In his recent interview with Stephen Fraidin at the Cadwalader Fifth Annual Finance Forum, Bill Ackman discussed a number of topics including his key takeaway from seventeen years of investing. Here’s an excerpt from the interview:
Fraidan: We’ve now talked about a huge success, but you’ve often said that success is not a straight line and that’s been true with respect to you and Pershing Square. Can you tell us what lessons you’ve learned from the vicissitudes that you’ve gone through, and that Pershing Square has gone through?
Ackman: Sure. So, if you’re a concentrated investor, the good news is that if you make a smart decision, the payoffs are very large. The bad news is that the mistakes are also very, very large and, because we get a lot of press attention, I guess they like the successes, but they love the failures, so, one thing is you have to have a pretty thick skin.
Investing requires what [Warren] Buffett calls temperament—you need a good temperament, which means a certain emotional distance from what you know is going on. It can be challenging going through it and having your mistakes written about in the press, but I describe experience as making mistakes and learning from them.
When I look back over 17 years at Pershing, the biggest takeaway from the mistakes we’ve made has been that they occurred when we stepped outside of the core strategy that has driven our results over time.
Our core strategy is buying the greatest businesses in the world, super durable, high-quality, simple growth companies.
When we’ve veered from that strategy it’s been expensive, and so the smartest thing I did after two contemporaneous big failures circa late 2015-2016, is that I took our investment principles—which we always talked about as a firm—and I had these little deal toy tombstones made where I had those principles engraved in stone on little tablets like Moses’ ten commandments, and I put them on everyone’s desk and it actually was a very helpful thing and we haven’t veered since, and we’ve actually had a remarkable several years just sticking to the strategy.
So we’ve had a great strategy and in investing you always want to continue to expand your circle of confidence, but not get too far away from your core, and I think that would be the biggest takeaway for me.
You can read the entire interview here:
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