This Forbes interview explores Bill Ackman's investment strategies and philosophy, focusing on his approach to identifying and investing in "super durable" companies that generate long-term growth. The conversation also touches upon his experiences with activism, the challenges he faced, and his current focus on building a Berkshire Hathaway-style enterprise through Howard Hughes Corporation. Finally, the interview delves into Ackman's views on the mismanagement of higher education, specifically Harvard University.
Based solely on the provided transcript, Bill Ackman recommends investing in companies he calls "super durable," which are characterized by:
Predictable, long-term cash flows: The value of a financial asset is the present value of the cash it generates over its life. The business must endure to allow for prediction of these cash flows.
Difficult to replicate: These are businesses that are not easily copied.
Perpetual growth potential: Ackman seeks businesses that can grow indefinitely, which are rare. He prefers businesses that operate on a "royalty" model, where they receive a percentage of sales without needing to invest significant capital. Examples include franchise businesses (like Tim Hortons), music royalties (like Universal Music), and hotel brands (like Hilton). He also cites Uber as a similar model, receiving a percentage of each ride without owning the vehicles. He views these as annuity-like businesses, providing consistent returns.
He also mentions that sometimes a good investment doesn't appear cheap at first glance (like Chipotle when he bought it), but if its underlying strength can be leveraged to reverse a negative trend, it can prove very valuable in the long run.
