Bill Ackman: The biggest fight of his life

Lucy

You've had a challenging year this year with Lucy. What happened?

Otherwise healthy child. What happened was she had, unbeknownst to us, what's called an arteriovenous malformation, which is a kind of structure in the brain. The way that doctors describe it: typically blood flows into the arteries, then to the capillaries, and then to the veins. When you go from arteries, where there's a huge amount of blood flow, to capillaries, the blood flow slows down, and then to the veins. In her case, she had a bridge that went from the artery directly to the vein. So over time there was too much pressure going into these veins in the brain, and one of those veins burst. A large amount of blood filled her brain, which is a confined volume. It's a bit like a balloon blowing up inside your brain. That put pressure on the surrounding brain and the skull, and obviously the skull doesn't move. So the pressure goes downward and puts pressure on the midbrain. The midbrain is what keeps you breathing, keeps your heart beating.

The really unfortunate thing: we believe this happened around nine in the morning, based on her Oura ring. She lives alone, a young woman, in Williamsburg. I texted her at four o'clock that day. I had called her another time that day. Other family members had done the same. But she was leaving for Abu Dhabi for a wedding, a friend of hers was getting married the following day, and she was picking up her luggage from her mom's house. Only when she hadn't picked up her luggage, when she was two hours late and no one could reach her, my oldest daughter went to find her. I was sleeping at the time. They found her lying on the floor of her apartment, barely breathing, face down on the right side. She thought she was dead. She called 911; she could hear her breathing in a very labored way.

I don't sleep next to my cell phone, and my daughter didn't have the landline number for my house. So she was able to call someone in the building. A guy in the building pounded on the door, handed me the phone with my daughter on, and I hopped in a cab.

The EMTs didn't know which hospital to take her to, because they didn't know what had happened to her. One of the big problems is that sometimes the EMT thinks someone's just drunk, and that's why they fell, and the way you treat a drunk person is you just let time go by. Time going by for a person with a brain hemorrhage is very bad: the more time the brain is under pressure, the more damage can take place.

She got to the hospital at 12:05, and she was sitting on a gurney there while they were trying to figure out what she had. Eventually they gave her a CT, they figured out she had a hemorrhage, and they called the surgeon. What you need to do is release the pressure on the brain as quickly as possible, and the way you do that is you remove about 40% of the skull to allow the brain to expand beyond the skull.

We moved her from Elmhurst Hospital, a city hospital in Queens. By the way, we were very pleased with how they cared for her there. We moved her to Mount Sinai. I'd spent some time helping Mount Sinai, so we knew the team there, and they also have very good neurosurgeons and a neuroscience practice. She was on a breathing tube. She was wearing a bandage on her head, and it said "no bone," so that the nurses knew to be careful.

That's how we started. I basically gave the doctors what I call the dare-to-be-great speech. I said, let's see what can be achieved: whatever you need from us, unlimited resources, let's look at the latest and greatest technologies. They basically told us, look, Bill, we don't know what kind of deficit she's going to have. Nineteen hours of pressure on the brain. I didn't learn until weeks later that they don't normally do the surgery to save someone when it's been more than five hours, because the assumption is brain death, basically. So at 19 hours she was close to death. Hours, minutes, I don't know exactly.

So we didn't know what would become of her. But I'm a very optimistic person, and she has regained her cognition over time. She's the same Lucy we knew. She's got the same sense of humor. She's really kind of remarkable. She woke up not being able to walk, to speak, and unfortunately to see. Her walking is coming back; I think she's going to regain her ability to walk. Her speech is very slowly coming back. There's something like 17 vowel sounds beyond the vowels we were taught, and she can do about 15 of the 17 now. Each day she's almost learning a new consonant. She can say a few words; "no" she's quite good at. And with vision she's even shown some progress.

An institute for the brain

I've spent a lot of time working with the doctors, and my pitch to them was: let's see what we can do for her, and everything we learn for her, we can use to help others. Neri and I are going to make this available to everyone.

About three months after, I was coming back from my birthday party and I got a call from a friend. We had been talking with Sinai about doing a redevelopment of their Fifth Avenue campus to build a brain institute, some kind of brain center, and we were very aligned with their idea. The problem is that's probably a ten-year project. It's super complicated: taking down an existing hospital, moving people, bringing people back. Then a vacant biotechnology building became available on 65th and 11th Avenue, ten blocks from the office. Sixty days later we closed on the building, and we signed a contract to buy the rest of the site, a 3.4-acre site.

Our goal is to build the world's greatest brain institute: everything from a focus on the patient, how we get treatments to patients. There's a ton of interesting stuff going on in technology. Obviously everyone knows Neuralink, but there are probably a dozen other companies working on brain–computer interfaces and other ways to get data from the brain. And of course AI. So not only are we able to get more and more data from the brain, we're able to interpret that data better than ever before.

I'm hoping Lucy can speak normally, and I hope on her own, just by working at it. I'm hoping her vision returns. But if she has deficits in those areas, there will be solutions in the relatively short to intermediate term. In vision, a world where you wear a pair of glasses that basically have a camera, and the camera takes in the image and ports it to your visual cortex, and that's how you see. Elon says he's going to have a rudimentary way for people to see within a relatively short amount of time. I've reached out to pretty much everyone for help on this, and he told me that within five years people will have better vision than they have now. Bionic vision, in effect.

The way my doctor, Dr. Kellner, describes it to me is that Lucy is leading this whole thing. A lot of neurologists and even neurosurgeons are nihilists. They don't believe patients can make really material recoveries, and they can. We've heard a lot of interesting stories of recovery, which are great to share with Lucy. But we're going to be able to do a lot more. New York is probably one of the best places to do this, and there isn't anything like it. So we're excited about it.

What you guys have done in response is just incredible.

What's interesting is that all of the skills, experiences, relationships and resources I've developed over my career set me up to be incredibly well positioned to help my daughter and to help other people who have this problem. I'm a real estate investor, so I was able to buy the building at a fraction of what it cost. Architecture, design: I'm also married to a very talented architect, who's going to play a pretty important role here. So I think we're going to do something really interesting. And we've had an incredible outpouring of people who want to be part of this. In many cases these are people who write to us who've dealt with this at a very personal level. They have a brother, a sister, a parent who suffered, and they've seen the nature of the treatment that's available today, and they want to change that.

People say, Bill, how do you deal with something like this? Well, the first thing I had to do was figure out how to help my child. And as I made progress with that, this other thing makes me feel like something good is coming out of it. I have this view that from every bad thing, something good comes. This is among the good that's coming from what she's going through, and that makes me feel good.

Did you always have that view, or was that learned?

I figured it out over time.

When was there a moment when not?

