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Markets are near all-time highs and Bill Ackman is launching a new fund right into it. So, why now? Joining me is Bill Ackman, CEO of Pershing Square. Bill, congratulations. Thank you so much. Big day for you. You actually have two funds. We have Pershing Square Inc. PS and then Pershing Square USA, your closed-end fund, that's PSUS.
Uh actually, if I can correct you. Oh, go ahead. So, PSUSA is a closed-end investment company or fund. Sure. Pershing Square Inc. is a company, an operating company, not not Yes, it's like like a Blackstone or a KKR or Apollo's an alternative asset management company that collects fees from the businesses that we uh the funds that we manage.
PS is the management company, the parent company. PSUS is your PSUSA, the fund. Thank you for clarifying. Sure. You've said you want to build a modern-day Berkshire Hathaway. Why now? So, uh the entity that we're we're building a modern-day Berkshire Hathaway is a company called Howard Hughes. That's one of three permanent capital vehicles that comprise the underlying assets of Pershing Square Inc.
Why today? Because we've never had a US-listed um we're you know, I'm an American. Uh our offices are here. We invest in US companies. But today, if you're a US person or yesterday, there was no way for you to invest with us um because the rules around closed-end funds limited our ability to launch one.
So, when those rules changed beginning a few years ago, and that began a process for us to someday have an entity where someone with $50 can buy a share of our stock. And that was why and as soon as we could get through the process, get the IPO done. And and and in terms of why now, it's actually a great moment to put capital to work.
Um a lot of the best businesses in the world we think are trading at very attractive prices in the backdrop of a war and uncertainty and volatility uh with some very strong economic uh undercurrents. And with stocks near all-time highs. And I do have to point out that Berkshire has been sitting on this massive pile of cash because they haven't found the right opportunity or the right value.
So, what gives you the confidence that now is the time to deploy capital? So, this company, Pershing Square USA, is going to own basically the same portfolio as the other Pershing Square core funds that pay much higher fees and incentive fees. So, it'll be a very low-cost version of Pershing Square.
And we are believe our companies have a, you know, we're going to offer a very attractive compound return from here. So, we think actually there are many companies today that the market is very disparate. There's some companies that are very highly valued. There's some stocks that are very cheap and there's some somewhere in the middle and we are a very concentrated investor.
So, it's about a dozen or more dozen to 15 companies that we own as opposed to the market generally. This is not an index fund. It's a very concentrated portfolio. We get very deeply involved in our companies. We work to help make them you know, be more successful and we're going to perform very differently from the market.
If you look over a long period of time, we've generated, you know, 19% compound return, excuse me, for 22 years and it's been about 25% for the last eight, but it's not been a straight line up. You know, it's volatility. For So, investing with us is, you know, we're looking for people who want to be an investor for the long term.
We think we'll do very well over the long term, but I can't tell you how we're going to do over the next 90 days. So, give us some examples of names you want to own right now for PSUS. So, this is going to be a a replica of our existing portfolio. We also have some investments that we have not yet publicly disclosed.
So, if you look up the other Pershing Square, there's a lot of disclosure about companies we're invested in. Been advised today not to talk about specific companies, but it will be our core holdings. Okay. So, some of the core holdings include Hilton, Universal Music, Chipotle, Alphabet. Alphabet's gone.
you sold. Okay. Alphabet's gone. Okay. So, it's actually a pretty refreshing portfolio. okay. Okay. So, in terms of the risk that investors need to think about on day one, what is that? Day one, you're investing in a pile of cash. We're going to deploy this as Pershing Square USA. We're going to deploy that capital in very high quality, what we call super durable growth companies.
Um the risk is, you know, are we going to invest in the right companies and uh are we going to be successful in helping them succeed? Uh you know, I would look at our track record over, you know, a couple decades to form a conclusion about that. Pershing Square Inc. is a asset management business. Um it has very different risk than a typical asset management business because 98% of the capital we manage is in these permanent capital vehicles.
The typical asset management from the risk is that the investors take their money. Mhm. That's not a risk in our business cuz the money stays in these entities cuz they're corporations. Investors, if they wanted add more, they buy stock. If they want to exit, they sell stock, but the capital stays. So the the risk for the business is what kind of returns are we going to generate over the next 5, 10, 15, 20 years?
