Bill Ackman: Investment Strategy, What the Market is Missing, How AI Breaks Businesses

(0:00) Bill Ackman joins the show! (0:30) Evolving investment philosophy: What's changed over 20 years? (4:40) AI: Greatest time to build a business, and a major threat to portfolios (7:50) Predicting market moves, the "rubber band effect" (16:00) Owning founder-led companies (19:30) Building the next Berkshire Hathaway Thanks to our partners for making this possible! EY - Agentic AI is introducing a new investment discipline. As AI shifts to consumption-based models, EY connects spend to enterprise value. https://www.ey.com/en_us/insights/ai/agentic-ai-token-costs? WT.mc_id=3501318&AA.tsrc=sponsorship https://www.ey.com/en_us/insights/ai/agentic-ai-token-costs? WT.mc_id=3501318&AA.tsrc=sponsorship NYSE - Thank you to our partner, the New York Stock Exchange - a modern marketplace and exchange for building the future. It all happens at the NYSE. https://www.nyse.com Plaud - Never miss a moment. Plaud, our official wearable AI note-taking partner at All-In Liquidity Summit, captured every insight. https://www.plaud.ai Follow Bill Ackman: https://x.com/BillAckman Apply for Summit 2026: ⁠https://allin.com/events⁠ Follow the besties: ⁠https://x.com/chamath⁠ ⁠https://x.com/Jason⁠ ⁠https://x.com/DavidSacks⁠ ⁠https://x.com/friedberg⁠ Follow on X: ⁠https://x.com/theallinpod⁠ Follow on Instagram: ⁠https://www.instagram.com/theallinpod⁠ Follow on TikTok: ⁠https://www.tiktok.com/@theallinpod⁠ Follow on LinkedIn: ⁠https://www.linkedin.com/company/allinpod⁠ Intro Music Credit: ⁠https://rb.gy/tppkzl⁠ ⁠https://x.com/yung_spielburg

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00David Sacks?

  One of the most provocative and interesting investors in the country.

• 0:04Speaker 01

  A legendary activist investor.

• 0:05Speaker 02

  Pershing Square CEO and founder, Bill Ackman.

• 0:10Speaker 01

  Taking a short position and going public with it is a pretty serious business. Interestingly, some of the best businesses in the world are trading at the lowest multiples.

• 0:18David Friedberg?

  We're kind of the rebirth of the closed-end investment company universe.

• 0:22Jason Calacanis?

  What did you think of Zara, the CEO of OpenAI? I'm sorry, CFO. Felt like the CEO.

• 0:28Speaker 01

  Yeah, I was.

• 0:29Jason Calacanis?

  Stuck with that stuff.

• 0:31Speaker 01

  Actually, I was super impressed. Made me a lot more bullish on OpenAI. And I thought.

• 0:36Jason Calacanis?

  Right?

• 0:37Speaker 01

  I thought she should be CEO of.

• 0:39Jason Calacanis?

  That's what I thought.

• 0:39Speaker 01

  I think Sam should be. I think Sam should be chair. I think he's a much better.

• 0:43David Friedberg?

  There was a question I wanted to ask her that we didn't get time, which was, what's it like working with Sam?

• 0:47Jason Calacanis?

  I mean, that could have been like.

• 0:49Speaker 01

  Oh, he's super, super impressed.

• 0:50Jason Calacanis?

  Three hours of a documentary.

• 0:52David Friedberg?

  I wanted to kick this off. So thank you so much for being here. We've tried a number of times to get you to all in and it's great to finally have you. You obviously are a legend that doesn't need much of an introduction. Lately, in the last number of, call it years or months or quarters or what have you, it seems like your investment philosophy may be changing. Your model, where you've been activist and you've entered positions and exited positions. And lately, you've talked a lot about more kind of permanent, long-term holdings. Would love to hear a little bit about if that is actually a change and how your evolution in your investment model has kind of changed over time.