Well, I've had a few near-death experiences in business, and in each one of those cases I was materially better off afterwards. Those are good lessons. "What does not kill you makes you stronger" is definitively true. And by the way, for Lucy, I think this is going to be good for her.

Say more about that.

Look, she's a wonderful, amazing person. But if you can recover from something as devastating as this, it's going to make her into a superhuman person. She is a wonderful human being. One of the things that's helping her recover is that her mom has been there every day. I moved my office into the hospital within a day of her moving into the hospital. I did two IPOs, the two Pershing IPOs, from room 1107, room 107 on the eleventh floor of 11 West at Mount Sinai Hospital, on the power of Zoom. I would do a Zoom meeting for 45 minutes, then I would spend 15 minutes with my daughter, and then I'd do the next meeting. So I had my daughter as the inspiration for these two IPOs we were working on.

We only moved her out of the hospital on August 8th. She's been rehabilitating in Bridgehampton, and now she's coming back into the city for a little procedure. Then she's moving into her own apartment. We bought an apartment in our building within a few weeks of the incident, and we've been designing it to be the best rehab and recovery place for her to live.

Socialization, social interaction, is absolutely critical for someone recovering from something like this, the emotional support you get. And her friends have been amazing. Every day one or more of her friends shows up and talks to her, eats with her, engages with her. She's this super giving person with a ton of friends. Everyone loves Lucy. And she's getting an amazing return on that, because her friends are showing up to save her. All of this makes me feel that humans can be so amazing. You can recover from almost anything.

And by the way, there's a lot more hope for people who've had strokes, brain injuries, military TBI-type stuff. There are a number of people in the field who have been really frustrated with how far we've not gone, and who want to be the ones who fix this.

What's been preventing us from going further? Why haven't we pushed the limits on this stuff?

The answer is some combination of the insurance industry, and just economics, and how hospitals work. A neurosurgeon wants to do their surgery and then move on to the next one. Neurosurgeons are highly compensated, but they get paid for doing surgeries; they don't get paid for the recovery of the patient over time. Every hospital has some kind of rehabilitation program, but in many cases it's embarrassingly inadequate. The insurance company might pay for only six weeks of care, and then they get sent home. And their home is not the ideal place. It takes a village. What if they're the principal breadwinner and they're devastated by this? Maybe the other family member has to go out and work as opposed to caring for them.

One of the most depressing things I was told was by the head of rehab at Mass General, whom we've been talking to. He said, Bill, what Lucy's achieved is remarkable; she's had incredible care. For the typical person, one, they wouldn't do the surgery. And if they do the surgery, the typical patient ends up in a nursing home when they check out of the hospital, because the family can't take care of them, and they die a few months later from pneumonia, because of the care that can be achieved in a nursing home. It's super depressing.

This is one of the cases where I'm financially unconstrained in my ability to help her, so we can maximize the care. What we're going to try to figure out at the institute is how to do this in a way that everyone can have the benefit of the care. And technology is going to help a lot. A great speech therapist could be $500 an hour. Insurance will pay some percentage of that, but only for some period of time, and people can keep recovering years and years later. But of course, AI could be an amazing speech therapist. So there are lots of ways technology is going to enable us to help people recover from these injuries.

The focus is brain rehab, recovery and longevity. What does a brain rehab and recovery institute do? It focuses on your brain recovery and your physical recovery, and the brain plus your physical recovery is fundamentally longevity. The other thing hospitals aren't very good at is nutrition. The food in hospitals is frightening. Someone has a heart attack and the next morning they're having pancakes with syrup and orange juice. In Lucy's case, we made the food for every meal. The institute is going to have amazing food, because nutrition is critical. So there are a lot of things we can do, taking advantage of this financial circumstance. I'm going to use it in a way that will enable us to build something optimal and, I think, ultimately self-sustaining.

You're an incredible father. What an amazing response to terrible circumstances.

I would feel, if I couldn't do it, like one of the most frustrated people in the world. I literally feel like I was designed to help her, with everything I know how to do.

You mentioned the Oura ring, the data on the Oura ring. What was the data that indicated something?

I've been in touch with the CEO of Oura; he actually reached out on Twitter. And I think you can do this, certainly with an Apple Watch, and hopefully with an Oura ring. What happened was, if you look at her data, and I actually put it on Twitter, at around nine o'clock there was a very quick spike in her pulse and then a drop-off that looked unusual. If you combine that spike and drop-off with someone falling (the Apple Watch has an alert when someone falls), if that happens at the same time as a huge spike in their pulse, you can ask: did they have a heart attack, did they have whatever? There are things you can look at. I think Oura should have the same capability, and I think they're working on it.

Holding it together

How do you keep your mind in a healthy place? What do you do to keep your head right?

I play tennis almost every morning, or do some form of exercise. I think that's probably the most important thing I do, because it's the one time in the course of the day when I'm completely focused on the ball that's coming at me, as opposed to whatever else is going on. So it's a really important form of meditation for me. That's one. I get a good night's sleep. I spend time with my family, things like that.

Do you still meditate?

I haven't in a while. I did during a challenging year when I was in the middle of a divorce, and it really helped. I probably should find 20 minutes a day to meditate.

How do you manage it all? You have four effectively public entities, you have this with your daughter, you have a seven-year-old, you want to be a great husband. How do you harmonize all of these things?

Pershing Square has come a long way from when I started it. When I started, I was the chief bottle washer. I would come up with all the ideas, I'd have an analyst who would help me prosecute them, and if there was activism, I was the guy. Over 22 years we've built an amazing team. We're in an industry where the top people can move from one place to another and get huge $100 million bonuses for showing up, things like this, and the result is a lot of turnover in the industry. We have no turnover at Pershing Square.

Is that good or bad?

Well, we've made some mistakes and we've replaced some people over time. But if you look at the investment team, it has been the same team for nine years now, with a couple of new additions, and that's actually a really good thing. If you have a constant revolving door of new people, you don't really know that you can trust them. Are they really telling you the truth? Are they telling you all the risks and rewards of a particular situation? When you've built a relationship with people, you've worked with them for nine years, and you have this culture of transparency and candor, I don't for a second question anything that's being told to me by a member of the investment team. They're telling me the flat, candid truth. That's a very comfortable place.

So the answer to your question is that the Pershing investment process is incredibly well run by a very experienced team. I play an important role, and I have the ultimate say, but I am no longer the guy who generates the bulk of the ideas. I'm someone who generates a minority of the ideas in the portfolio, so that's helpful. And then the business itself: Ben is responsible for running a lot of the business elements of Pershing Square. That frees me up to think, it frees me up to work on more strategic stuff, and it frees me up to come up with the occasional idea.