Um you know, I think we've had an incredible run over the last 8 years. We're probably the best performing, certainly the best performing as a closed-end fund, by far the best performing average closed-end funds generated a 7% return per annum over the last 8 years. We've generated a 25% return per annum over the same period.
But why not just invest in the S&P 500 because that's done pretty well over the past 1 year? Or why not get a hold of your holdings when you deploy this cash and just buy the individual companies? Uh sure. So uh had you invested in the S&P in January of 2004 we launched, uh and you invested a $10,000 back in uh 22 years ago, uh at the end of last year, you would have had $90,000.
That sounds pretty good. But had you invested in Pershing Square USA, the uh in our strategy, the fee structure across our various strategies, you would have had um you know, $460,000. Right? So we've compounded Minus a 2% fee for PS No, no. That's net of all fees. Net of all fees. So our net returns have vastly outperformed the S&P over a very long uh period of time.
So that's why that's the difference. Um now can you buy stocks after we disclose them? Of course you can. But you can't buy them at the price we acquired them at. And we did an analysis years ago and the average increase in price uh over the last, you know, 20-something years that you would have had to pay versus the price we acquired the stake at.
You you're paying a big premium um because of the market you know, responds generally when we announce a stake in a company. And that day the stock goes up a lot. We're able to accumulate it in the months prior without having to make a disclosure. So one, you get our our cost as opposed to what you have to pay when a stock starts trading.
And second, we also hedge risk. So one of the things that we're best known for buying big stakes in well-known public companies and helping solve problems. Like Chipotle is a good example or buying buying Hilton when the market I would say under appreciated business. But the other thing we do is we look for what we call black swan risks.
Beginning in 2005, we started seeing AAA rated companies guaranteeing subprime obligations. We said this is not going to end well. We bought an instrument called a credit default swap. course. You're It was a very well known for that. way for us to bet against that risk. And when the markets blew up, we made a fortune relatively speaking.
We took that capital and we bought stocks. And then a decade later in February 2020, our concern was COVID. We said, "Look, this is going to be a pandemic. Uh it's going to have significant economic effects." We bought a very like a hedge. We bought the 74 billion of this uh CDS index hedge. We made 2.6 billion dollars in in 10 days.
And then we took the money and we bought stocks. Um and then we did something similar uh 9 months later when the we said, "Look, we're going to have massive inflation." We bought an instrument called an interest rate swap option that enabled us to hedge. Made 2.6 billion on on interest rate swap options.
This will be the first investment fund a retail investor can invest with in history that has that capability and that hedging capability. But why invest on day one though? Because it's a giant pile of cash. Uh the answer Well, why did people Why do we raise 5 billion in the IPO? Why do people sign up in advance to raise The the is not only do they get a pile of cash in an investment vehicle with a good long-term strategy, but they also received an interest in our business for free.
And Berkshire Hathaway Inc. is an amazing business, and I expect it to compound in value at a very nice rate over a long period of time. Um but this I think there's really never been a bad time to invest in Berkshire Square as long as you have a long-term horizon. I want to get your market view because you're obviously deploying capital and putting money to work.
Do you think the current market rally that we've been seeing is justified, or do you think that stocks are due for a reality check? Uh I think it's justified. Why? I I think the economy is going to be very strong. Uh and I I I think the the kind of second half of the year in particular. And part of that relates to just kind of policy, right?
We have this a tax bill that's going to be very pro and is very pro investment. We have a president that's made deals with lots of different countries using tariffs and other levers to get them to commit to open factories here. We have a massive of AI infrastructure build-out. We have a massive energy infrastructure build-out.
All of these things are pro economy. And then AI itself is this very powerful productivity force. Every company today is trying to figure out how to use AI to enhance their business. And so there's a very large you know, enormous tailwind. And I and you know, when you look at the S&P 500 and you say, "Oh, it looks expensive historically." You have to look at the composition of the companies.
