on our way. And it's a company that I I think can compound its value at a high rate over time because the business will grow with the compounding of our funds. Now the only disappointing part which creates an opportunity for your viewers if you will is that Pershing Square USA our listed vehicle is for reasons I don't entirely understand is trading at a massive discount. Um It's trading at a 21% discount to the underlying value of its assets as of last yesterday. And the assets we have We raised 5 billion of capital. We've been deploying that capital in a you know, the volatility has been very helpful to us to buy stakes in a very attractive uh market. Um and these are businesses uh themselves uh you know, we've admired for years, but uh didn't get cheap enough to more recently. We built a portfolio of uh some of the highest quality durable growth companies in the world. Uh businesses like, you know, Microsoft or Amazon or Uber, Meta, for example. Um and so if you uh we bought them at very attractive prices and you can recreate create them at a 21% discount to the price we paid by buying into our investment vehicles. That's my uh investment tip for the podcast.

And actually the the management company itself also is a extremely high quality business. Uh and uh you know, it's one of the few businesses in the world that can grow at a pretty high rate. It will grow at a rate faster than the compounding of the funds that we manage because we'll launch new funds over time. It doesn't need to reinvest capital, so it can retain uh or I actually distribute to the shareholders the vast majority of its profits. Um and uh it's like a royalty stream on a base of permanent capital that grows over time. And I think that model is it's quite interesting. So it's worth a look, too. So yes, we're I'm promoting a couple of our stocks, uh but uh

we're big believers. I you know, I'm a major about 45% of Pershing Square. Uh and uh I have a I invested $250 million in the IPO of PSUS. So it wasn't really a wasn't a liquidity event. It was sort of a inverse liquidity event. Most people think of an IPO as a liquidity event. This was a way for us to list the companies, raise some capital for this new fund, uh and make an an additional investment in in us in a way.

So, so Warren Buffett has been a important hero of mine. I describe him as a informal mentor. You know, he's someone that, you know, I got into this business largely due to the sort of uh, my being inspired to learn about Warren Buffett in my early 20s, and I literally I I've read pretty much everything he's ever written, and I've watched probably every YouTube and/or other video that he's appeared in. I've gone to many annual meetings, and I've had some the opportunity to spend a little bit of time with him uh, over the course of my career. Uh, and you know, it's it's very helpful in life to have great mentors, and he's been an amazing one for me. So, always been an aspiration. You know, I said, "Look, what's my goal as an investor?" Well, I'd like to have a better track record than Buffett. Now, one of the things he's done to make that challenging is, you know, he he ran Berkshire for 60 years, and he's 95. Uh, and uh, I'm 60, so just to match the record, I've got a 35-year uh, so I think, you know, the brilliance of Warren Buffett is, you know, he set forth kind of a a list of principles that he stuck to over thick and thin. Uh, and and he basically compounded the capital of Berkshire at 20% per annum over a 60-year period of time, which leads to a really remarkable kind of outcome. So, um, we've learned a lot from him. I would say our approach is not identical. Uh there's certainly some similarities. Um and uh we now we do have a vehicle uh called Howard Hughes Holdings, another cheap stock worthy of a look, uh that we are um the executive chair of, and we're following the Berkshire playbook. What did Buffett do? Well, he bought, you know, a dying textile company. Over time, he liquidated that company, took the cash out of it, liquidated assets, sold off various aspects, the real estate, etc., of the company. And he took that capital and he bought an insurance company, a bank, some other businesses over time. But the principal business was insurance. And what he did that was different is he focused on running a very profitable insurance company, which obviously every insurance company wants to be profitable, but he also focused on the asset side of the balance sheet, which is instead of investing just in fixed-income securities, which is the what the vast majority of insurance companies do, he invested in common stocks. Uh and he was a good common stock investor. So, when you hear of Buffett buying Apple, it was really the Buffett insurance company buying Apple. And so, what we've created at Howard Hughes, we didn't start with a textile operation, we started with a real estate company, and the real estate company itself over time kind of liquidates, cuz we sell lots to home builders, big part of the business. We generate cash from the net operating income of our uh properties. We build condominiums and we sell them. We generate cash from this. Instead of reinvesting all that cash in real estate, which is what the company's done historically, we're taking that cash, and the first asset we bought is an insurance company. We bought a company called Vantage uh last month. Uh and we are going to manage Vantage much the same way that Buffett manages insurance operations. We've taken the uh you know, we're we're taking the float of the insurer, and we're investing in very low-risk investments, US Treasuries, short-term Treasuries. And we're taking the uh balance of the assets, the surplus, uh and investing in common stocks. And so, our goal is to build Howard Hughes into, you know, a compounding machine uh like Berkshire over time. So we were we took a page from Mr. Buffett and and we'll see how we do, but you know, 35 years just to tie the duration of the track record.

some stocks are going down and other stocks are going up.