So Pershing kind of takes care of itself. We have a number of public entities, and we have an amazing accounting team, and those public companies all sort of do the same thing. There's the management company that earns fees from the entities we run; that's Pershing Square Inc., ticker PS. There are two funds that are publicly traded that own effectively the same portfolio. There are certain governance responsibilities we have for those entities, but each of them has an independent board of directors, and our role there is as the external investment manager. We have excellent boards at both of those.

The typical closed-end fund board is a bit of an embarrassment. I don't know how closely you follow the space, but you've seen Boaz Weinstein going into these proxy contests. The typical closed-end fund board is a group of people who... I don't want to pick on anyone, but let's say BlackRock for the moment. I think I read somewhere that the same six directors sit on 86 closed-end fund boards. It's hard to do real governance when you sit on 86 boards of directors. The typical limitation from ISS is four. We hired real directors. We pay them like real directors. They're not serving on 50 other boards. So we have really good boards. And what we do is fundamentally simple.

So Pershing runs itself to some degree, just because of delegation, incentives and alignment. We have the best alignment, because everyone's paid on performance. At the end of the day, performance is going to be the biggest driver of our management company, because the compounding of the underlying assets is what grows our fee stream. So it's a very aligned entity. I own about 45% of the company. The team owns another, I think, 35%. And then there's a minority interest held by the public and some strategic investors. So you get the alignment right, you get the people right, you've got some principles written on a stone tablet, and you've been doing it for a while.

But you're super competitive. I know you want to be the best investor in the world. This is one path, and then there's another path: dad and husband.

I would say the one thing in the last 60 or 90 days is that setting up this AOI thing has consumed some mind share of mine, as you would expect, because I'm assembling the team. It's a bit like a proxy contest: we've taken control of the board of directors, now we've got to bring in a new CEO. Once we bring in the CEO and the team is in place and announced and everything else, I don't get involved in the day-to-day operations. The same thing is going to be true for the AOI. It's going to be like another portfolio company in some sense, although we're all going to sit on the board; I'm going to chair the board. But I don't think I could be setting up the AOI if we had a proxy contest underway at the same time.

AOI is the Ackman-Oxman Institute, just for everybody listening.

Yes.

Bubbles

When do you do your best thinking?

Often it's when I'm on vacation, actually. Some of my best ideas come when I'm totally relaxed, or I'm in the shower.

You've done a lot of research about bubbles. How would you explain what a bubble is?

A bubble is human nature. A lot of money is being made, people have a lot of FOMO and want to participate, and that leads more and more money into the same trade, if you will, until overvaluation takes place. And then eventually the bubble bursts.

They seem to happen around these technological changes: railroads, automobiles, transistors, the internet.

Sure.

Are we in one now?

Well, we're certainly in a transition. AI is absolutely transformational. It's the most transformational technology, I think, of all of our respective lifetimes. There are bubble-like elements. There's a lot of crazy stuff going on in the private world of venture. Pershing can now invest in some venture-stage businesses. We met with a company, let's say two weeks ago, and they weren't raising money. Two days later they closed a round; they were preempted by some investor who put $50 million in at a $400 million valuation. And two weeks after that they raised another $50 million at a $1 billion valuation. So there are a lot of people fearing missing out on the future, a lot of capital going into venture, a lot of competition, a lot of preempting, and it's leading to very high valuations. I saw a company's Series A round at a $5 billion pre-money.

How do you avoid that FOMO?

It depends on where you are in life. Warren Buffett was remarkable for his discipline over a 60-year career. Interestingly, in the last real bubble, the internet bubble, Berkshire's stock hit something like an all-time low, because people said he'd lost it while all these other people were making money. He just didn't participate, and he soldiered on. I think it's a question of short-term versus long-term perspective.

What advice would you give founders right now who might be trying to raise?

It's a great time to raise capital. And assuming you raise the capital, don't spend it so quickly, expecting the money will be there forever. What this is reminiscent of is the internet bubble. There was effectively an unlimited amount of capital available for suspect business plans. And then there was a piece in Barron's one weekend that listed all of the internet companies in the public markets and how much cash they had left, based on their burn rate: how many months to go before they went to zero. That was probably the week before the market blew up.

There's a certain discipline associated with bootstrapping yourself. Then you take in 50 million or 100 million, and you completely change the way you deploy capital, betting that any time you need money you can just tap the markets. There will come a time, some form of blow-up, a pretty high-profile one, where people lose a whole bunch of money, and that will cause a reset. I think the companies that are disciplined in how they spend the capital, so they have years of runway, will be the survivors, and the ones that have to raise money in three months will be gone. My advice to founders is to treat every dollar as if it's your own money, spend it really carefully, and don't expect this freely available capital to exist forever. So raise money now, but keep it in the bank. Don't spend it. Or spend it judiciously.

Betting on the founder

How do you see the difference between investing in the public markets, which is what you've typically done, and the private markets, in terms of venture?

First, in the public markets we're investing in what we call super-durable growth companies. These are the most dominant companies in their respective spaces. They're highly profitable, they have strong balance sheets, and the key success factor is predicting their ability to continue to gain or maintain market share, grow their business and have pricing power. In the public markets, yes, the CEO matters, but we've always had the view that if we don't like the CEO, we can find a better one.

In venture, you're really betting on the person more than the business plan. You're investing in a company that is maybe pre-revenue, or it's losing money. You're betting on their ability to grow at a fast enough rate that ultimately they go from being a capital consumer to a company that generates cash over time. So it has some similar elements, but it's much more founder-dependent, CEO-dependent, than the public markets. With the best public-market companies, if something happens to the CEO, you can find another great person to run it. With the best private companies, without the CEO you'd probably write it off.

How much are you weighting the idea versus the person?

I weight the person more than the idea, because often the original idea is not the idea that turns out to be the success. The founder is going to hit a roadblock; the original idea doesn't work. My most successful venture investment, where I didn't like the idea, was Coupang. That was Bom Kim, and his business plan was to create the Groupon of South Korea. Even at that time, which was 2009, I thought Groupon was a really bad business model. But he made a very powerful case for why South Korea was a great place to launch an internet business, and I liked him. Ultimately he built the Amazon of South Korea, which had really nothing to do with the original business model. So with the most successful ones, you're really betting on their ability to manage through the challenges that emerge and figure out a business model over time.

Who profits from AI

How is AI changing the investment profession?

The most important thing an investor has to do is assess the risk. The value of a business is the present value of the cash it generates over its life. The early years of that life matter more than the later years, but you need to predict with a pretty high degree of confidence what a business is going to look like 10 years out, 20 years out, 30 years out, if you want to make an illiquid long-term investment in the business. We look at even liquid investments that way. You want to invest in something where, if the stock market were to shut for 10 years, you'd be happy to own it. It's good discipline.

So the thing you need to think through is the risk of disruption, and what AI has done is massively increase the risk of disruption. You've got to be very, very thoughtful about the businesses. Go back and read Warren Buffett, the greatest investor of all time: he was not able to perceive the risks of disruption created by the internet, for example. Wikipedia disrupting World Book. Well, now we have AI, and it's a much more complicated problem. All of us are guaranteed to look foolish with one business or another where we didn't anticipate the risk of disruption because of AI.

What businesses do you think become more valuable as a result of AI?

I actually met with one of the founders of Cognition yesterday, a very interesting company. Their AI, in effect, enables banks and big financial institutions, which spend a ton of money dealing with legacy systems because of an agglomeration of acquisitions they did over time, to rewrite the COBOL into modern code, and to do it in a matter of days as opposed to many months. I think the cost to run big financial institutions is going to come down meaningfully because of AI. The big spenders on tech, if you will, are going to become a lot more efficient.

Now, the question is whether you're going to be able to keep the profit. Everyone is going to be forced to use the best software to run their business more efficiently and become more AI-native, and the question is whether they get to keep that profit or whether the margin gets passed on to the customer. That's a function of the nature of the business and its pricing power. The problem with money generally is that it's a commodity, and banks are in the business of providing money. So it's a complicated question; it depends on the business.

I think AI will enable the creation of many businesses that could not have been created before. And AI will enable people to become entrepreneurs who have never been entrepreneurs before. Even the most recent overnight release from Meta: I haven't had a chance to play around with it, but guys in the office were talking about how easy it is to use. I think it's Muse, whatever it is.

Yeah, Muse.

How easy it is for people to now create their own agents to do stuff for them. The pace of improvement is by far the fastest of anything I've ever seen. Think about Microsoft in the old days, 1.0 versus 2.0: it might be a couple of years or more between updates of consequence. Here you get an update of consequence in days. It's a bit like driving a Tesla, where overnight they update the software.

Does that scare you as an investor?

I'm not frightened, so scare is probably the wrong word. But I would say you have to be very thoughtful about the moats and how wide they really are. It's the most complicated question for an investor, how to predict the risk of disruption. Of the businesses that seem like the most dominant businesses in the world, there will be some that just disappear.

From interest to a billion-dollar check

How do you go from "I'm interested in this company" to "now we're writing a check for a billion dollars into it"?

Usually it's not a company we just woke up and heard of. We're looking for the best businesses in the world, so over time we build what's called a library of companies we've followed for a long period of time. We've liked the business and haven't had a chance to own it, because we may have done a lot of work but said, look, at this price, 35 times earnings or whatever, it's hard for us to get to a 20-plus percent rate of return, which is our ambition. So we do the work and put it aside on valuation concerns, and then we wait for the day when some macro event happens. COVID gives us a chance to buy that kind of business. Or even the SaaSpocalypse, which caused pretty much everything to do with software to get repriced. It gave us an opportunity, for example, to buy Microsoft at what in our view was a very attractive valuation, and a host of other really high-quality businesses.

The process is that we typically have two members of the team do a deep dive on a company. They'll start, obviously, with the SEC filings, 10-Ks, 10-Qs, conference call transcripts. Then we'll assemble what the key issues are that we're trying to understand. We spend a fair amount of time on expert networks. We'll talk to former employees of a company, to other industry experts, to people at competitors, to get to the underlying issues. Then we build a model of the business and get an assessment of how it pencils: what kind of return does this generate at the price we can buy it for today? Those are some of the elements. Then that team will put together a deck and present to the group.

That two-person team usually is not Ryan or myself. Ryan is our CIO; I guess you'd call me the portfolio manager. We do our own independent assessment, which gives us enough information to be dangerous, to ask the right questions. And then we have the balance of the team, the other five people, who haven't done the work on the name. That group comes together to discuss an investment, and out of that meeting comes a decision to make an investment in the company, or they say, okay, there are still some open issues, let's get to the bottom of this concern. Then they go back, do the work, and come back to the team. That's the basic process.

How are you using AI internally in that investment process, either to speed up the work or to do work you normally couldn't do?

Today we're really using AI more as a research tool, to learn about a certain subject that's relevant. It hasn't crept too deeply into the process, I would say. We're not using it to build models. In a world where everyone has the same access to AI, it's hard to be differentiated. I think what's left to humanity is the outside-the-box thinking, the creative process, the insight that's gleaned from looking over all the facts, whereas AI is a bit of a review of everything that happened before. If you look at our most successful investments, they've usually been cases where we've done something someone hasn't done before: buying credit default swaps before a pandemic, for example, or investing in the stock of a bankrupt company, or shorting the credit of a AAA company before the financial crisis. Those are among our best investments, and you couldn't have found them in a model. AI would not have told you to do any of those things.

Rules carved in stone

A lot of value investors have underperformed since 2010, 2011, but you haven't. Why do you think that is?

We've been very good about continually increasing our standards for business quality. We want to own the best businesses in the world, with a very low risk of disruption, and I think we're quite disciplined about that. The other thing is that we're not just a long-only equity investor. We have opportunistically made a pile of money in a couple of cases when we've had a view about macro events that's different from others'. When you have that, and you can find an asymmetric way to make the bet, you can make a lot of money. We made a lot of money going into COVID because we were, I would say, weeks ahead of the world in our view that there would have to be a global economic shutdown. We made a lot of money because we said there has to be massive inflation, so we bet that rates would rise.

One of the things we did: we've talked about it before, but we had a very large loss circa 2015, 2016. After that experience, I said we've got to take our investment principles and literally engrave them on a stone tablet and put them on our desks. Having a checklist is actually not a bad way to make sure you avoid mistakes, and we have a good checklist.

What's on that checklist?

The nature of the business: we invest in simple, predictable, free-cash-flow-generative companies. The kinds of management teams we're looking for. A focus on large-cap, liquid public companies. And an aversion to short selling; that was a good lesson. And on the asymmetric side, we're looking for a case where we have a view that's different from the rest of the world and we can express that view with an instrument where the payoff is very large relative to the amount of capital we put to work. But it's very simple: we're looking for the best super-durable growth companies in the world. We spend a lot of time thinking about moats, and obviously we want them run by the best teams in the world, or, if a company is not run by the best team in the world, we want to have someone in mind whom we could install if we need to replace the team.

The trade he won't make again

Why did you stop short selling?

I never actually liked short selling, because it's asymmetry in reverse. You can lose infinity, and the amount you can make is finite. We shorted the bond insurers going into the financial crisis.

That was the MBIA one.