You know, today we have some of the biggest companies in the world growing at the fastest rate. Usually, in the old days, only small companies could grow as fast as some of the biggest companies in the world today. And that's a very significant difference in terms of the composition of the index. So, I think the I think index funds are great.
Yeah. I think and I think they will likely continue to do a good job. But we're we pick the best of the S&P 500. We own it 10 companies, 12, sometimes 15. And we even among those, we concentrate the top three, the top four can be half the portfolio. So, we're doing a lot of research on the companies we invest in.
We're investing in businesses and helping make them more successful. So, that's why we've been able to beat the market over a long time. What's a position or theme that you don't think the market is fully appreciating right now? I've been advised today not to talk about individual positions. But I think I would say I would say people are underestimating how strong the economy could be this year.
Which would benefit which sector? Every company. What could break this market? Um you know, I I think we're beyond the place for an adverse outcome in Iran. Um I think getting that resolved uh is a That's really the one remaining overhang on the market. Think we resolve the war in Iran, energy prices start to come down, the Fed can get more constructive on lowering interest rates.
And I think, you know, rates are really too high. I understand the Fed not wanting to lower rates at this moment because with, you know, energy The problem with energy higher energy prices is it sort of bleeds out into other parts of the economy. You know, fertilizer costs affect the cost of food. Yeah.
Um so, I think that's kind of the one issue that needs to be resolved to have a real uh take off the market. can oil be at and the market can continue to move higher? What's the highest level it can be? The answer is it's less about what the highest level is and how long it stays there. Okay. The market and the economy can absorb spikes.
Um but, you know, oil in the mid $100 range for an extended period of time would not be good. That's probably the biggest risk to the economy. Okay. Just finally, your your best advice for all of our audience, retail investors who are listening in. Maybe they missed out on the the April rally. Maybe they are fully invested, but thinking about where they want to put their cash to work.
My best advice is um one, start investing early because compounding is this incredible force, but you want to compound for as many years as possible. So, uh start investing early. Uh take care of your health cuz if you live a long time, that's also another way to extend the Warren Buffett had one one of the reason why he has an amazing record is he's 95 years old, he's still just recently retired.
But still going to the office. But certainly still still going to the office. Um, and then also taking a longer-term view. Uh, the market is moving more and more short-term. A lot of professional investors, famous ones like Citadel, Millennium, uh, are very short-term oriented. Jane Street, you know, these are and these are profitable strategies, but I think the benefit a long a individual investor has is the ability to take a long-term view.
You know, if you're 25 years old, you're 30 years old, you're putting away money that, you know, for if you create have some capital that you don't need to touch for the next 3 years, 5 years, 10 years, and that's how you can have a real competitive advantage investing. Okay. Take a look at Pershing Square USA and Pershing Square Inc.
PSUS and PS. Yes, thank you for clarifying that. Before we let you go, we'd like to play a rapid-fire game of this or that on this street. Okay. Quick questions, quick answers. You ready? Yes. I'll delete the uh, specific company questions that I had for you, because I don't need to get rejected again.
Right. Uh, next 12 months, bullish or bearish? Bullish. Buy now or wait for a pullback? Buy now. Markets, fairly valued or stretched? Fairly. Recession risk, real or overblown? Overblown. Consumer, resilient or tapped out? Resilient. Rates, higher for longer or cuts ahead? Cuts ahead. AI, bubble or boom?
Boom. Big tech earnings, make or break? Make. Concentrated conviction or diversified safety? Concentrated conviction, of course. That's an obvious one for you. Uh, quality or value? Quality. More upside from here, US or international stocks? I'm a huge believer in the American experiment. Gold or oil?
Pass. Gold or Bitcoin? Mhm, tough one. Yeah, I don't have a view. Okay. Uh, how much cash do you have in your portfolio? You should have enough that you don't feel stressed when the stock market goes down. One word to describe how you're feeling about the market for the rest of 2026. Excited. Bill Ackman, thank you so much.
Appreciate you playing this or that and for your perspective and congratulations again. Thank you. Appreciate it. That is Bill Ackman, CEO of Pershing Square. If you enjoyed this interview, check out our street talk with Jim Cramer. He breaks down exactly where he'd put money to work right now.
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