19% annualized return in 2022! Bill Ackman of Pershing Square personally reveals the investment logic behind his three 'black swan致富' windfalls

We allocated 1.5% of our capital to build a large hedge—and it generated 20% of our total capital in 2008 and 2009. We used those proceeds to aggressively buy stocks during the market crash. Ackman: Then in January 2020, I began worrying about COVID-19 from a public health perspective; by February, I declared, 'The global economy must shut down,' so we built a massive hedge in the CDS market—two weeks later, the world shut down, and that hedge was worth $2.7 billion. We again used those proceeds to buy equities at rock-bottom prices in March. Ackman: Later came the Fed’s aggressive interest-rate hikes. Trump spent $7 trillion on stimulus; Biden pledged even more—yet rates remained near zero. This combination of 'most aggressive fiscal policy + most aggressive monetary policy,' coupled with consumers having hoarded pent-up demand for over a year while stuck at home, inevitably triggered massive inflation. We bet on rising rates via swaptions—and earned over a billion dollars. We deployed those proceeds to continue buying stocks. Tony: That’s the exact playbook you ran back in 2002–2003—no one was listening to you in the market, but if you were right, the difference was $100 million versus $2.5 billion. Ackman: Exactly. The high-performance fee structure of hedge funds is inaccessible to ordinary mutual funds and retail investors. PSUS’s uniqueness lies in being the first publicly traded 'hedge fund'—employing identical hedging and active strategies, with an identical portfolio. Yet because it’s a listed entity, it cannot charge performance fees—effectively offering a 'lighter-version' Pershing Square. 06 The Next Berkshire: Howard Hughes Company Strategy Chris: Recently, when discussing the Howard Hughes Corporation, you called it 'Berkshire Hathaway for the next generation.' Could you elaborate on this idea? Ackman: Everyone knows Buffett’s early story—he found a textile company whose stock had fallen below its net working capital, bought half the company, and gradually wound down the textile business, redeploying the cash into insurance and subsequently a string of high-quality businesses. Many assume Berkshire’s value resides in Coca-Cola, See’s Candies, or Apple—but 70%–80% of Berkshire’s value actually stems from its insurance float—the premiums collected and invested long-term. Berkshire’s real secret is having 'people who understand insurance' and 'people who understand investing' under one roof. Our involvement with Howard Hughes began as an 'accident' in 2008—when we acquired General Growth Properties. Its share price plummeted from $20 billion to $100 million (a 99.5% drop); it carried $27 billion in debt and owned America’s finest Class-A shopping malls. With bond markets frozen, refinancing was impossible—bankruptcy seemed inevitable. We paid $60 million for a 25% equity stake—just 1.5% of our total assets at the time. Worst-case loss: 1.5%; best-case: returns of several-fold to tenfold. Ultimately, we earned approximately $3 billion. In that process, we did something else: we packaged all non-Class-A mall businesses—land holdings, community development assets, etc.—into a standalone company named 'Howard Hughes Corporation.'

Top trading masters’ investment philosophies: Key principles for identifying 'high-quality stocks'—as seen through the eyes of master traders

This article, compiled by Just2Trade (J2T), profiles four Wall Street investors and explores how they identify 'high-quality stocks.' Bill Ackman Columbia Business School conducted an in-depth interview with Bill Ackman. In that interview, Ackman outlined his investment philosophy developed over 22 years: “We operate on a tiered framework: 1.0 is classic value investing—buying securities statistically cheap based on data; 2.0 is discerning qualitative differences among businesses; 3.0 is understanding how active investing itself affects outcomes. Recently, we’ve added 4.0: it demands deep familiarity with the company you’re targeting—and assessing whether replacing its current management team with a superior one would unlock substantial value. That, in essence, is my 22-year evolution.” Ackman consistently pursues concentrated positions—a strategy carrying inherent risk—but he maintains rigorous discipline in portfolio construction: “I strongly believe in concentrated investing. But it isn’t just about protecting principal through meticulous analysis; more crucially, it depends on the companies you choose. If a company possesses durable, simple, predictable competitive advantages—and generates consistent cash flow—concentrated investing can indeed safeguard your capital.” Ackman sets his investment budget based on how much he can afford to lose. For any single position, his maximum tolerable loss is 5%–6%. Risks fall into categories: legal risk, policy risk, and a large portion of uncertainty. A total loss on a position would amount to only 2%–2.5% of his fund’s total market value. In other investment domains, Ackman rarely incurs losses. When evaluating a business, Ackman focuses on: Identifying high-quality enterprises resilient to macro shocks—such as interest-rate volatility or surging commodity prices. He also seeks out poorly run companies where his intervention—replacing management—can unlock latent value. His core competency is: Acquiring stakes in companies via stocks and financial derivatives, then executing comprehensive capital restructuring post-acquisition. He routinely requires portfolio companies to sell real estate assets or non-core divisions to boost earnings—transforming illiquid assets into liquid capital, which is then returned to shareholders via dividends or share buybacks, thereby enhancing stock value. Steven Cohen Cohen’s hallmark approach is rapid stock turnover—executing dozens of trades per day. This naturally evolved into his signature style: short-term trading. Cohen’s trading philosophy is refreshingly straightforward: “To make money in markets, you must take risks—but only intelligent ones. If a trader has a strong idea yet hesitates to size up appropriately, he’ll never earn enough.” Cohen absorbs vast amounts of market intelligence daily—from order-flow imbalances to shifts in buyer/seller strength—even scrutinizing word choice in policymakers’ speeches. After forming a well-reasoned forecast, he buys tens or even hundreds of thousands of shares at once. “Reading the tape is an art.” “I can’t precisely articulate it—it’s an intuitive grasp of patterns. When I begin trading, I look at nothing but the numbers on the screen.”

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