So look, I think there are lots of different layers in the value chain so to speak. You know, right? There's the the base layer, the technology layer, the hyperscalers, the data centers. And it seems to me there there's near infinite demand for compute. So I think if you're Microsoft or you're Amazon or even meta, SpaceX and you own the infrastructure layer of AI, you're going to do very well. And it looks like, you know, based on you know, deals announced by SpaceX recently that the the kind of payback period for an investment in a data center is is still very very high. And we're hearing you know, I'm a pretty active venture investor as well. And we're hearing from the smaller companies that they're having difficulty getting access to compute. So that I don't think there's a bubble there. I think there'll be really infinite demand for compute because intelligence is something that people prepare to it invest in. Then there are the sort of frontier model companies, the open AIs of the world, the Anthropic's of the world. I read a story this morning that Anthropic is going to have, you know, billion dollar profitable quarters. That's interesting because the open AI story sounded like a story of unending losses. I'd worry more about a business that's going to generate massive losses that has to constantly raise capital than I will about one that, you know, is going to turn profitable. Now, I think the threat to the Anthropic's of the world and the Open AIs is that the open-source models uh from China and from other places, I think actually uh SpaceX is going to launch a new model in the next day or so. But, these models um are nearly as good as the kind of leading-edge models that people are paying a lot of money for. And I think you're hearing stories of companies where, you know, they didn't control the spend of their employees, and they wake up and they spent their entire $500 million you know, token budget in one quarter and they were supposed to make it last through the course of the year. And people are, you know, using, you know, the fast the most uh powerful uh Claude model to figure out where to go for a dinner reservation, right? That's not a particularly efficient, you know, sort of sort of use. So, I think they're I Yeah, I I worry a bit about the business model of the kind of found, you know, the sort of leading-edge models because with the open-source models becoming so good, I think the vast majority of use cases, prompts, etc., you know, a free model or an ad-supported model is going to be a better uh you know, it will achieve everything you need to achieve. Uh so, I worry about, you know, perhaps the Open AIs of the world. I think that's a a more challenging kind of space. But, look at the um is it a bubble? I I don't think the investments that the Amazons and Microsofts and Metas are making in compute are are going to end up being wasteful bets. I think they're going to earn very attractive returns on those on those investments. Um and uh you know, the private markets, you know, there's you see companies where the valuations are going up massively quarter after quarter after quarter. You know, it's I just don't know enough to know uh cuz that you know, there's little information available about these companies.

So it's it's a it's a it's a fool's errand to predict what the stock market's going to do in the short term, but that doesn't prevent lots of people from making those predictions because you know, people forget that the prediction they made and you know, at some point you'll end up being right and you get to be the hero if you you know, say the market's going to crash and the next week it crashes. You can you know, people have built a career sort of over that. You know, we take a pretty fundamental approach. Um, when you look at um, if you look at kind of earnings revisions for the S&P 500 um, you know, the the uh, earnings trajectory of the market uh, you know, the kind of uh, out performance relative to kind of original expectations at the beginning of the year, you know, analysts are basically taking up their earnings numbers pretty aggressively on the S&P 500. And so when people look at uh, you know, the multiple today I don't even know you know, 21 times something like this. Um, you know, is that you know, historically in the you know, let's say the market has been you know, typically 17 PE something like this and maybe now it's 21 so people say oh, it's overvalued. But I would argue that the business mix, the compa- the composition of the S&P 500 is a very different business mix than it was 30 years ago. Um you know, we have major companies like Nvidia, you know, Microsoft, Amazon, you know, they the the the biggest companies comprising a major portion of the index, and they're growing very, very quickly in both revenues and their and their profits, and they're deserving of of of much higher valuations. Um and actually, I think you know, the you know, many of the big seven stocks are actually quite cheap. Right? I think Microsoft is trading near its all-time lowest uh earnings multiples. Similarly, you know, the same for Amazon. Um and uh you know, so I I don't see a fundamental reason why there should be a stock market crash tomorrow. You know, the at the end of the day, stocks don't look particularly uh overvalued.

And in fact, you know, we're able to find lots of undervalued, very high-quality, long-term durable growth companies. And normally, when you can find those businesses, it it isn't normally a time. Now, there are sectors of the market, you know, people are generally pretty excited about semiconductor memory chips, things like this, uh that have exploded in value. Um and those are more difficult businesses to predict, you know, sort of over time. So, you could see massive re-ratings, down drafts in in portions of the market that have done very, very well.