• 1:28Speaker 01

  Sure. So I would say the biggest change over time is an appreciation for the importance of, I would call it business quality. Long-term, durable, protected, non-disruptible growth. I would say, early days, you're a smaller, more liquid investor. You don't have to think as long-term. As you become a bigger concentrated investor,

• 1:49Speaker 01

  and over time, you learn the importance of durable kind of growth. That's the most important factor. I would say I'm as. Activist as I've ever been, but more of it's on Twitter than I would say in the corporate context. And the reason for that is when I started in Pershing Square, no one sort of knew who we were. And so, actually, one of our first investments was Wendy's International. Wendy's owned Tim Hortons, the Canadian coffee and donut chain, and the value of Tim Hortons was more than the entire value of Wendy's. So we had this very simple idea, buy Wendy's, spin off Tim Hortons, double our money. And we bought 10% of the company, and I called the CEO, and he didn't return my call. And I called him again, he didn't return my call.

• 2:32Speaker 01

  I literally couldn't get a return phone call at the beginning. So we actually called a friend who worked at Blackstone, and Steve Schwarzman agreed to write a fairness opinion on what Wendy's would be worth if we spun off Tim Hortons. We kind of mailed it in, filed it publicly, and six weeks later, they spun off Tim Hortons. Wow. And then the CEO finally called me back, and he thanked me. And he had gotten fired, but he thanked me because he had a huge exit package. [laughing] And he was very happy. But, so in the beginning, we couldn't get a return phone call, so we had to, and we were small, so we had to go to a conference, and we had to, you know, do presentations and go on CNBC. What happens over time is you join boards of directors, you become known as an investor. You know, we're kind of a constructive shareholder.

• 3:17Speaker 01

  I know pretty much every CEO in S and P 500, either directly or one person removed. And, you know, maybe I age, I've aged a bit, but you build kind of a reputation. And today, we buy a stake in a company, sometimes they'll put out a tweet saying, you know, we welcome Pershing Square as a shareholder, but they opened the door for us. You know, in the beginning, we had to bang down the door, and today, so we get very deeply involved in our companies if it's needed. Other companies we own, there's no, nothing for us to do, just be to, you know, just clap.

• 3:46David Friedberg?

  So you are considered a value-add investor?

• 3:49Speaker 01

  Yeah, but we only want to add value. The conversation last night was kind of an interesting one. You know, the best investments are one where you don't need to join the board and do anything.

• 3:57David Friedberg?

  Well, that may be in a startup, but in a mature business, it may be...

• 4:00Speaker 01

  No, I think in the public company context, one of the valuable things we can do, you know, the problem of being a public company today is kind of the very short-term nature of markets, analysts, et cetera. And obviously, to run a business, a business is a, you know, a good one, is a forever thing. You want to make decisions in the context of decades sometimes, or certainly three, five years. And how can you do that when someone's asking about the tax rate in the second quarter? And having a big shareholder on the board, where you can kind of test ideas out with the big shareholder before you expose them to the public, where the big shareholder can say, "I'm supportive of this initiative even though it's going to hurt earnings in the next few quarters," is a helpful thing.

• 4:38Chamath Palihapitiya?

  I just want to connect this last conversation with Sarah to this. Are you an investor in the AI complex? And how do you underwrite business model quality from what you see on the outside in the entire complex?

• 4:51Speaker 01

  I mean, yes, effectively, we're an investor. We're, actually, today, we own Microsoft, we own Meta, we own Amazon. Actually, I think you're, either directly or indirectly, you're invested in AI.

• 5:02Chamath Palihapitiya?

  Yeah.

• 5:03Speaker 01

  Or it's a threat. So you have to, you have to understand it. How do I think about AI in a business model context?

• 5:08Chamath Palihapitiya?

  Business model quality, yeah.

• 5:09Speaker 01

  When you're a concentrated investor, or you're a investor generally, and you're a long-term investor, the most important and most challenging thing to do is determine, what's the risk of disruption? What's the risk of two guys, two women from Stanford in a garage, you know, coming up with something? That risk, I think, has gone up dramatically. This is the greatest era in history, just to build a business, right? There's unlimited access to compute, you know, certainly for a startup, unlimited access to capital, and a lot of incredible talent, which means that the probability of your being disrupted has gone up enormously. So the hardest thing you have to do as an investor is understand, you know, and that's really where we spend most of our time.

• 5:50Chamath Palihapitiya?

  What's your tendency in a moment like this, then? Do you swing towards the chaos, or do you reposition to things that are maybe more durable and defensible from AI, where the disruptability is less?

• 6:00Speaker 01

  What's interesting about markets is people always bring their eye to the new, new thing. And the new, new thing is sort of chips and semiconductors and energy. And that's where, you know... The shorter term capital is going. What tends to happen is really high quality things get left behind. And the same thing really happened. I was there in 2000 in that sort of bubble. This is different. I'm not saying this is. But there's some analogies. And the analogies are people got excited about internet stocks. And Berkshire Hathaway traded at the lowest valuation I think it ever traded at in its history, as people said, oh, that's all old stuff. I think a similar thing is happening today in a sense to Amazon and Meta, Microsoft.

• 6:45Chamath Palihapitiya?

  Those are the ones that are.

• 6:46Speaker 01

  These are old fashioned companies in kind of this, you know, the OpenAI era.

• 6:51Chamath Palihapitiya?

  So they're undervalued in your mind?

• 6:52Speaker 01

  Yes.

• 6:53Chamath Palihapitiya?

  What else is undervalued?

• 6:54David Friedberg?

  What about the SaaS apocalypse? So is it oversold at this point?

• 6:57Speaker 01

  Again, I think it's a careful analysis. I worry more about a sales force than I do about your kind of. I think you got to do the work. I think it's one company at a time. But I think if, you know, if you're a software company today, you have to be as AI enabled as you can. I think there have been sort of monopolistic type profit taking off of customers. When someone had a kind of a niche software product, they're charging, you know, 30,000 a year or something like this. I think those companies are really at risk. You know, Microsoft, when the average customer is paying, I don't know, 50 bucks a seat or some small number, that platform is worth a lot more and is less at risk.

• 7:37Chamath Palihapitiya?

  I want to go back to COVID because you had an incredibly viral moment where you were on CNBC at that moment and you pounded the table and you said, this is what's going to happen. And literally the market just ripped and you were. Well, first it went traded massively down. You were right on that side of the trade and then you were on the right side of the trade when it ripped back up. And then I think it was maybe a month or two ago. I think publicly you basically pounded the table and said, this market's going way higher. Can you just put us in your head? Like, where does that desire to be so active and?

• 8:18Chamath Palihapitiya?

  You know, it gives you so much room to be wrong, but then when you're right, it does add to the lore of Bill Ackman, of which you have a lot. So how do you balance that? Where does it come from? Like, why in these moments do you just get so convicted? That the conviction just has to spill out and then you're just so out there?

• 8:34Speaker 01

  So I've always been like, uh, my high school yearbook epithet was most verbose.

• 8:40Chamath Palihapitiya?

  Me too.

• 8:41Speaker 01

  And actually, my friend actually lives around here. His quote that he put next to my name in my yearbook, it says, "A closed mouth gathers no foot." That was his. And so that's kind of what I've lived by. I've always had this sort of desire to speak the truth about things. And, uh, you know, I was just talking with Jake, actually. We had breakfast this morning and we're talking about my Rhonda post.

• 9:06Chamath Palihapitiya?

  Yeah.

• 9:06Speaker 01

  Remember that one?

• 9:07Chamath Palihapitiya?

  I do.

• 9:07Speaker 01

  So like, you know, there's just certain things that need to be shared and discussed. But with respect to markets, actually what happened was I was concerned about the country because I felt we needed to have basically a two-week pause. You know, this is March of, or February, I guess it was March of 2020. And I assumed we were going to just do a short-term shutdown, let the virus cool down as hospitals were kind of getting overwhelmed. And, uh, the president hadn't done that yet. I was kind of surprised by this. And so that was what inspired me to go on TV as a way to reach President Trump and say, "Look, we need to shut down the country just for two weeks." You know, my, uh, and I said, "Look, you do this, okay? The virus will blow over.

