Bill Ackman: Lessons I Learned From Warren Buffett

Here’s a great interview with Bill Ackman on The Knowledge Project Podcast speaking about a number of really interesting topics including lessons he learned from Warren Buffett, saying:

Question: What are some of the lessons that you’ve learned over the years from Warren Buffett and Charlie Munger?

Ackman: So a big part of my education as an investor came from reading everything Buffett’s written. Watching him speak. He came to Harvard Business School and I was a student there. One of the most influential things he said to me, and I say to me because it was me and the other 300 people in the audience, was if you want to be successful all you need to do is look around the room and think about the classmate or classmates you most admire and what qualities they have and just decide to adopt those qualities.

If you do that your chances of being successful go up enormously, and it was incredible advice, and his basic point was if you want to play the violin and you’re not Yo-Yo Ma and you haven’t practised your entire life it’s gonna be hard to pick up the violin tomorrow, or cello tomorrow, and India virtuoso.

But character and the qualities that enable you to be successful in business, hard work, discipline, returning phone calls promptly after you receive them. Showing up at meetings on time. Being honest and straightforward, fair-mindedness. These are all things you can have if you don’t already have them you can have them tomorrow by just deciding that you’re gonna adopt these characteristics. I thought that was a very powerful thing to say. That was one.

Then, just how to think about investing in the stock market and all the Ben Grahamisms that he’s reinterpreted and presented all that stuff. Super helpful. And just thinking even the way he built his business over time.

Buffett started out in the mid 1950s as an activist hedge fund manager right. He had a partnership. He charged a 25% incentive fee over a 6% return and he was quite active. He would buy stakes in businesses. He would push for liquidations of companies that had large security portfolios relative to the market value of their business.

He was really an activist investor, and then 15 years in he had a hundred million under management I think. Twenty five million of it was his. And he wrote his investors this letter and said okay you can have all your money back, or you can have stock in this crappy textile company, and I’m gonna take stock in the textile company but, I’m gonna be a little less motivated than I was in the past. I’ve made a lot of money. Markets aren’t that attractive. I can’t promise anything but happy to have you if you want to go long. Take your money if you want your money back.

As I like to say, some number of people, Larry Tisch apparently withdrew four hundred thousand dollars back then from the partnership, which today would be whatever, four hundred million probably. More probably. Four billion. Some people rolled their capital and what’s interesting is Buffett gave up the twenty five percent share of the profits for the right to run what he called a crappy textile company with a 40 million dollar market cap for a hundred thousand dollar salary.

But what he got was stability, permanency of capital, and that was not lost on me.

You can listen to the entire interview here: