Bill Ackman: Every company is an AI company today, if not, you're going to fall behind

Summary

In this CNBC interview, Pershing Square CEO Bill Ackman discusses the company’s recent IPO, addressing the first-day stock sell-off and the unusual allocation of shares to retail investors. He explains that technical factors, rather than market sentiment, drove early volatility. Ackman shares that $5 billion has been raised, with 35% already deployed into highly liquid companies, and expresses confidence in current market valuations despite recent rallies. On AI, he emphasizes its transformative potential for leading tech firms like Meta, enhancing business outcomes rather than disrupting them. Overall, Ackman underscores strategic capital deployment, market opportunities, and the role of AI in shaping future growth.

Takeaways

• 😀 Bill Ackman discussed the first-day sell-off of Pershing Square's IPO, attributing it to technical factors and unexpectedly large retail allocations rather than fundamental issues.
• 😀 The IPO allocation strategy was unusual: 85% to institutions and 15% to retail, with retail investors receiving full allocations to promote financial democratization.
• 😀 Some retail investors sold immediately because they received larger allocations than expected, creating short-term downward pressure on the stock.
• 😀 Pershing Square raised $5 billion in the IPO, with 35% of that capital already deployed into very liquid companies.
• 😀 Ackman emphasized a clear and structured plan for deploying capital at current market prices.
• 😀 Despite market gains, Ackman believes the companies Pershing Square invests in are still undervalued relative to their growth potential.
• 😀 Ackman noted that market indices today consist of higher-quality, faster-growing companies than historical averages, justifying higher P/E multiples.
• 😀 On AI and technology investments, Ackman stressed that all companies must leverage AI to remain competitive.
• 😀 Investment evaluation focuses on whether AI enhances a business rather than disrupts it, with examples like Meta showing positive AI-driven outcomes in advertising.
• 😀 Ackman expressed strong confidence in leadership teams, highlighting Mark Zuckerberg's track record as a capable capital allocator despite concerns about AI strategy and spending.
• 😀 Overall, Ackman’s approach blends value investing principles with strategic growth opportunities and a commitment to empowering retail investors.

Q & A

Who was interviewed in this CNBC segment?

Bill Ackman, the CEO of Pershing Square, was interviewed.

What event had just occurred for Ackman's company prior to this interview?

His company had just completed its public market debut, an IPO.

How did the stock perform on its first day of trading?

The stock sold off significantly on its first day, despite the IPO being largely successful.

What allocation strategy did Ackman take for retail investors during the IPO?

Ackman gave retail investors a full allocation, which was unusual because typically, retail receives a smaller fraction in closed-end IPOs.

Why did the stock experience heavy selling according to Ackman?

Many retail investors unexpectedly received larger allocations than expected, causing them to sell quickly to settle trades, leading to significant short-term selling pressure.

How much capital had Pershing Square raised in the IPO, and how quickly was it being deployed?

Pershing Square raised $5 billion, and as of the interview, approximately 35% of that capital had already been deployed.

What types of companies does Pershing Square focus on investing in?

Ackman mentioned that they invest in very liquid companies, indicating a focus on well-established, tradable stocks.

What is Ackman's view on current market valuations despite the overall market run-up?

Ackman believes that, despite the market moving up, many of the companies he likes are still relatively cheap, especially when considering their growth and quality compared to historical averages.

How does Ackman approach AI in investment decisions?

He assesses whether AI will disrupt a business or enhance it. For market-leading companies, AI is generally seen as a powerful asset that improves performance.

What is Ackman's opinion on Meta and Mark Zuckerberg's leadership?

Ackman expresses strong confidence in Mark Zuckerberg, citing his track record as an excellent allocator of capital and noting that AI improvements are yielding better customer outcomes for Meta.

Why did Ackman compare today's market multiples to historical averages?

He explained that the average company today is very different from 20 years ago, being faster-growing and higher quality, which can justify higher price-to-earnings multiples in the low 20s.

Did Ackman reveal specific high-conviction investment ideas during the interview?

No, Ackman chose not to point out specific ideas because they were in the middle of deploying capital.