Bill Ackman: why now is the time to buy stocks

Stock prices have fallen sharply and billionaire investor Bill Ackman thinks it’s a good time to commit more capital to equity markets. Watch the manager of Pershing Square Holdings (LSE:PSH) explain to interactive investor's Lee Wild the best way to do it and which company he’d buy more of if he didn’t already own so much.

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Lee Wild, head of equity strategy at interactive investor: Hello. With me today, I have star investor Bill Ackman, CEO of FTSE 100 company, Pershing Square Holdings. Hi, Bill. Thanks for joining me today. Great to talk again.

Bill Ackman, founder and CEO of Pershing Square Holdings: Sure. Good to see you.

Lee Wild: You've been active in the market fairly recently. I know you've sold your stake in Domino's Pizza Group (LSE:DOM) over the summer. Have you been buying and selling anything else, Bill?

Bill Ackman: No. We own really the same things we've owned. I mean, nothing materially. We always make adjustments. The private funds that we have have capital flows in and out, and as a result, in order to keep the funds proportional, you'll see often in our 13F, you know, a small amount of trading. But we have bought some more Universal Music Group (EURONEXT:UMG) in a couple of the co-investment vehicles that we manage. It's already, I would say, quite a full position in PSH, so we haven't added to it, but if it were a smaller position, I certainly would. But we bought Universal stock as recently as the last few days for our co-investment vehicles.

Lee Wild:So the money from Domino's, are there any plans for that? Earmarked for anything? Are there any company sectors that you're particularly keen on that you're tracking at the moment? Where might that Domino's money go?

Bill Ackman: We're looking for a great company to invest in. We're using it to buy back stock and a small amount for interesting hedges that we find. We obviously don't identify our targets in advance. You know, I and other members of the team are doing work on a number of companies that we think are interesting, but nothing's gotten yet to a price where we're excited to own.

Lee Wild:I mean, for equities, I think, more broadly, lots of talk of a Roaring Twenties. I mean, is that still possible for the equity market or should investors expect lower returns than they've been used to over the past decade?

Bill Ackman: Look, it's much easier to make money in the stock market in a rising stock market environment, and if, you know, rates, a declining interest rate environment is generally a market in which asset prices increase, and so a rising tide lifts all boats, so if you just own equities. So right now we're in a rising interest rate environment, so that's obviously more challenging. And really, I think that what matters is, are the central banks around the world going to stop this out-of-control inflation? I would say I think they will. And what's the new level of long-term inflation?

As recently as, I don't know, 24 months ago, central banks around the world were worried about deflation, and that's been a very, very dramatic change. And so I think, I think you can do very well as a stock market investor if you find really high quality companies and you buy them at attractive prices, and I think today is a pretty good time. It's a pretty good point of entry, right. You know, March of 2020 was obviously a very, very good entry point, and anyone who bought stocks in March of 2020, something I went on TV and advocated on 18 March 2020, I said, this is a moment. I think this is sort of another moment where, I don't know how well you're going to do over the next three or six months, 12 months, it's this highly uncertain world, but over the next three, four or five, 10 years, it's a pretty good place to be an investor, or time to commit more capitals to equity markets. Although I would, you've got to pick carefully. You want to own the super-high quality, well-capitalised, dominant businesses that you know will be here, you know, 30 years from now. And that's why we own companies like Hilton Worldwide Holdings Inc (NYSE:HLT) and Universal Music and Restaurant Brands International Inc (NYSE:QSR), and so on. ​​​​​​​

​​​​Watch the other videos that form part of the Bill Ackman interview here:

• Bill Ackman: sell your shares when this happens
• Bill Ackman talks cheap stocks and new hedge-type bets
• Bill Ackman: my latest view on inflation and recessions

Lee Wild: So what you're saying, whether or not there's a Q4 correction or whatever, that doesn't really matter. If you're looking further out, a few years, three, four, five years out, now's a good time? You'll look back on today and think, yeah, that was a good time to buy?

Bill Ackman: For sure. That doesn't mean the market's not going lower in the next three months, right. But, you know, I wouldn't commit all of your capital today, right. Keep some in reserve, a bit of the, as I used to call it, dollar-cost averaging. You know, the S&P is down approaching 20% for the year, and it wasn't highly overvalued at the beginning of the year so, I think prices are fair to cheap.  

Lee Wild:Well, I mean, you've kind of answered my final question. Where do you see Pershing Square in five years' time? I mean, two questions, will the persistent discount in London see you list in the US? And either way, you'll stick to your current strategy I guess? Is it a core portfolio of around 10 stocks with opportunistic hedges, is that fair to say?

Bill Ackman: Yeah, I think the strategy is not going to change, but we're going to keep working at the discount thing, and then what I would say there, you know, we talked about in the letter that a way in which we could be listed, I think the right place ultimately for a US-managed portfolio of North American companies is, you know, logically in the US, and if there's a way for us to get there within the rules, you know, we're going to figure it out. And, you know, part of my day job is helping the companies we own optimise their businesses and get the valuations in the market that they deserve, and we're putting some thought and energy into it for ourselves. But in the meantime, I am enjoying buying back 50,000/60,000 shares a day at today's prices. I just think that's a good deal. It's the best deal I know in markets.

Lee Wild:Great. Bill Ackman, CEO of Pershing Square Holdings, thanks very much for joining me today.

Bill Ackman: Thank you very much Lee.