YouSaid · the spoken record

Bill Ackman

lines on the record: 257
first: 2024-02-20
most recent: 2024-02-20
sittings or episodes: 1
sources: podcast

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“But it wasn't a trade. I wouldn't describe it as a trade. A trade is something you buy and you flip. This is something where we made the investment initially in November of 2008. And we still own a company we spun off of general growth and it's now 15 years later.”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“Could theoretically happen. But again, the activist, in your example, generally doesn't own a lot of stock. The shareholder basis today, the biggest shareholders are these index funds that are forever. The BlackRock Vanguard, State Street, their ownership stakes are just at this point only growing because of the inflows of capital they have from shareholders. So they have to think, or they should think very long term, and they're going to be very skeptical of someone coming in with a short-term idea that drives the stock price up in the next six months, but impairs the company's long-term ability to compete. And basically that ownership group prevents this kind of activity from really happening.”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“But sometimes it's hard to have that kind of credibility when you're a new CEO of a company. So when you have a major owner that's respected by other shareholders sitting on the board saying, hey, the CEO is doing the right thing and making this expensive investment in a new factory. We're spending more money on R&D because we're developing something that's going to pay off over time. That large owner on the board can help buy the time necessary for management to behave in a longer term way. And that's, I think, good for all the shareholders.”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“Depends whether that investor is, but generally I think it's a good thing. And that's why one of the problems with being CEO of a company today and having a very diversified shareholder base is the kind of short-term, long-term balance. And you have investors that have all different interests in terms of what they want to achieve and when they want it achieved. And CEO of a new company has a new CEO of an old company, let's say, hasn't had the chance to develop the credibility to make the kind of longer-term decisions and can be stuck in a cycle of being judged on a quarterly basis. And a business, the best businesses are forever assets. And decisions you make now have impact three, four, five years from now. In order to make, and sometimes there are decisions we make that have the effect of reducing the earnings of a company in the short term, because in the long term, it's going to make the business much more valuable.”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“It is, it is. But you need some thought leaders, so activists are kind of thought leaders because they can spend the time and the money, a retail investor that owns a thousand shares doesn't have the resources or the time. They got a day job. Whereas an activist day job is finding the handful of things where there are opportunities.”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes. So activists generally never own more than 5 or 10% of a business. So they don't have control. So the way they get influence is they have to convince the other, you know, they have to get to sort of a majority of the other shareholders to support them. And if they can get that kind of support, they can behave almost like a controlling shareholder. And that's how it works.”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“And the management of the company. And that's been a very good thing for the performance of the U.S. stock market, actually”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“And that, by the way, that's the way investing was done in the Andrew Carnegie J.P. Morgan days 150 years ago. You had these iconic business leaders that would own 20% of US steel. And when things would go wrong, they'd replaced the board and the management and fixed them. And over time, we went to a world where mutual funds were created like in the 1920s, 30s, index funds with Vanguard and others. all these controlling shareholders would kind of gave their stock to society or their children and multiple generations and there were no longer kind of controlling owners of businesses or very few and that led to underperformance and the opportunity for activists over time and what activism has done and I think we've helped lead this move”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“And then we realized an investment, a company called General Growth was the first time we took a board seat on a company. And there was some financial restructuring and also an opportunity to improve the operations of the business, sit on the board of a company. And that was one of the best investments we ever made. And we said, okay, we can do more than just be an outside the boardroom investor. And we can get involved in helping select the right management teams and helping guide the right management teams. And then we've done that over years. And then I would say the last seven years, we haven't had to be an activist. An activist is generally someone who's outside banging on the door trying to get in. We've sort of built enough credibility that they open the door. And they say, hey, Bill, what ideas do you have? So welcome. Would you like to join the board? We're treated differently today than we were in the beginning. And that is, I would say some people might just call it being an engaged owner.”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“Bring in new talent and then take over the management of a business. And that's the most extreme form of activism. So that's kind of the early days of what we did. And a lot of the early things that we did were call it what we call sort of like investment banking activism, where we'd go in and recommend something, a good investment bank would have recommended. And if they do it, we make a bunch of money. And then we moved on to the next one.”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“Them to do what's called a fairness opinion of what Wendy's would be worth if they followed our advice. And they agreed to do it, paid them a fee for it. And then we mailed in a letter with a copy of the Fairness opinion saying Wendy's would basically be worth 80% more if they did what we said. And six weeks later they did what we said. So that's activism, at least an early form of activism. With that kind of under our belt, we had a little more credibility. And now we started to take things and stakes in companies. The media would pay attention. So the media became a kind of an important partner. And some combination of shame, embarrassment, and opportunity motivated management teams to do the right thing. And then beyond that, there's certain steps you can take if management is recalcitrant and the shareholders are on your side. But it's a bit like running for office. You've got to get all the constituents to support you and your ideas. And if they support you and your ideas, you can overthrow, if you will, the board of a company.”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“And so to influence what was to us a big company, we had to make a fair bit more noise. So we would buy a steak, we'd announce it publicly, we'd attempt to engage with management. The first activist investment we made at Pershing Square was Wendy's. I couldn't get the CEO to ever return my call. Didn't return my call. So we actually, in that case, our idea was Wendy's own a company called Tim Hortons, which was this coffee donut chain. you could buy Wendy's for basically $5 billion and they owned 100% of Tim Horton's which itself was worth more than $5 billion you could literally buy Wendy's separate Tim Hortons and get Wendy's for negative value that seemed like a pretty good opportunity even though the business wasn't doing that well so we bought the steak called the CEO couldn't get a meeting nothing so we hired actually Blackstone which was at that time had an investment bank and we hired”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“We do is we invest our capital in a handful of things. We get to know them really, really well because you're going to put 20% of your assets in something you need to know it really well. But once you become a big holder, and if you've got some thoughts on how to make a business more valuable, you can do more than just be a passive investor. So our strategy is built upon finding great companies in some cases that have lost their way and then helping them succeed. And we can do that with ideas from outside the boardroom. Sometimes we take a seat on a board or more than one. And we work with the best management teams in the world to help these businesses succeed. So when I first went into this business, no one knew who we were. And we didn't have that much money.”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“Think recently, in the last couple of days, I read an article saying that more than 50% of the capital in the world today invest in the stock markets passive, indexed money. And that's the most passive form. So if you think about an index fund, a machine buys a fixed set of securities in certain proportion. There's no human judgment at all. And there's no real person behind it in a way. They never take steps to improve a business. They just quietly own securities.”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“Brother, there's much more information available today. When I was first investing, literally we had people faxing us documents from the SEC filings in Washington, D.C. Now everything's available online. Conference call transcripts are free. You have AI, you have unlimited data and all kinds of message boards and Reddit forums and things where people are sharing advice. And everyone has their own by virtue of their career or experience, they'll know about an industry or a business. And I would take advantage of your own competitive advantages.”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“You understand why they're successful, you can go there every week and you can monitor. Is anything changing how these new kind of, how's chicken el pasteur? Is that a good upgrade from the basic chicken? The drink offerings improving, the store's clean. I think you should invest in companies you really understand. Simple businesses where you can predict with a high degree of confidence what it's going to look like over time. And if you do that, and I'm not particularly concentrated fashion and you don't borrow money against your securities, you probably do much better than your typical mutual fund.”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“I even recommend for individual investors to invest in a dozen companies. You don't get that much more benefit of diversification going from a dozen to 25 or even 50. Most of the benefits diversification come in the first call it 10 or 12. And if you're investing in businesses that don't have a lot of debt, they're businesses that you can understand yourself. You understand, you know, actually individual investors did a much better job analyzing Tesla than the so-called professional investors or analysts, the vast majority of them. So if it's a business you understand, if you bought a Tesla, you understand the product and its appeal to consumers, it's a good place to start when you're analyzing a company. So I would invest in things you can understand. That's kind of a key. You know, you like Chipotle.”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“I think there are very few mutual funds. There are thousands and thousands of mutual funds. There are very few that earn their keep in terms of the fees they charge. They tend to be too diversified. Know too short term, and you're often much better off just buying an index fund, and many of them perform. If you look carefully at their portfolios, they're not so different from the underlying index itself, and you tend to pay a much higher fee. Now, all of that being said, there's some very talented mutual fund managers, a guy named Will Danoff at Fidelity's, had a great record over a long period of time. The famous Peter Lynch, Ron Barron, another great long-term growth stock investor. So there's some great mutual funds. But I put them in the handful versus the thousands. And if you're in, you know, the thousands, I'd rather someone bought just an index one basically.”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“Buffet is the ultimate long term thinker and just the decisions he makes, the consistency of the decisions he's made over time in fitting into that sort of long-term framework is a very educational, let's put it that way, for learning about this business.”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“Need in the short term, then you can actually be thoughtful about it. And that is a huge advantage. The vast majority of investors, it seems, tend to be the ones that panic in the downturns get overlated when markets are doing well.”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“Sure. So never invest money, you can't afford to lose where it would, if you lost this money and you lose your house, et cetera. So having Being in a place where you're investing money that you don't care about the price in the short term. It's money for your retirement. And you take a really long-term view. I think that's key. Never investing, will you borrow money against your securities? The markets offer you the opportunity to leverage your investment. And in most worlds, you'll be okay, except if, you know, there's a financial crisis or a nuclear device gets detonated, God forbid, somewhere in the world, or there's an unexpected war, or someone kills a leader unexpectedly. Things happen that can change the course of history and markets react very negatively to those kinds of events. And you can know the greatest business in the world trading for $100 a share. And next moment it could be $50. So as long as you don't borrow against securities, you own really high quality businesses, and it's not money that you...”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah. And you just, it's a bit, again, you can learn a lot from other people's experience. It's one of the few businesses where you can learn an enormous amount by reading about other periods in history, following Buffett's career, the mistakes he made. If you're investing a lot of capital, every one of your mistakes is going to be big, right? So we've made big mistakes. The good news is that the vast majority of things we've done have worked out really well. And so that also gives you confidence over time. But because we make very few investments, we own eight things today or seven companies that matter if we get one wrong. It's going to be big news. And so the other nature of our business you have to be comfortable with is a lot of public scrutiny, a lot of public criticism, and that requires some Experience”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“Think so. I think now I'm a pretty emotional person, I would say, or I feel pretty strong emotions, but not in investing. I'm remarkably immune to kind of volatility. And that's a big advantage. And it took some time for me to develop that.”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“Or it has much less impact on you because you know, you know, again, as Mr. Graham said, the short term, the market's a voting machine. You have a bunch of lemmings voting one direction. That's concerning. But if it's a great business, doesn't have a lot of debt, and people are going to just listen to more music next year than this year. You know you're going to do well. So it's a bit some combination of being personally secure and also just knowing what you own. And over time, you build. Callusis, I would say.”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“It's something you kind of learn over time. A key success factor is you want to have enough money in the bank that you're going to survive regardless of what's going on with volatility in markets. People who, one, you shouldn't borrow money. So if you borrow money, you own stocks on margin. Markets are going down and you have your livelihood at risk. It's very difficult to be rational. So key is getting yourself to a place where you're financially secure. You're not going to lose your house. That's kind of a key thing. And then also doing your homework. Stock prices can trade at any price in the short term. And if you know what a business is worth and you understand the management, you know it extremely well, it's not nearly as it doesn't bother you when a stock price goes down.”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“It's not something you learn in the jungle. I don't think it's something that if you think about the surviving the jungle, the lion shows up and everyone starts running, you run with them. That does not work well in markets. In fact, you generally have to do the opposite, right? When the lemmings are running over the cliff, that's the time where you're facing the other direction and you're running the other direction, i.e. you're stepping in, you're buying stocks at really low prices. Buff has been great at that. and great at teaching about what he calls temperament, which is this sort of emotional kind of or unemotional quality that you need to be able to dispassionately look at the world and say, okay, is this a real risk? Are people overreacting? People tend to get excited about investments when stocks are going up and they get depressed when they're going down. And I think that's just inherently human. You have to reverse that. You have to get excited.”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“Sure, so most of what I've learned in the investment business I've learned from Warren Muffet. He's been my great professor of this business. My first book I read in the business was The Ben Graham Intelligent Investor. But fairly quickly you get to learn about Warren Buffett. And I started by reading the Berkshire Hathway Annual Reports. And then I eventually got the Buffett Partnership Letters. You can see, which are an amazing read to go back to the mid-1950s and read what he wrote to his limited partners when he first started out and just follow that trajectory over a long period of time. So what's remarkable about him is one duration, right? He's still at it at 93. Two, you know, takes a very long-term view. But a big thing that you learn from him, investing requires this incredible, dispassionate, unemotional quality. You have to be extremely economically rational, which is not a basic”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“Sure. So this very senior management matters enormously. We use the Chipotle example. Steve L's great entrepreneur business got to a scale he really couldn't run it. We recruited a guy named Brian, helped the company recruit a guy named Brian Nickel. And he was considered the best person in the quickservice industry. He came in and completely rebuilt the company. Actually, we moved the company. Chipotle was moved to California. And sometimes one way to redo the culture of a company is just to move it geographically. And then you can kind of reboot the business. But a great leader has great followership over the course of their career. They'll have a team they've built that will come follow them into the next opportunity. But the key is really the top person matters enormously, and then it's who they recruit. You know, you recruit an A-plus leader and they're going to recruit other A type people. You recruit a B leader. You're not going to recruit any great talent beneath them.”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“And you can learn a lot. I mentioned before one great way to learn about a business is go back a decade and read everything that management is written about the business and see what they've done over time, see what conference calls are actually relatively recent. When I started in the business, there weren't conference call transcripts. Now you have a written record of everything management has said in response to questions from analysts at conferences and otherwise. And so just you learn a lot about people by listening to what they say, how they answer questions, and ultimately their track record for doing what they say they're going to do. Do they underpromise and over deliver? Do they overpromise and under deliver? Do they say what they're going to do? Do they admit mistakes? They build great teams. Do people want to come work for them? Are they able to retain their talent? And then part of it is, how much are they running the business for the benefit of the business?”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“So as I like to say incentives drive all human behavior, and that certainly applies in the business world, so understanding the people and what drives them and what the actual financial and other incentives of a business are very important part of the analysis for investing in a company.”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“I think you've seen a lot of that in the last year. And I would say some combination of embarrassment and pride are huge motivators for everyone from Sergei Brin to the management of the company.”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“An amazing, incredibly dominant company until it disappeared. Polaroid, you know, this incredible technology. And that's why we have tended to stay away from companies that are technology companies, because technology companies generally, the world is such a dynamic place. It's one that's always working on a better version. And, you know, Kodak was caught up in the analog film world. And then the world changed.”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“Absolutely. That's a great question. Business investing is about finding companies that can't be disrupted. AI is the ultimate disruptible asset or technology. And that's what makes investing treacherous, is that you own a business that's enormously profitable. Management gets, if you will, fat and happy. And then a new technology emerges that just takes away all their profitability. And AI is this incredibly powerful tool, which is why every business is saying, how can I use AI in my business to make us more profitable, more successful, grow faster, and also disrupt or protect ourselves from the incomings? It's a bit like Buffett talks about a great business like a castle surrounded by this really wide moat. But you have all these barbarians trying to get in and steal the princess. And it happens, you know, Kodak, for example, was.”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“For the business. One way to think about the value of the business is the price you pay for the earnings. Or alternatively, what's the yield? If you flip over the price over the earnings, it gives you kind of the yield of the business. So 15 multiple is about almost a 7.5% yield. And that earnings yield is growing over time as the business grows. Compared to what you can earn lending your money to the government, 4%, that's a very attractive going in yield. And then there's all kinds of what we call optionality in all the various businesses and investments they've made that are losing money. They've got a cloud business that's growing very rapidly, but they're investing basically 100% of the profits from that business and growth. So you're in that earnings number, you're not seeing any earnings from the cloud business. And they're one of the top cloud players. So very interesting, generally well managed company with incredible assets and resources and dominance.”