#413 – Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech

Episode Summary

Executive Summary: Bill Ackman lays out his value-investing and activist-investing philosophy, emphasizing price vs. value, margin of safety, and buying durable businesses with moats. He details major wins and losses, including Chipotle, General Growth, Canadian Pacific, and the $4B Valiant disaster, then explains how X/Twitter, governance, DEI, Harvard, and the Israel-Hamas war shaped his recent public activism and worldview.

Main Topics: Value investing and margin of safety (Priority: 5/5): Ackman explains Ben Graham’s framework: price is what you pay, value is what you get, and successful investing depends on estimating durable cash flows and buying at a discount to intrinsic value. Moats, durability, and business selection (Priority: 5/5): He emphasizes non-disruptible businesses with strong brands, barriers to entry, predictable cash generation, and long-term persistence, using Universal Music Group, Chipotle, Google, and restaurants as examples. Activist investing and board governance (Priority: 5/5): Ackman describes activist investing as using concentrated ownership, public pressure, and board involvement to fix underperforming companies and restore accountability between owners and managers. Big wins, big losses, and psychological resilience (Priority: 5/5): He recounts landmark trades such as General Growth and Canadian Pacific, the Valiant failure, and how financial security, discipline, meditation, exercise, and incremental progress helped him recover. Harvard, DEI, and free speech conflict (Priority: 5/5): A major section covers Harvard’s response to October 7, Claudine Gay’s testimony and resignation, and Ackman’s critique of university governance, ideological capture, and hypocrisy around free speech. Israel, Gaza, and the role of governance (Priority: 4/5): Ackman argues Hamas, not Palestinians, is the core problem, says peace requires governance reform and Gulf-state involvement, and links prosperity to political structure. Media, X/Twitter, and reputation defense (Priority: 4/5): He argues modern media incentives reward sensationalism and defamation, and says X gives him and others a platform to rebut stories quickly and counter institutional narratives.

Key Arguments: Investing succeeds when one can estimate a business’s long-term cash flows, buy below intrinsic value, and preserve a margin of safety. The best businesses have durable moats: strong brands, scale, hard-to-replicate systems, or embedded consumer behavior that makes disruption unlikely. Activist investing is legitimate because it restores accountability when management and boards underperform and shareholders need a direct voice. Great boards and leaders matter more than titles; incentives drive behavior, and governance failures often explain corporate and institutional decline. The Valiant loss showed that straying from core principles can be catastrophic, while disciplined refocus can restore performance. Harvard’s governance structure is too self-perpetuating and insulated; it allows ideological capture and weak accountability. The October 7 attacks exposed the moral and governance failures of universities that failed to protect Jewish students and uphold their own policies. X is a crucial counterweight to mainstream media because it lets public figures respond immediately and reach large audiences directly. AI is a powerful disruptor, but in many creative businesses it will be a tool for human creators rather than a replacement, especially where identity and fame matter. Trump’s presidency had real policy benefits, but his style, divisiveness, and January 6 response were serious liabilities; Ackman prefers bipartisan, competence-driven leadership. Dean Phillips is presented as a principled, independent, and viable alternative candidate who could offer better governance than Biden or Trump.

Data Points: AG1 fish oil offer: 1 month - Mentioned in sponsor read: one month supply of fish oil for signing up. Policygenius coverage example: $292/year for $1M coverage - Sponsor read for life insurance quotes. 8Sleep temperature range: 55°F to 110°F - Sponsor read describing mattress temperature control. Pershing Square team size: 40 people - Ackman says his firm is very small relative to assets managed. Major holdings count: 7–8 companies - He says Pershing Square owns about seven companies / eight things. General Growth stock low point: $0.34/share - During the financial crisis, General Growth stock collapsed to pennies. General Growth equity value at collapse: About $100M - He describes the equity as having roughly this market value at the bottom. General Growth investment: $60M for 25% - Pershing Square bought about a quarter of the company at distressed prices. General Growth recovery: $31/share - He says the stock eventually rose from 34 cents to $31. General Growth return: About 50x for one taxi driver - He recounts a follower investing $50,000 at around 60 cents/share and making about 50 times his money. Canadian Pacific ownership: 12% - Pershing Square bought 12% of the railroad before the proxy battle. Canadian Pacific vote result: 99% - He says the activist slate won almost all votes at the shareholder meeting. Chipotle stock appreciation: Almost 10x - He says the stock rose nearly tenfold after the turnaround. Google valuation: 15x earnings - He argues Alphabet became cheap during AI fears. Google earnings yield: About 7.5% - Derived by Ackman from the 15x multiple. U.S. government bond comparison yield: 4% - Used as a benchmark against Alphabet’s earnings yield. Harvard tuition: $82,000/year - Used to illustrate the burden on students whose education is disrupted. Harvard class size: About 1,600 - He says Harvard’s class size today is roughly the same as when he attended. MIT faculty conservative self-identification: 2% - He cites an anonymous survey showing very few faculty identifying as conservative. Harvard overseers signature threshold change: 600 to 3,200 - He says Harvard raised the number needed to run for the board of overseers. Herbalife short thesis outcome: About $1B profit/loss swing - He says Icahn made about a billion and Pershing lost about a billion in the battle. Valiant loss: $4B - Ackman identifies Valiant Pharmaceuticals as the biggest loss of his career. Portfolio drawdown after Valiant: Over 30% - He says mark-to-market losses and shorts pushed the portfolio down more than 30%. JPMorgan rescue loan: $300M - He borrowed this amount during the Valiant crisis to protect the fund. Harvard thesis / Oxman dissertation context: 130 academic works - He notes Neri Oxman had a large scholarly output when plagiarism allegations arose. Oxman and Harvard town relation: 52 miles - He says their ancestral towns were about 52 miles apart on Google Maps. Dean Phillips New Hampshire vote share: 20% - Ackman says Phillips went from zero to 20% in 10 weeks.

Pivotal Quotes: "Price is what you pay. Value is what you get." — Bill Ackman: Explaining Ben Graham’s foundational investing lesson and the difference between price and intrinsic value. "The short term, the market's a voting machine. The long term, the market's a weighing machine." — Bill Ackman: Describing how markets can be irrational in the short run but reflect fundamentals over time. "The world is not going to ask your permission to become what it is becoming." — Bill Ackman: On AI, disruption, and the need for businesses and investors to adapt to changing technology.

Implications: The episode reinforces that governance, incentives, and durable moats matter as much as valuation. It also shows how public platforms, university politics, and media incentives now shape investing, reputational risk, and institutional trust.