Bill Ackman: In This Market Investors Should Focus On Super-Durable Growth Companies

During his recent interview with AJ Bell, Bill Ackman explained why investors should focus on super durable growth companies in this market. Here’s an excerpt from the interview:

Host: Do you think we’ll get a better year next year?

Ackman: I would guess probably, although I think predicting the market in the short term is a bit of a suckers game, if you excuse the expression.

I think Federal Reserve, I think people understand is going to continue to raise rates, getting to something approaching a five percent short-term fed funds rate, and that rate staying there for an extended period of time i.e probably most of 2023.

So there’s not any subsidy if you will to the markets coming from the Federal Reserve, it’s basically the opposite, and that of course will also be… it’s already having the effect of restraining the economy and hopefully inflation.

I think once the market starts to see inflation taper, and if taper, if inflation tapers pretty quickly they can begin to predict that the Federal Reserve is going to take its foot off the brake a bit, and perhaps start taking down rates.

I think that will be a perceived and probably likely buying opportunity, so I think that’s a potential catalyst more toward the end of 2023 for markets to you know, people starting to get excited about owning equities again.

We still have the overhang of a war right in Ukraine, and you know does that continue for another 6, 9, 12 months, two years?

I think it’s not knowable but unfortunately I think it continues, and I think that will you know continue to cloud the economic picture in Europe.

I think it will continue to have an impact on Energy prices, food prices, so it’s a challenging time and you know we try to find businesses that are incredibly resilient, and we call a sort of super durable growth companies.

Businesses that regardless of what’s going on in the world you know, people are going to listen to more music next year on more devices with more apps on TikTok or otherwise, and that’s why we like owning Universal Music, which is a royalty on people listening to music.

We think people are going to be continuing to renovate their homes, which is why we like, you know an interest rate environment where you can’t, you can’t move because moving means you got to give up your three percent mortgage to get a seven percent mortgage.

We think people are going to be… people want to upgrade are going to upgrade their own homes, they’re going to be going to the Home Depots and Lowes of the world you know as we try to find these super resilient businesses.

Most of our companies are very I would say North American centric, they make most not all their profits in the US and in this world I would say unfortunately I like owning a very U.S centric portfolio.

You can watch the entire discussion here: