In this interview with Julia La Roche, Bill Ackman discusses his simple formula for investing in great businesses. Here’s an excerpt from the interview:
We had an investment strategy we always would articulate but never sort of codified in a very simplistic, Moses tablet if you will, of Commandments. Basic Commandments are:
- We want to buy the best businesses in the world, simple, predictable, free cash flow generative, dominant companies, as Warren Buffett would say, with a moat around them.
- We want businesses like that that don’t need access to the capital markets to survive. We don’t want a company that has to constantly raise money to implement a business plan.
- We want companies with strong balance sheets. We want companies with excellent governance. You don’t get all of these things at a fair price, something’s typically missing, but the one thing we don’t compromise on is business quality.
So, the short version of the principles are, own the best, super-durable growth companies you can find with conservative balance sheets.
Buy them at attractive prices, and use our influence to make sure they’re managed and governed correctly. That’s it. It’s pretty simple.
Stay away from shorting stocks, avoid commodity-sensitive industries, and you do great.
Investing is very simple. Where there’s a part of investing that’s quite simple. Just buy great businesses and own them as long as possible.
Just make sure you think about the potential for disruption because we’re in a world where technology is a very dynamic force.
You can listen to the entire discussion here:
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