Pershing Square’s Bill Ackman, who is in the middle of a roadshow to take one of his funds public, said Warren Buffett was the inspiration for the way he built and developed his 20-year-old hedge fund management company. In a virtual presentation to pitch his closed-end vehicle Pershing Square USA Ltd., the billionaire investor recalled discovering Buffett’s writing in his early 20s and learning from the unusual career path of the “Oracle of Omaha.” “I kept going down the value investing rabbit hole,” Ackman said during the roadshow, which he made public online . “I found eventually copies of the early Buffett partnership letters, which told an interesting story. And that story was really the inspiration behind launching Pershing Square.” Buffett started out, essentially, as an activist investor and hedge fund manager running a series of private partnerships, Ackman said, until the 1960s when he closed his partnerships and took control of Berkshire Hathaway, a struggling textile business . “Most people in the asset management industry don’t give up their businesses, but he chose at that time to wind up [the] Buffett partnership,” Ackman said. “Buffett then personally went out to buy control of Berkshire Hathaway, and then has managed it incredibly successfully over the last more than 50 or so years.” “That story resonated with me, and it became one of my personal ambitions someday to be managing a permanent capital entity like Warren,” he said. The 58-year-old Ackman has mostly achieved that goal with almost 90% of Pershing’s assets now in a permanent capital format . Pershing Square had $18.7 billion in assets under management at the end of June. Most of its capital is in Pershing Square Holdings, a $15 billion closed-end fund that trades in Europe. Ackman is now seeking to offer a similar closed-end fund listed on the New York Stock Exchange, a move that could pave the way for an IPO of his management company. Ackman said in traditional hedge funds, one unpredictable challenge is that investors can yank out their money anytime, which can result in constant fundraising and soothing of investors. The advantage of managing permanent capital is that it makes him more focused on the portfolio and gives him the ability to take a long-term approach in investments. “If you want to be a long term investor in businesses, the challenge of managing a portfolio where money can come and might go is significant. Action can have a significant negative impact on one’s returns. So my ambition was to get to a very similar place as Warren Buffett as promptly and as practicable,” Ackman said. Ackman has long called himself a “Buffett devotee,” saying the 93-year-old investment icon has been his “unofficial mentor” for years. He also has frequented Berkshire’s annual meetings in Omaha, Nebraska, including attending this year’s gathering.