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“You think of all the data Google has, like the search data, all the various applications, email and otherwise, the kind of the Google suite of products, it's an incredible data set. So they have more training data than pretty much any company in the world. They have incredible engineers. They have enormous financial resources. So that was kind of the bet. And we still think it's probably the cheapest of the big seven companies in terms of price you're paying for the business relative to its current earnings. It also is a business that has a lot of potential for efficiency. Sometimes when you have this enormously profitable dominant company, all of the technology companies in the post-March 20 world grew enormously in terms of their teams, and they probably overhired. And so you've seen some, you know, the Facebooks of the world and now even Google starting to get a little more efficient in terms of their operations. So we had a low mole.”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“And don't start with the Google search bar. That's a risk to the company. And so our view, based on work we had done and talked to industry experts, is that Google, if anything had by virtue of the investment they've made and the time, the energy they've people put into it, we felt their AI capabilities were, if anything, potentially greater than Microsoft Chat GPT and that the market had overreacted. And because Google is a big company global business, regulators scrutinize it incredibly carefully, they couldn't take some of the same liberties. A startup like OpenAI did in releasing a product. And I think Google took a more cautious approach in releasing an early version of Bard in terms of its capabilities. And that let Lamarck the world to believe that they were behind. And we ultimately concluded, if any, they're tied or ahead and you're paying nothing for that potential business. And they also have huge advantages by...”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“When you type in your search, the Google advertising search YouTube franchise is one of the most dominant franchises in the world. Very difficult to disrupt, extremely profitable. The world is moving from offline advertising to online advertising, and that trend, I think, continues. Why? Because you can actually see where your ads work. They used to say about advertising. Spend a fortune and you just don't know which 50% of it's works, but you just sort of spend the money because you know ultimately that's going to bring in the customer. And now with online advertising, you can see with granularity which dollars I'm spending when people click on the search term and end up buying something and I pay it's a very high return on investment for the advertiser and they really dominate that business. Now AI of course is a risk. If all of a sudden people start searching or asking questions of ChatGPT.”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“Then Google does this fairly disastrous demonstration of BARD. And the world says, oh my God, Google's fallen behind an AI. AI is the future. Stock gets crushed. Google gets to a price around 15 times earnings, which for a business of this quality is an extremely, extremely low price. And our view on Google, one way to think about it, when a business becomes a verb, Usually, pretty good sign about the mode around the business. So you open your computer and you open your search and very high percentage of the world starts with a Google page and a one line.”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“So it's a business we've admired as a firm for whatever 15 years, but rarely got to a price that we felt we could own it because again, the expectations were so high and price really matters. Really, the sort of AI scare, I would call it. Microsoft comes out with ChatGPT. They do an amazing demonstration. People are like this most incredible product. And Google, which had been working on AI even earlier, obviously the Microsoft Microsoft was behind an AI. It was really their chat GPT deal that gave them a kind of a market presence.”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“Maybe we'll have Burger King feature in it. What about Flame Broiled? What's with these fried burgers? We got to get you to Burger King grilled burgers.”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“We own a company called Restaurant Brands. Restaurant brands own a number of Quickservice companies, one of which is Burger King.”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“Farmers around the country. It's a lot easier to make a deal with one of the big massive food producers by your pork from them than to buy from a whole bunch of farmers around the country. And so that is a big moat for Chipotle, very difficult to replicate”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“Mode is you get to a certain scale and you do it successfully, and the brand is now understood by the consumer. And what's interesting about Chipotle is what they've achieved is difficult, right? They're not buying frozen hamburgers, getting shipped in. They're buying fresh, you know, sustainably sourced ingredients. They're preparing food in the store. That was a first, right? Quality of the product at Chipotle is incredible. It's the highest quality food you can get. You can get a serious dinner for under 20 bucks and eat really healthily and very high quality ingredients. And that's just not available anywhere else. And it's very hard to replicate and to build those relationships.”