• 9:51Speaker 01

  Stocks are at an incredibly cheap valuation. If we handle this correctly, you're going to make a ton of money and we're buying." You know, valuation is like a tether on the market, right? When it gets too high, it's like this rubber band that's stretching and inevitably it bounces back. But it works the other way as well. When stocks get too cheap, there's this, you know, the rubber band's actually pulling valuations up. And so there are certain moments where it gets to that place. And sometimes actually, if you call that out, it causes people to have kind of a psychological reset.

• 10:20Chamath Palihapitiya?

  What happened recently that caused you to call that out?

• 10:23Speaker 01

  Stocks just got crazy cheap, just incredibly cheap, of really high-quality companies.

• 10:28Chamath Palihapitiya?

  Right.

• 10:28Speaker 01

  I don't know. I don't know why.

• 10:30Chamath Palihapitiya?

  Define extremely cheap in fundamentals.

• 10:32Speaker 01

  Fundamentals, based on, you know, what's the value of a financial asset, the present value of the cash it generates over its life. On that basis, stocks of really high-quality companies are really cheap.

• 10:41Jason Calacanis?

  Is there any way to underwrite, and I don't want to pick on specific companies, but we have the three that are going public and then you have like a Palantir, let's say. And these things have become very popular in pop culture, in retard maxing on subreddits, on the public's consciousness, high net worth individuals wanting to buy into SPVs that are double loaded and then getting wiped off the cap tables. Is there any way to underwrite 100 times revenue, 50 times revenue, 150 times revenue in these companies? Or are these just tremendously overvalued because of the demand side?

• 11:18Speaker 01

  I think you underwrite SpaceX the way you underwrite a venture capital investment.

• 11:24Jason Calacanis?

  Interesting. Explain that, unpack it.

• 11:26Speaker 01

  So, everyone here, invest in venture, right? You bet on who's running it, right? The talent is enormous. It's people, they taught me, I had a professor at business school, he said, people, opportunity, context, deal. So on people, SpaceX.

• 11:42Jason Calacanis?

  One of one.

• 11:43Speaker 01

  Yeah. Opportunity, one of one. Context, incredible and actually feel bad for Blue Origin, but not harmful to SpaceX, the fact that they're biggest.

• 11:55Jason Calacanis?

  Effective way behind.

• 11:56Speaker 01

  Then you get to deal, okay? That's the more complicated question for SpaceX. Again, we don't know what the valuation is going to be, but if it's a billion, a trillion, 750 billion dollars, then you say, okay, well, let's think five years out, what does this company look like? What is Starlink? What's the trajectory of Starlink? SpaceX is near monopoly in terms of low cost space launch. That's going to become increasingly important and even Amazon is going to have to become an even bigger customer because they're not, you know, Blue Origin's, and time, I would say, has become increasingly valuable in the AI era, right? You delay a model, we were talking, David and I were talking about the administration and his kind of stepping in for the president not to sign that executive order to kind of slow us down.

• 12:40Jason Calacanis?

  Allegedly.

• 12:41Speaker 01

  You lose a month, you lose a couple of months today and it means a lot. So I think, the only question I have, and I haven't done the math, I actually invested in X, I invested in XAI, I'm in an SPV. Ron Baron said, Bill, you gotta invest in SpaceX. So I'm in, so now I have, so obviously I'm rooting for kind of a good outcome. I just don't, I haven't done the.

• 13:01Jason Calacanis?

  What about Anthropic, OpenAI, and Palantir?

• 13:04Speaker 01

  Okay, I'm sorry.

• 13:06Jason Calacanis?

  Anthropic, OpenAI, Palantir also fall into this category. Do you underwrite those as venture investments as well? And have you done the work on those?