Yeah, but most of the money we made, we made on the credit default swaps as opposed to shorting the stock. And then we did nothing. And then someone pitched me on a fraudulent pyramid scheme. We did the work and said, it's a fraudulent pyramid scheme. And we said, how can we lose money shorting a fraudulent pyramid scheme and then delivering a detailed analysis to the FTC? They'll have to investigate. And the people being harmed are the most disadvantaged people in society. So we thought it was an amazing setup. We like to make investments where the wind is at our back, and we said, look, the wind's at our back. We're helping a group of disadvantaged people who are being taken advantage of. It's an evil company. This has to work. And we underestimated the risk of market dynamics: Carl Icahn showing up, buying the stock, putting capital to work against us. It just reminded us that it's a really shitty business.

The company you were shorting, the pyramid scheme, we won't mention the name, but that generated huge attacks against you. There were websites against you. There was a famous CNBC segment. What are the personal costs to you when you're willing to put out a contrary opinion like that?

Well, it's much easier to be an investor in companies. You make a lot more friends. You buy a stock, other people pile in with you, it goes up, everyone wins. You short a stock, and in that case we were the vast majority of the short interest, so everyone else was on the other side. Then you had a company to which we were an existential threat. They had been attacked over time by critics, by the media and otherwise, and they had built up a lot of infrastructure to go after the critics, so they were well prepared to go after us. And then it became a bit of a hedge fund trade: let's go squeeze Bill. That was the unfortunate part of it. In some sense the industry was saying, okay, these guys are over their skis, we can squeeze them out. That was not the fun part.

Saying what he believes

You were relatively quiet from a public-life point of view compared to before, and in the last few years you've been a lot more vocal. Why now?

I've always been a free-speech kind of person. Go back to my high school yearbook: I was listed as most verbose, and my yearbook epithet was "A closed mouth gathers no foot." So I was known for being expressive about my point of view. One of my important drivers in life is that I always wanted to be able to say what I believed. As my follower count grew on Twitter, it gave me, on the margin, more influence, and as I cared about various issues, I wanted to help advance a narrative. That's why I've been more public about it. And I've been rewarded by it working, beginning with smaller things. You can actually influence the administration and the course of history with a tweet, which is pretty cool. A lot of evil can go by if no one's willing to say the emperor is not wearing clothes.

Dr. Claude

I want to come back to the AI thing for one second before we move on from it. How are you using it personally?

I'm using it a lot more recently. My daughter had a major health incident, and AI is amazing at vetting, at helping you make medical decisions for a child. It's an incredibly powerful tool. I think every doctor should actually be checking their work with Dr. Claude, or pick your favorite AI.

Do you think companies like Brookfield get more valuable, where tangible, almost infrastructure-like assets become more valuable in a world of AI? And there's another bet, and I'd love to hear your reaction to this: Thrive starting to buy these sports teams, under the assumption that we have this barbell. We have AI in one hand, and on the other hand these tangible experiences are going to become more and more meaningful to people, and presumably they'll pay more for those experiences.

On Brookfield, I think it's an incredibly well-run, amazing company. They're very good at infrastructure, they're very good at financing, they're very good at building things. So think data centers, think power. There's effectively infinite demand for compute, and they're very well positioned. So I think Brookfield is an AI winner for sure. They'll provide a lot of the backbone, power and otherwise.

I'm a big Josh Kushner fan. I don't know how much of the recent baseball investment is Thrive-related or personal; it's not quite clear to me. But I do think there are a lot of people sitting at home being lonely, and you go to a big sports event, the feeling you have at a Knicks game... maybe at the end of the game you're unhappy, but while it's underway it's a very human, elation-type experience.

Now, I don't think sports teams are valued in the way I think about valuing most assets. I think they're valued more like an artwork than a financial enterprise. The vast majority of sports teams, as far as I know, if they make money, it's not a lot. It's not like the owners expect them to generate massive cash. They're taking a small return today on the basis that it's going to generate a lot more cash in the future. I think the vast majority of sports owners are prepared to spend every dollar they're allowed to on expanding the franchise.

Are you going to buy a sports team?

No.

Activism behind the scenes

You went from being a very loud activist to trying to effect change behind the scenes. Why the change, and is it more effective this way?

It's because we're able to effectuate change behind the scenes, when we weren't when we started. When we went into the business, we didn't have credibility or reputation. We hadn't been in the boardroom. I was 20-plus years younger. In that world, where you have limited financial resources and limited reputational resources, you can buy 5% of a company and you have to win on the power of the idea. To get the big institutions to support you, you might have to end up in a proxy contest, et cetera.

Twenty years later, I've been on multiple boards, as have other members of the team. We have a track record of success, of investing in a company and being a long-term investor. In the early days they would say, oh, you're just a short-term investor. Over time we've been able to prove that our interests are aligned with the interests of the long-term holders of the business. So today we buy a stake in a company and we literally get letters from the CEO. Recently we made a number of new investments, and in three of the five or six cases we got very nice letters from the CEO saying, thank you so much for investing in our company, I read your second-quarter letter, you think about the business the way we do, let us know when we can come see you. And if we have any ideas for them, I'm sure they'll be very receptive. In that world, we don't have to be an activist.

Do you think that if you're going to be an activist, you should have to hold your shares for a certain period of time?

I don't think you should be legally required to. But to answer the question more directly: activism that is focused on causing the stock price to go up in the short term while causing the company long-term harm obviously makes no sense. Cut your expenses dramatically and underinvest so that we can report a more profitable quarter: that's not going to lead to a good outcome. Or lever up the company and return the capital to shareholders. The most extreme version was greenmail, which has largely been outlawed. But you could see certain kinds of activism as almost a form of greenmail: let's benefit the short-term holders at the expense of the people who are stuck owning the stock. The board's job is to shut that stuff down. And I think shareholders today, Vanguard, BlackRock, the index fund owners, are forever owners. They're not going to support some kind of short-term initiative that will cause long-term negative consequences.

Index funds and stock options

You talked about index funds there for a second. What advice do you have for the ordinary person who's earning a paycheck and wants to invest?

If you want to be an investor, it's something you've got to allocate real time to. It's something you have to study and learn; you've got to do your homework on companies. So that's a decision. If you just want exposure to the stock market, I do think index funds are a very good approach, and they've beaten most active investors over long periods of time.

How would you do that? Would you dollar-cost average on a monthly basis, or would you say, oh, it's high now, so I'll hold off? How do you think about it?

I think the key is, one, to start young. The sooner you can start putting aside money you can invest for the long term, the better for your retirement: the power of compounding. I wouldn't sit around holding cash because you think the market's expensive.

You mentioned stock options earlier; I want to come back to that. How do you think about stock options from a mature company's perspective? Let's say Meta or Microsoft, where they could easily pay cash, but they use options.

Or they use restricted stock in some form. The benefit of some form of restricted stock or options is the vesting. It gives you some ability to retain talent in a way that just paying someone cash every year doesn't. So I think it's still a very useful tool. It also obviously creates more alignment: people actually care about the share price, which I think is an important discipline for employees.