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“And operate them successfully. And the quick service business is about systems and building a model that a stranger who doesn't know the restaurant industry can come in and enter the business and build a successful franchise. Now, Chipotle is not a franchise company. They actually own all their own stores, but many of the most successful restaurant companies are franchise models, like a Burger King and McDonald's, Tim Hortons, you know, all these various brands, Popeyes. And there it's about systems. But the same systems apply whether you own all the stores, and it's run by a big corporation or whether the owners of the restaurants are sort of franchisees, you know, local entrepreneurs.”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“You have to find businesses that it's hard to foresee a world in which they get disrupted. And the beauty of the restaurant business, and actually our best track record is in restaurants. We've never lost money. We've only made a fortune, interestingly, investing restaurants. A big part of it's a really simple business. And if you get your potley right and you're at 100 stores, it's not so hard to envision getting to 200 stores and then getting to 500 stores. And the key is maintaining the brand image, growing intelligently, having the right systems. Now, when you go from 100 stores to 3,500 stores, you have to know what you're doing. And there's a lot of complexity, right? You know, if you think about your local restaurant, the family's working in the business, they're watching the cash register. And you can probably open another restaurant across town. But there are very few restaurant operators that own more than a few restaurants.”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, the most difficult analysis to do as an investor is that, is kind of figuring out how wide is the moat, how much at risk is the business to disruption. And we're in, I would say, the greatest period of disruptibility in history, right? Technology, you know, a couple of 19-year-olds can leave whatever university, or maybe they didn't even go in the first place. They can raise millions of dollars. They can get access to infinite bandwidth, storage. They can contract with engineers in low-cost markets around the world. They can build a virtual company, and they can disrupt businesses that seem super established over time. And then on top of that, you have major companies with multi-trillion dollar market caps working to find profits wherever they can. And so that's a dangerous world in a way to be an investor. And so you want to.”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“A great business has kind of made a big mistake or you have a company that's kind of lost its way, but it's recoverable. And that's we buy from shareholders who are disappointed, who've lost confidence, selling at a low price relative to what it's worth if fixed, and then we try to be helpful in fixing the company.”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“So the kind of business we're looking for is sort of the kind of business everyone should be looking for, right? A great business. It's got a long-term trajectory of growth out into the force, you know, even beyond the foreseeable distance, right? Those are the kind of businesses you want to own. You want businesses that generate a lot of cash. You want businesses that you can easily understand. You want businesses with these sort of huge barriers to entry where it's difficult for others to compete. You want companies that don't have to constantly raise capital. And these are some of the great business of the world. But people have figured out that those are the great businesses. So the problem is those companies tend to have very high stock prices and the value is generally built into the price you have to pay for the business. We can't earn the kind of returns we want to earn for investors by paying a really high price. Price matters a lot. You can buy the best business in the world and if you overpay, you're not going to earn particularly attractive returns. So we get involved in cases where”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“Difference between publishing and recorded music. We'll look at the competitors. We'll talk to, we'll read books. I read a book about the music industry or a couple books about the industry. So it's a bit like a big research project. And these so-called expert networks now. And you can get pretty much anyone on the phone. And they'll talk to you about an aspect of the industry that you don't understand, want to learn more about. Try to get a sense. Public filings of companies generally give you a lot of information, but not everything you want to know. And you can learn more by talking to experts about some of the industry dynamics, the personalities. You want to get a sense of management. I like watching podcasts. If a CEO were to do a podcast or a YouTube interview, you get a sense of the people.”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source
“But their approach was not far from ideal. But we start with usually reading the SEC filings. So companies file a 10K or an annual report. They file these quarterly reports called 10Qs. They have a proxy statement which describes kind of the governance, the board structure, conference call transcripts are publicly available. It's kind of very helpful to go back five years and kind of learn the story. Here's how management describes their business. Here's what they say they're going to do. And you can follow along to see what they do. It's like a historical record of how competent and truthful they are. It's a very useful device. And then, of course, looking at competitors and thinking about what could dislodge this company. And then we'll talk to if it's an industry we don't know well. We know the restaurant industry really well. Music industry, we'll talk to people in the industry. We'll try to understand, you know,”
2024-02-20 · Lex Fridman Podcast · #413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech · IDENTIFIED FROM THE TRANSCRIPT · source