• 13:13Speaker 01

  They're venture investments that do what's helpful is they're not seed or series A. Right, they're, you know, D or E, but they're still like venture investments. These companies have proven they can generate a lot of revenues. And actually, what I was just saying on Sarah, I thought she had a very, very thoughtful explanation on how they think about committing capital. Right, and that's the thing I haven't heard from on OpenAI, which is why if I were OpenAI, I would be getting that message out because, you know, from the outside, you're like, it's a pretty interesting business model. You got a company that's spending, making capital commitments, they're massively in excess of, you know, revenues. And how do you do that and get, you know, it's a degree of difficulty, I would say is hard.

• 13:52David Sacks?

  Your perch on the boards of, let's call it these more traditional Fortune 500-type businesses and your conversations with those CEOs, how are they thinking about AI? Is it something that they're tipping into with pilots? Are they doing transformation initiatives? Do they think this doesn't really apply to us, we'll deal with it later? What's your sense of how they're adopting or embracing AI?

• 14:16Speaker 01

  I would say every CEO in America today is like, how do I use AI? How does it apply to my business? How is it a threat? They've got to find an internal champion, they maybe have to recruit someone from the outside. I would say on the hierarchy of things they worry about, it's probably number one as both an opportunity and a threat. So if you're not paying attention to it, you'll, I mean, your board is going to be, you know, asking you the first question every meeting about, you know, what, how are we dealing with the AI threat? How are we dealing with the AI opportunity? So it's absolutely top of mind.

• 14:46David Sacks?

  Are you seeing much early success? I mean, are through your, you know, again, through your visibility into these companies? I mean, there's a lot of mixed signals that we get, like McKinsey did a study and said that 95% of enterprise initiatives actually fail. Jamath, you've made this point around 80, 90, a lot of these enterprises don't really know how to deploy AI. The fanciest title in Silicon Valley these days is a forward deployed engineer, which is basically like an IT consultant who can close the gap between the promise of AI and the ROI of it. And I think people are just trying to figure out like, how do we, how do we use this thing? I mean, have you seen much actual success? Is this the, is this the question right now? Is this how we bridge this gap?

• 15:31Speaker 01

  So I haven't seen much success, other than, I mean, I'll give you the Pershing Square story. You know, we're a tiny little company. How are we using AI today? The first use case is really on the legal side. And, you know, kind of almost, almost we call it compliance back office type, you know, functionality. I think we're still super, super early in terms of big companies using AI effectively.

• 15:54David Friedberg?

  Can I ask, or test a thesis with you? You know, the venture underwriting model, where you think about people, you're underwriting a founder and their capacity to lead and redirect the organization in a changing environment, in technology environment, market environment and whatnot. And we have seen repeatedly similar success at scale if the company is still founder-led, where the founder feels like they have the authority to make all the radical decisions needed to make sure that that company persists and changes as needed in a changing environment. Have you looked at founder-led companies versus non-founder-led companies where perhaps the founders really do have an inherent advantage in being able to navigate the changing environment and actually generate outsized returns over

• 16:36David Friedberg?

  time? And I ask this particularly as it relates to the SaaS apocalypse. And if you take a look at the companies that are founder-led today versus not, if you're not founder-led, you have an incentive to not make a mistake and get fired. If you're founder-led, you don't give a [bleep], your job is to make sure the company.

• 16:50Speaker 01

  Yeah, I think the answer is exactly what you've said. I think the problem is that the average life of an S and P 500 CEO is probably, I don't know, four years or three years, three and a half years or something like this. And you're focused on, you know, kind of shorter-term compensation. You generally don't have a big economic stake in the business. You're a founder. This is your entire life. It's your entire reputation. It's not like you're going to go get another job. You've got to kind of make it work. And also, when you're in the boardroom, you have the authority of either being a major voting, you know, voice, or a, you've got a huge economic stake in the company. And when we join a board of a company, we're often the largest or the largest non-index fund type shareholder. That kind of gives us, you know, a little bit of a disproportionate voice in the boardroom. Imagine if you have that and you're CEO of the company, right? So I think that does

• 17:34Speaker 01

  give you, and also if you've gotten to be a successful founder over time. Guaranteed that you've made a number of very challenging calls over time that turned out to be right, otherwise you wouldn't be there. And so you look at Mark Zuckerberg, right, when he bought, I don't know, Instagram, everyone's like shocked at the price paid, or WhatsApp, you know, they seemed like, you know, sort of outside the, you know, the company only had whatever, 19 employees or something when he paid a billion something. But you make enough of those calls and you can make the other challenging call.

