In his latest Q3 2020 earnings call, Bill Ackman discussed why he recommends investors focus on businesses that can survive the ‘great flood’. Here’s an excerpt from the call:
Q: Do you anticipate looking at more defensive ideas in the near future to mitigate some of the risk along with the current credit spread protection that you have?
Marks: So we think that the nature of the businesses we own, we try to find companies that can survive the great flood or now we’ll say can survive the great pandemic.
We’re looking for businesses that regardless of the economic environment, regardless of what’s going on in the world that these businesses will succeed over the long-term and we value our companies based on our estimates of the cash flows, they’ll generate over their expected life, which is why we invest in businesses with strong balance sheets, with dominant market positions, great brands, kind of unique assets that provide them with a competitive advantage.
And the result of that is we were in… our companies were prepared, if you will, surprised by, but prepared for the pandemic just the nature of their business models. And it’s — the story that — when the story went through the history is written the economic history of 2020, it will be fortunately for Pershing Square about the success of the dominant well-capitalized business, but unfortunate for the world, the challenges for the smaller less well-capitalized, less well-known businesses that are not as technologically enabled.
You can read the full Q3 2020 Pershing Square earnings call transcript here:
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