Pershing Square CEO Bill Ackman Talks Strategy Behind NYSE Listings at All In

Our model is to find the best businesses in the world, hopefully even briefly at some of the attractive valuations, right entry price, and then be a long-term investor.

Well, with the help of the New York Stock Exchange, we listed a company called Pershing Square USA, which is a closed-end investment company. It will basically be a mirror image of our other vehicles that historically have only been offered to offshore investors, institutional, or super high net worth investors. This is an entity that anyone with $41 can buy one share.

Our business model really requires long-term money. The traditional hedge fund model, where people commit capital for a couple of years and can redeem a certain amount each quarter, is fine for a trading strategy. But when you're a long-term investor, you buy big stakes in companies, you join boards of directors, you spend time with management teams helping them with their long-term strategic direction. You don't want money that can leave overnight. The beauty of a public company, which is what a closed-end investment company is, is while investors have daily liquidity — they can buy and sell their shares — the capital is forever, basically. And that gives us the ability to make long-term investments in a world which is becoming increasingly short-term.

And by the way, we also took another company public at the same time — a company called Pershing Square. We actually go by the name Pershing Square instead of Pershing Square Capital Management. That's now a subsidiary of our public company. Pershing Square is the management company, the GP as some people call it, or the alternative asset management firm that manages — it's the company I work for, the company I'm CEO of. It's a very interesting business because you've seen other alternative asset managers like Blackstone, KKR. What's unique about ours is that the capital is permanent. The company itself receives fees based over time on a growing base of assets that grow not by fundraising — although we can certainly launch new funds — but by compounding. If we make good — we have a great year this year, our AUM grows, our fees grow, and the profits of the company grow. So they're both interesting companies. One's sort of a diversified Pershing Square portfolio of securities. The other's an operating business.

Sure. Look, I've always thought that the standard for someone making an investment should not be how much capital they have. If you want to have a standard that's based on a certain level of investment experience — the test today is really generally based on net worth. I think you should be able to take an effective test. You pass the test, you can become a qualified investor as opposed to having a certain amount of capital.

I think it's hard to make a statement on the overall market because it's really a bifurcated market. We're finding a lot of really cheap stocks in a market that's hitting new highs, which is sort of an interesting dynamic. A lot of the attention is on semiconductor and memory chips, the IPOs that are coming, and a lot of attention's been taken away from companies that people think are almost old-fashioned. Meta is an old-fashioned company today. Microsoft is an old-fashioned company today, and therefore they're less interesting — that's not where the excitement is. The result of that is those stocks are very cheap. So we're finding a lot of cheap stocks and, query whether there's some overvalued ones, which of course there are.

50th, yes.

Could be. The market's got kind of two components to it. You have the ownership of stocks, and you've got this growing index ownership, which is an incredibly important phenomenon. Today, if you're not in the stock index, your valuation is going to be — you have two companies. McDonald's, for example, is in the S&P 500. Restaurant Brands, which is Burger King and Tim Hortons and others, is not — because it's a Canadian company, it's not in the index, it has relatively limited index ownership. Arguably, it's growing faster, it's a more diversified business. You can make some arguments for why it should trade at a higher multiple than McDonald's, but it trades at a very significant discount. Why? Because it's not in the index. So you have more and more index capital, and that's become an increasingly important thing. In addition to the stocks that are actually in the index, actual ownership of index funds — there are a lot of investors who follow the index. A huge amount of capital is in a very stable format, this sort of index ownership. And then there's also a lot of capital invested by so-called pod shops — Millennium and Citadel and others. They've been taking on increasing amounts of capital, and they have much shorter-term mandates. They're the marginal buyer and seller of many securities. The result is really more volatility, because the way those models work is you have very tight risk limits. If you're going to lose more than a certain amount of money, you're out. What that leads to is even very big companies — the stocks can move dramatically if they miss an earnings expectation or they change their guidance or there's some news event. You've seen a huge amount of volatility and geopolitics adds to that volatility. And of course, midterm elections will be part of that volatility.

You know, it's interesting. Turning 60, which I did — 250 years sounds pretty young as a country to me, right? It's like a quarter of my lifespan. The country's only four times my age, which I find something I didn't think about when I was 10, for example. Countries seemed pretty old. Now, the American experiment is very young. So that's one sort of notable thing. And I think it's important we're around. What's kind of amazing is a bunch of relatively young guys — and they were generally guys back then — wrote the Constitution and the Bill of Rights, set up a system with free speech and a Republican nature of government that's worked, with all of our warts, remarkably well over a quarter of a thousand years. It's amazing.