• 18:04Jason Calacanis?

  Is this antithetical to a Ben Graham investing model? Like, you have to have a different set of skills as an investor to identify this talent?

• 18:11Speaker 01

  Yes, I mean, Ben Graham is a really important voice for investors in that he said, look, you got to think about a business. A stock certificate is an interest in a business as opposed to just this piece of paper. That's probably one of his most important kind of aphorisms. But he was investing, for the most part, in liquidations. He was in that, you know, in the days of Ben Graham, where there weren't, there's no Edgar system, and in order to get a 10K filing, you had to go to the headquarters of the company. There were a lot of stocks trading at, you know, basically the cash on the balance sheet. And his business model was, you know, buying these things at stupidly cheap prices and eventually, but Ben Graham made most of his money investing in, I don't know, GEICO or something, you know, not.

• 18:50Jason Calacanis?

  Tell us a little bit about, you know, there's this sort of activist and significant shareholder, but then there's Howard Hughes, and you've talked a little bit about Berkshire Hathaway 2.0, or just being inspired by that, Chamath, you were inspired by for a long time. Oh, Bill just took Pershing Square public. Yeah, but with the Howard Hughes Corporation specifically, tell us about that effort, because you're operating that business.

• 19:13Speaker 01

  There's a book, I think it's called The Financial History of Berkshire Hathaway, and that's for geeks. Basically, this guy went back and read every 10Q, whatever, he actually went through the filings, looked at every deal that Buffett ever did, and you follow him over a 60-year period of time. And the vast majority of the value he created at Berkshire was through, actually, the ownership of insurance operation. And what's interesting about insurance is that, you know, running an insurance company you have two jobs. One is you, you know, write business, right? You take risk. You collect premiums in exchange for the obligation to pay future claims. And then you get that, you get money upfront, and your responsibility is to invest that money. The vast majority of insurance companies focus only on the liability side of the balance

• 19:58Speaker 01

  sheet. Buffett was really the first to do, focus on, actually more on the asset side of the balance sheet than on the liability side, and over time, on the liability side. If you, if you manage the assets of an insurance company well and the liabilities well, you can build this enormously profitable, compounding, tax-efficient machine over time. And the question is, why haven't other people done this? And the answer is, if you're really good at investing, you go work for a hedge fund, you go work for Fidelity, you go work for Wellington, but you don't go work for an insurance company. So the insurance company's ability to recruit investment talent is very limited. Buffett owned half the company, he was really good at investing, which is why it worked. So what we're doing is, we're, you know, Buffett started with a crappy textile company,

• 20:41Speaker 01

  effectively liquidated it over time, reinvested in insurance, and then invested the assets well. Howard Hughes is actually a really interesting company, but it's a business that Wall Street has not cared about for a long period of time. We created it out of the bankruptcy of, of General Growth, it was a spin-off of all the other assets, and it's a company that owns these small cities. So, I bet a lot of people here have heard of Summerlin, because a lot of the tech community has moved from California to Las Vegas, but we own this small city. Twenty-six thousand acres of land, we own all the commercial land, we own all the residential land, we sell lots to home builders, we build a downtown, we build buildings. It's a bit like the Irvine Company. You know, Don Brenn created probably a hundred billion dollars of personal wealth managing

• 21:26Speaker 01

  a small city. So, super cool company, but the timeframe is decades as opposed to quarters. So Wall Street's never cared, it's always traded at a huge discount. So Buffett bought into a textile business at a discount to liquidation value. At $63 a share, you're owning Howard Hughes at a discount to liquidation value. What we're doing is, instead of reinvesting all the cash the business generates into real estate, we're going to reinvest all the cash into insurance, within the next week or so.

