Good morning. Is Bill Ackman like Warren Buffett?
The CEO of Pershing Square Capital Management cited a desire to unleash “long-term value” when making yesterday’s $64 billion bid to acquire Universal Music Group. He’s long admired the chairman of Berkshire Hathaway, who handed the CEO role to Greg Abel earlier this year. And Ackman revived talk of creating a modern-day Berkshire last month when filing to list Pershing with a new fund on the New York Stock Exchange.
As investors look at Pershing’s impending IPO as an alternative to Berkshire in the world of value investing, it’s worth comparing the two men and the companies they’ve built.
Investing Approach – Buffett has a six-decade track record of 20% compound annual returns to investors, roughly double the S&P 500. Ackman’s hedge fund has delivered similar returns since its 2004 launch, not including fees. But it’s a choppier journey when you’re an activist investor who names enemies, looks for problems to fix and wages war in public. Pershing’s turnover is double that of Berkshire, though both are relatively low, and it’s a fraction the size. Ackman’s focus on fee growth and asset management is also more akin to Blackstone than Berkshire. Capital can be more nimble than a conglomerate. But Ackman’s UMG bid reinforces a philosophy embraced by Buffett, who prefers to buy “wonderful businesses at fair prices” and work privately with management to unlock value.