Now, at Pershing Square, the management company, which was the gift we gave with purchase, we don't intend to issue any meaningful amount of options or restricted stock. We spread equity very widely throughout the firm, so 80% of the stock or so is held by the team. So we're in the fortunate position of not having to issue equity or options for a very long time. But maybe 20 years from now we'll have a new generation that doesn't have any equity in the company, and we may choose to; it can be a useful tool.

I was very happy the market gave me an opportunity to purchase some of that when it came out. It went down to $23 or something.

Yeah, I bought some too.

Netflix, twice

Talk about Netflix for a second. You bought it, you sold it a month later, and now you've re-bought it. What went into that decision? You were wrong, now you're right. How did you change your mind?

Netflix is one of the companies in the library, if you will, that we had done a lot of work on over time. What created the opportunity the first time was that they had missed subscriber growth guidance and the stock got crushed. We think Netflix is an amazing business with a very dominant position, and we bought a meaningful stake in the company. We then met with management and shared our detailed deck with them. They completely agreed with our thesis on the company, so we felt super aligned with management. We talked about things like, why don't you take on an advertising model, a lower-cost advertising tier? They said, we're never going to do it.

About three or four weeks later they announced earnings. If you go back and review the earnings call, management seemed shell-shocked. They missed the subscriber numbers again. They seemed very surprised by this. They talked about how we're going to have to adapt, we're going to have to launch an advertising model, literally three weeks after they said they would never do it.

My takeaway was this: you make an investment in a company, and then you learn new information that's inconsistent with the original thesis. Either you have to buy a lot more, because the stock's gotten cheap and you believe the new information is not material, or you have to exit because the thesis is broken. We made the decision to exit on the thesis being broken. In the letter we wrote to our investors, we said, look, we're selling for this reason. We think management is going to be able to work through this problem. But Pershing Square invests in the highest-certainty companies in the world, and we think the dispersion of outcomes here has widened dramatically. They may get it right, and it may be a home run, but there's a much greater probability that they don't get it right. They don't know anything about advertising models, and whether that's going to be successful or not. So with the wide dispersion of outcomes, we have a better place to deploy the capital. We took the money and bought Google, Alphabet. Because for us, we don't need to make it back the same way we lost the money. We can always take a tax loss, which has some value to us, and redeploy into something else that's higher-certainty. If you look at the Pershing Square portfolio, we own the highest-certainty, most predictable companies in the world, and this had lost its certainty element, at least in our minds.

Now, what's happened since? They executed extremely well. They built a very successful advertising model. They became an even more dominant company. They became a much more cash-flow-generative business, and the streaming wars, they won. The Disneys of the world, the Paramounts of the world have been pushed aside. You probably turn off the lights before you turn off your Netflix, practically. And they're incredibly well positioned to innovate. They're the place any creative person goes to sell or produce their content. And then the stock, because they executed really well, went back to a very high multiple and wasn't interesting. Then relatively recently the stock got cut in half again. Now we had the high-certainty business we thought we'd owned, they'd proved themselves, and it was at a price that made sense. So we bought it back.

Howard Hughes and the assets nobody wanted

The business you're involved with that I think people know the least about is Howard Hughes. How did you get involved in that, and why are you so excited by it?

Sure. Howard Hughes was an entity we created to make another investment successful. We invested in a company called General Growth. We bought the stock during the financial crisis, when it was down 99.5%. We bought 25% of the company, and we did so a few months before it filed for Chapter 11. We were actually pushing the board to file for Chapter 11 while they were trying to avoid it. It was a case where it was inevitable, but our view was that we could run a restructuring where the shareholders could keep their investment in the company, maybe with some dilution. I joined the board of the company and we led that restructuring.

What created complexity in General Growth versus its direct competitor, a company called Simon Property, which is still quite successful today, was that in addition to Class A shopping malls they owned a lot of land and did a lot of development, in a business they had acquired from Rouse. They owned these so-called MPCs, small cities, and the market hated that business. So we said, let's make General Growth look exactly like Simon by taking all of those businesses, all these land plays, these MPCs, out of the company, and anything else that didn't look like a Class A mall. We took all the non-core stuff and stuck it in Howard Hughes.

By the way, normally when you spin off a company from another company, the spinning company's stock price drops by the value of the thing you spin off, because it's kind of like a dividend. In this case, it's the first time I've ever seen it: we spun off Howard Hughes and General Growth stock went up, because the market saw the overhang removed. David Simon called it ShitCo. He was putting in a competitive bid, and our structure, a deal we did with Brookfield, was to create this entity. We called it Howard Hughes; he was making fun of it by calling it ShitCo. But it really was sort of ShitCo, because it was everything that was taken out. The assets nobody wanted, so to speak.

Then we hired what I thought was a very good entrepreneurial team, David Weinreb and Grant Herlitz, to work through these assets over time, until in the last five or six years the portfolio was quite focused on just MPCs. We said, look, the market's finally going to understand why this is a really good business.

Owning a city

MPCs are master-planned communities. They're small cities at this point. We own The Woodlands in Houston, which is a small city of 150,000 people, something like that, with high-rise office towers and shopping centers and schools and churches. I describe the business a bit like SimCity, the game, where we act as the benign owner of these communities. What's in it for us is that we own all of the commercial land and all of the residential land. We sell the residential land to home builders. We don't sell the commercial land; we use it to build whatever the community needs. And if you take a very long, multi-decade view, this is a business that over time generates a huge amount of cash. We have a series of these small cities.

But after 14 years of Wall Street wanting nothing to do with the business, we said, look, it's time for us to transform Howard Hughes into something else. The reason Wall Street doesn't like the core Howard Hughes business is that land and development have a bad long-term track record. And our land is very different from other land. Imagine you owned New York City, and you owned all the vacant commercial land and all the vacant residential land, and you owned it over a hundred-year period. You'd make trillions of dollars. That's really the opportunity. And the land we own is in places people are moving to: Texas, Las Vegas, Hawaii. But still, as a public stock, it has always traded at a big discount to the value of its assets.

So over time we bought a significant stake in the company. We now own 47% of the company, and we're transforming it into a modern-day Berkshire Hathaway. What did Buffett do? He started with a dying textile operation. Over time he liquidated the textile operation and reinvested the capital in insurance and banking and a candy company and other businesses. He built a conglomerate, ultimately, but a conglomerate that compounded its capital at a very high rate over a long period of time, and it did so while issuing very little stock.

What we've done since we made our investment, since I became executive chair and since Ryan became their CIO, is acquire an insurance company called Vantage Holdings, a P&C specialty insurer and reinsurer. Most recently we recruited what I believe is the best management team in the insurance industry, and we're going to build this little insurer into a big insurer over time, with that very talented team underwriting the risks we take on and Pershing Square managing the assets.

What Buffett did that was unique is that he ran an insurance operation. In the beginning he didn't do a very good job with it; it took him time to learn how to run an insurance operation. But he managed the assets not just as a portfolio of fixed-income securities, which is the typical approach for an insurer. He took basically all of the float generated from writing insurance and put that money in short-term Treasuries, so there was plenty of capital available to pay claims. Then he took the balance of the insurer's assets and bought common stocks. And Buffett was a very good common stock investor, as we know. So the insurer, over time, made money on the liability side, by making a profit writing business, collecting more in premiums than it paid in claims, and then it earned an attractive return on its assets. When you earn an attractive return on assets and you have basically negative-cost liabilities, you can run an insurer that generates a 20% or more annual rate of return. That's what we're underway to do at Howard Hughes.

Now, no one notices and no one cares. Why? Because it's still a real estate company that people hate. But the nature of Howard Hughes's core business is that over time it self-liquidates. Each year we sell hundreds of millions of dollars of land; over time our land assets will go away. Each year we sell hundreds of millions of dollars of condominiums in Hawaii. We've got four billion of condominiums under contract, in the process of being delivered. We generate something approaching 300 million of net operating income from the real estate assets. Historically we took all of the cash we generated and reinvested it in real estate; we bought another MPC in Phoenix, for example. We're no longer going to do that. We're going to reinvest whatever capital is necessary to make these small cities continue to be amazing places to live, and they're always highly ranked among the best places to live in the country. But beyond that, we're going to generate billions of capital that we're going to deploy, initially, in insurance.

And when you say deploy, that goes into the equity component of the insurance company, which allows you to write more premiums but also to invest the equity.

That becomes capital. We've already put 300 million of additional capital into Vantage since we bought the company. And over time, as we generate more cash from the real estate operation, and we're looking at things we can do to accelerate this, we'll transform from a real estate company into an insurance holding company. What Buffett had was a big stake in the business. We own about half, 47%. That allowed him to think long-term, so we're taking the long-term approach. We've recruited a very, very talented team, so I think we have the liability side set up for us to be doing smart things in insurance, and we're going to do a good job managing the assets.

Berkshire's most overlooked advantage

I have so many questions about this. "Modern-day Berkshire Hathaway": that term gets thrown around a lot. What does it mean to you?

It means we're going to operate much the same way Buffett did in terms of insurance. The driver of the value of Berkshire Hathaway over time is its insurance operation. When Buffett talked about buying Coca-Cola or American Express or other companies, those were assets purchased in the insurance company. So we're going to take a long-term view of the way we manage this insurance operation, and we're going to grow the business without issuing a lot of common stock, so there's a finite number of shares outstanding. And the beauty of insurance is that it's actually a very cash-generative business. So what you're going to see over the next several years is the business transforming. Today it's probably 70% real estate and maybe 30% insurance, by capital, and over the next five years it will migrate to something like 75% insurance, 25% real estate, unless we figure out a way to do that more quickly.

So if you were to list the keys to Berkshire's success, looking back?

He had control, so he could take a long-term view. He wasn't exposed to the short-term whims of his shareholders. He had permanent capital. He didn't pay dividends; he retained all the capital the business generated. He had a talent for investing in common stocks. He was able to recruit talented people to run the various businesses of Berkshire Hathaway. And he didn't dilute his shareholders by issuing a lot of stock options or by issuing stock in acquisitions.

I don't know why more people don't copy that. It sounds so simple.

It's not sexy to be in the investment operation of an insurance company. I think that's a big part of the reason why people don't do this. And it's difficult to get to a 47% stake in a public company. That usually doesn't happen; this is sort of a creature of history.

Do you think a lot of Berkshire's success boils down to the fact that Buffett could have been paid two and twenty at some point, but he took a modest salary and grew his wealth alongside the shareholders? How different would Berkshire look had he taken two and twenty? Not that you're doing that, but on the portfolio.

I think his willingness to work for free, in effect, was a very helpful thing for the ethos around Berkshire. It probably made negotiations around compensation for other employees easier. Buffett ran a partnership where he got something like 25% of the profits over a 6% return, and the costs were covered by the partnership. By the time he retired from that business, they had about 100 million under management, of which 25 million was his and 75 million was held by other investors. But I think he figured out that if he kept running in this partnership format... one, he wanted permanent capital. He was getting tired of dealing with investors who were giving him money and taking money away, which was affecting his results. He probably did the math and said, look at the power of compounding: if I own half of this little Berkshire Hathaway thing and I generate a 20% return for the rest of my life, I'll end up in a very good place, and the marginal promote is not that important to me. And by the way, he was able to run the investment operation as a one-man band, which I think also enabled him to do this.

I remember talking to Charlie Munger one night, and I asked him what the most underrated aspect of Berkshire Hathaway's success has been, the part people talk about the least. He said, we were almost never forced to make decisions by circumstances. We always had options. How do you think about that? What's your reaction?

We've designed our business around that. The unique thing about Pershing Square: we manage an offshore entity called Pershing Square Holdings, and employees own 28% of that company. We manage Howard Hughes, which is owned, directly and indirectly, in about the same proportion by employees plus the Pershing Square funds. And we just took public an entity called Pershing Square USA, and employees invested $500 million in it. So what's unusual about us is that we have these anchor stakes in each of the public vehicles we run, and each of them is a permanent-capital entity. That means that if there's a panic in the market and people want liquidity, they can sell the stock of each of these companies, but the capital stays in the vehicle. That enabled us to buy stock during the COVID crash, or during the financial crisis.

One of the very smart things Buffett did is that he decided, at a certain age, how he wanted to live his life, and he didn't want to live a life of constantly raising money, which is what you have to do if you're in the hedge fund business. In the hedge fund business, when you do really well, institutional allocators take money away from you because you've become too big a percentage of their portfolio. When you have a bad period, people take money away from you because you're having a bad period. And you really can't close, because if you're not open, people don't do diligence on you, so the next time you need to raise capital it's a many-month process for people to learn about your business again. And you're spending all your time raising capital. As you get bigger and bigger, it consumes a huge amount of your time. I attribute our biggest investment mistake to my being distracted by having to be on the road, to some extent, raising capital to try to keep the capital base stable. So we made a decision to just get out of the business of managing money that could leave, the open-ended funds. And if you look at Pershing Square today, if we just compound at anything close to historic rates, we'll be managing a trillion dollars in 20 years. That's plenty, and that's a good business.

From watch buyer to company owner

Let's talk about Bremont. How did you get involved with the watch company?

Yeah, Bremont. The story is that I was at a Howard Hughes board meeting in Dallas, and our office at the time was in a mixed-use complex with a shopping center. During a lunch break I went down to the mall and walked by a watch store, and there was a very good young salesman, and he talked to me about a Bremont watch. I'd never heard of the brand before, and I ended up buying a watch. And somehow I lost it over time. I have a watch safe, and it got buried in the watch safe.

Years later I was heading to London, actually for Pershing Square-related reasons, and a friend had just told me that he was wearing a nice Patek Philippe watch walking down the street in London and it was stolen. He said, Bill, you cannot wear a nice watch in London anymore. At best they're going to steal it; at worst you can get hurt. So I literally said, what watch can I wear where I'm a little less concerned about losing it, or that's not a recognized brand a thief is going to go after? I was looking through my watch drawer and I found this Bremont watch, and I thought, that's a super cool watch. So I put it on. I was staying in Mayfair, and I was walking down the street, and literally the next day after I got to London I walked by the Bremont store. So I walked in. I really liked the watches, and I ended up buying eight Bremont watches as gifts. That night I had dinner with the chair of Pershing Square Holdings, and I gave him a Bremont watch.

When I left the shop, they gave me a free Bremont clock I could put on the wall, and I asked, who owns this company? They said, two British brothers, the English brothers. So I wrote them a little note. I said, Dear Mr. English, if at some point you are interested in having a partner, I would be interested in potentially being that partner. Perhaps I could help you grow your company. My father taught me to like watches; there's a bit of a father-son thing. They emailed me back, and we did a Zoom, and they said, actually, we have a long-time holder who's interested in selling their interest. So we bought a smaller minority stake in the company.

Time went on. The thesis at the time was, we have this really good growth strategy, we're going to open all these boutiques, our boutiques are profitable. Well, it didn't work out, and they burned through the capital pretty quickly. But I view these investments a bit like hobby investments. It's not something I put a lot of resources into. It was a bit of a Warren Buffett-style investment, where I didn't do due diligence; I just assessed the character of the people I was dealing with and shook hands. The only involvement I had was helping recruit a new CEO, a guy named Davide Cerrato.

Anyway, things weren't working out between Davide and the board. The board had a disagreement with him about the direction of the company, and I sided with Davide. I thought he was making all the right decisions. He dramatically improved the quality of the watches. He's a phenomenal watch designer. I loved the direction. But the old guard, who had been with the company for 20 years, felt it was too much change, coming too quickly. We even have a new logo: are we losing the ethos of the brand? There was a bit of a board fight, and being a bit of an activist, I got a little more involved and ended up putting in a chunk more capital, buying effective control of the company. I joined the board as executive chair. I inserted my nephew to help fix things. And they've made amazing progress in the last year or so.

It's been fun. Other people in my industry buy sports teams; I own this little watch company. It's super cool, and this is a watch that's going to go to the moon.

I've got to get one of those.

This one is called the Supernova. One of the things that's cool is that the face has all of this phosphorescence; the face lights up completely at night. It looks like solar arrays in space. It's got a ceramic bezel, but it's a Swiss movement, one of the highest-quality Swiss movements, and it's a phenomenal design. We've got a lot of fans out there. I like wearing a watch where the other guy doesn't know what I paid for it. And because they're less well known, the thieves don't chop off your wrist for them yet. Maybe when we get to that point, that's good for the brand.

Judging a CEO in an hour

Talk to me about recruiting a new CEO. That's one of the things you've done as an activist, and you did it here again. What's the process you undertake to find the best person in the world for that position? Why are you so good at that?

We've done it a couple of different ways over time. For Pershing, the way we've generally done it is that, in our experience, finding someone who's done it before is the lowest-risk, highest-return option. Chipotle went through crazy food safety issues, and we needed someone, and Brian Niccol's name kept coming up. Then we used these expert networks to talk to people who used to work for Brian or compete against Brian. You can learn a lot from those 360 views, and he just had glowing references. And then we meet the guy.

I would say one of my best skills, though it's not been perfect and I've made a few mistakes, is that over time I've become a very good judge of people. What do you need? People who are super passionate about the job, a lot of capability, a lot of energy, and honesty, character, et cetera. And you can assess that, I think, in an hour.

The misconception

I want to switch gears a little and talk about you as a person. What are people's biggest misconceptions about you?

I've had this experience over the course of my life where people would say, Bill, I had a completely different impression of you based on what I read in the media, and now that I meet you in person, you seem like a really nice guy.

Yeah, you're much nicer.

Perhaps some of my Twitter expressions make people think I'm just a firebrand or whatever, but I'm not a hostile kind of person. I'm just someone trying to get to the truth.

I think the media positions people in this way. Certain people, for whatever reason, through your activism, you get positioned like this, and then people form these misconceptions.

I actually think the Herbalife thing did do some reputational damage over time, because they called me out. Being a short seller, I would say the general populace just thinks that's an evil, bad thing. So I think having that very much in the rear-view mirror helps. The Herbalife short was the end of 2012; that was a long time ago. Believe it or not, we've not made an activist investment for more than a decade. The last activist investment was in 2016.

Wow. Would you ever do it again?

I don't think we'd have to be an activist in any kind of traditional form. We will get quite involved in the companies we're involved in, and I guess if we had a big stake in a company and we felt they were doing the wrong thing, and we thought it was worth the energy... But I don't know that we're ever going to have to run another proxy contest. I don't think you run a proxy contest against someone with 3 million Twitter followers. I think it ends badly for them. And I think we have a sufficient amount of influence that we can get to the right answer with dialogue. So I don't think we have to be an activist. Activism is when you're outside the boardroom and you're not going to get invited in. I think any company we're a shareholder in, if we wanted board representation, would give it to us, because we're a major shareholder, we've got a good reputation, we're a long-term investor, and we're going to do the right thing for the business.

A significant life

We always end with the same question: what is success for you?

My definition of success for Pershing Square is obviously winning for investors. You can measure it: having people make a very attractive, life-changing investment with us, so that by the time they retire they can do the things they want to do, pay for their kids' education, buy the house they want to retire in.

For me, 60 is like a moment. I celebrated my 60th birthday in May.

Go deeper on that. A moment for you: what does that mean?

I think about each year like this: I love the summer. It's one of my favorite times of the year, and the summer goes by so quickly. Healthy people live to their 80s. I'm 60, so that's 20 to 25 years from now. And I'm hoping AI, and my doing a better job, enables me to live longer than that. I had a grandmother who lived to almost 106, and she smoked and drank. I don't know if that contributed to her longevity. But by the time I have no more time, I want to have had a significant life. My definition has always been that I want to have the greatest beneficent impact on the largest number of people. Obviously you start with your family and friends and so on, but I think this institute is where I'm going to be able to have a huge impact on something that's really needed. So success for me is having a significant life.