• 21:52Chamath Palihapitiya?

  You're in the business of building this flywheel.

• 21:54Speaker 01

  We're going to build this into a compounding machine over the next 50 years. It's something I've always wanted to do. We have the benefit of understanding both the insurance side of the business, and we can manage the assets well. And you can buy it at, you know, whatever, 60 cents on the dollar.

• 22:08Chamath Palihapitiya?

  How do you think about investing the assets of this insurance company?

• 22:11Speaker 01

  So what Buffett did is he took 100% of the insurance float, and put the money in short-term treasuries. So he took no risk on kind of policyholder funds. And he took 100% of the surplus of the insurer, the equity, and invested in common stocks. And that's what we're going to do. And I think we can build a really profitable insurance company. We're starting at a very small scale. The company's got like a $4 billion market cap. And the goal is to build it into a trillion-dollar thing over time. Compounding. The other thing Buffett did well is that he didn't issue any stock, or not for a very long time. So he started with a million shares, and today he's effectively like a million and a half.

• 22:43Chamath Palihapitiya?

  Do you think this is the future for very talented managers like yourself versus the traditional long-short fund, or do you think they sit side by side?

• 22:51Speaker 01

  I think it's hard to do this because you need control of a public company, and you have to be not in a get-rich-quick mindset. And if you're in the get-rich-quick, it's easier to go to Citadel or Millennium or one of these.

• 23:03Chamath Palihapitiya?

  Why does it have to be public?

• 23:04Speaker 01

  Why does it have to be public? It doesn't. It doesn't have to be public.

• 23:07Chamath Palihapitiya?

  Why did you choose to take it?

• 23:09Speaker 01

  You know, we got here by accident, right? So the most successful equity investment we've ever made is we bought this company called General Growth. We bought the stock of a company going bankrupt. Sort of the most contrarian investment you can make. Stock went from, you know, $20 billion market cap to $100 million, and we bought... Basically, a third of the company, or 27% of the company, had $200 billion market capital. There was 27 billion of debt. And the bankruptcy emerged, and the strategy we said is, look, the assets are worth more than liabilities. We're going to do the first restructuring where the equity gets to keep their investment in the company. Two years later, we emerged from Chapter 11. The stock went from 34 cents to $34. But part of the restructuring was spinning off this thing called Howard Hughes.

• 23:51Speaker 01

  It was really all of the junk that didn't belong in the company that the analysts hated. And so we did it as sort of an inadvertent investment. And 15 years later, we haven't really created much value with it. So we said, look, we've got to, the market doesn't like this thing. The market, a company has to earn a return in excess of its cost of capital in order for a stock to go up. And Elon's done an amazing job keeping the cost of capital of his companies really low. If SpaceX goes public at $1,750 billion, it'd probably be the lowest cost of capital, equity capital transaction in the history of the world. The problem with this company, because it's real estate, because it's development, because it's land ownership, the market says the cost of capital is really high, and you can only earn a certain return on real estate.

• 24:34Speaker 01

  So what we're doing is we're repurposing the real estate assets, and we're transforming the company into a much higher returning kind of business.

• 24:40Chamath Palihapitiya?

  So the last few years, you've become incredibly famous. I mean, just to kind of put a fine point on the word. How does that change and influence the way that markets work? Because your voice gets amplified now. You also have other places where other voices get heard, many people whose names you don't even know. You go into Wall Street Bets, it's every random Tom, Dick, and Harry with an opinion. Tell us the way the markets have changed with notoriety, fame, social media, influence, not just yours, but in general.

• 25:09Speaker 01

  Yeah. I don't think markets have changed as a result of anything that's happened with me or follower growth on Twitter. I think the Ryan Cohen guy, the GameStop guy. That is a change in markets when a stock can trade at a valuation well above its value simply on the personality and the ability to

• 25:32Chamath Palihapitiya?

  Vibes.

• 25:33Speaker 01

  To gather up armies of followers. The fascinating thing about liquidity and valuation is

• 25:43Speaker 01

  The higher a stock price goes, and it's gonna sound sort of intuitive, but it's not, the more valuable the company becomes. You know, there's actually the increase in value of the company increases the value of the company, right? Because it lowers the cost of capital, it gives you more flexibility, gives you the ability to issue stock, raise capital, acquire other businesses. And so, you know, getting back to the Elon example, it's really his, I mean, I would say he's a better example of this, we've not taken advantage of this at all, maybe we should, but he built an army of believers and followers that enabled Tesla to be built, you know, in public markets.

• 26:23Chamath Palihapitiya?

  Let me maybe end as we wrap up with a somewhat appointed question. You're an incredible investor. If there are people, if we want to be maximally aligned with Bill Ackman, is the best way to be an LP in Pershing Square, or is it best to go into the market and buy?

• 26:40Speaker 01

  So we have two, I think there are three ways you can invest with us that are all different and will achieve different things. One is something entity called Pershing Square, which is the management company of Pershing Square. I think it's one of the most interesting kind of intellectually businesses because it's a, it's the entity that receives fees on these three permanent capital vehicles we manage. It's a royalty on the compounding of investments in these entities, and there's no capex in the business. So we're gonna pay out basically all of our profits, and we're gonna grow as quickly as the underlying assets compound. So if you invested a dollar in Pershing Square, you know, 22 years ago, that's, that became,

• 27:22Speaker 01

  you know, 20, I should note this number, it's like 27 or 28 times net of all fees, okay? Over 22 years. Had we charged the fees of this public vehicle, that number would have been, you know, 37 times. I'm sorry, no, more, something in the mid 40s. Okay. What this means is, we now have a public vehicle that charges only a 2% fee, we've got one in London that charges an incentive fee. If we compounded the rates we have historically, we'll have 35 times the assets under management in 22 years. So we'll go from 25 billion of assets to something approaching a trillion. We don't have to hire another person. And we don't have to spend another dollar, if you will, on overhead. That's a pretty interesting business. So I like that one. So Pershing Square.

• 28:07Speaker 01

  If you want to invest with us as an investor, invest in something called TSUS. You own a portfolio of our best ideas and it's trading at an 18% discount to cash. You want to believe that we can build the next Berkshire Hathaway? You own Howard Hughes. We've got three different ways.

• 28:20Jason Calacanis?

  Yeah, I bought some Howard Hughes. I think following you on Twitter and going direct movement does allow you to communicate directly your vision and that actually makes it much easier to place the bet. And so I do think it has a profound impact because prior to your extremely long tweets that have been parodied now, there's an incredible meme of a Bill Ackman tweet coming in, which is an extended iPhone that's a foot tall.

• 28:48Speaker 01

  No, that was my Halloween costume.

• 28:50Jason Calacanis?

  Yes.

• 28:51Speaker 01

  For last year.

• 28:53Jason Calacanis?

  You would have written something shorter. You just didn't have the time, yeah?

• 28:57Speaker 01

  Yeah, I guess. I don't let other people read, you know.

• 29:00Jason Calacanis?

  Do you like have spouse or anybody read it?

• 29:04Speaker 01

  On the Rhonda tweet, which had some legal implications, I did have my communications guy and a lawyer, a friend who's a lawyer read it. But I only gave him a few minutes because I was so excited. Once I write something I really like, I just want to.

• 29:16Jason Calacanis?

  Yeah, I agree. I agree. Damn the torpedoes.

• 29:21David Friedberg?

  Mo does this too. He starts getting a little bit frantic when he's writing something and then he's like, "F*** it." And he just hits that.

• 29:26Jason Calacanis?

  I just hit that?

• 29:27Speaker 01

  By the way, it's a very powerful thing to be able to share your view and push a button and reach 2.2 million people. So I'll have to, why don't we just do a picture on stage and I'll send it out?

• 29:35Jason Calacanis?

  Yeah, that's great.

• 29:36Speaker 01

  Liquidity.

• 29:38Jason Calacanis?

  Gone, Ollie? All right. Relax.