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Welcome to Bloomberg's coverage of the Global Milk and Conference. I'm Danny Berger alongside Bill Ackman, the founder and CEO of Pershing Square. Bill, thank you so much for sitting down. Of course, I mean, you got to be the most busy man on Wall Street right now. It's just compiling
a list of what you're currently working on. You have two publicly traded equity funds now, a publicly traded asset manager, a publicly traded real estate company that you're working into transforming a mini Berkshire Hathaway, and you're running a campaign with Universal Music Group. Where's your attention most focused on right now?
I'm investing. They're all related, They're all correlated.
They're all part of one very small portfolio, which is why it's possible.
It is possible. And I know you run with a slim team there, so it's always impressive. And you got this IPO out last week and we talked about it, but we talked before it started to trade. I know you don't concern yourself with a day's worth a trader or a few days, but what do you make of the reception? That it got, that it did fall considerably. Is this an issue with bankers mispricing it?
No, I mean we sold a pile of cash. I don't know why anyone would buy a pile of cash and then the next day sell it at a discount. What I think I didn't appreciate when we last spoke is we did something different in this offering that people don't normally do. Normally, retail investors get kind of a very small allocation and they're disappointed by the shares they get in an IPO. In our case, we give the retail investors what they asked for and we cut the
institutions back. And I think the impact of that was retail investors woke up with more shares than they had intended to buy, and we're put in kind of a forced selling position, and that has to work its way through. I think once that's done, I mean, now again, the package of securities is modestly down from where we where we priced the offering. Remember, you get an interest in a TSUS, which is then either I think of it as investment holding company, you could think it was a
clothed in fund. There you're getting forty nine dollars in cash that we're in the process of deploying in the market. Then to get an interest in our business, which is a very good business. It's a bit like a Blackstone or a KQR, but some important differences. Substantially, all of our assets are in these sort of permanent capital vehicles, and so the business model itself is like owning a royalty on compounding and as we so that's why I
all have to do is focus on generating returns. I generate returns that generates an increase in our assets, that generates more cash flow.
For the business.
And it's a bit of a self fulfilling prophecy as long as we do a good job allocating the money.
One of the things that's different and I kind of hinted this at the beginning from you from the other big publicly traded asset managers, is just how slim you are. And this was brought up actually in one analysis of Persian square.
I like being slim. I think we all do.
I think, especially in this day and age. But this idea that there is key man risks because so much of it is your ideas and your ability.
To try to raise it's not true.
So yeah, so talk about that. How do you mitigate it?
I actually think we have the least key man risk of any hedge fund in the world. And that sounds surprising because usually you put me on. I do more TV appearances than other Persian Square employees. But what causes a hedge fund to go out of business is something happens to a key person and then investors. The first thing they do is they ask for their money back, and then they asset shrink and the rest of the
team leaves. In our case, the assets are in these public corporations where the money can't leave, and so if something happened to me, the money stays, the asset state of the team stays. The team owns, you know, forty five percent of the business, right, so the company of equities widely spread throughout the firm. And it's unusually about our firm. In an industry where's a lot of turnover, there hasn't been a persect Square. So my CEO, Ryan Israel,
and I we've work together now seventeen years. He's been CIO for almost four. You know, if I disappeared tomorrow, nothing would really change. In the early days of Persian Square, I generated most of the ideas, and I work with analysts on analyzing those ideas. Today I'm generating a minority of the ideas, so I'm not saying I'm unimportant. Hopefully I can still, you know, generate value for the firm.
But the firm itself is very robust. You know, it's the only firm in the world that if something happened to all of the employees because the ass or forever, the board would just hire a new team or put the assets in an index fund and you'd still build a very valuable kind of business over time. So it's one of the most robust businesses in the world, and it's one of the highest quality businesses in the world.
By the way, just just kind of on a similar notice, as you know a Warren Buffett fan. This past weekend was the first Berkshire Hathaway Annual meeting, where Abel was at the helm. You're obviously a young man, but have you thought it all about setting up succession what that eventually looks like at Pershing, Well, I.
Think it's really effectively set up, you know, identified as CEO Ryan, as I mentioned, he's really leading the investment team at this point. Ben Haakim president of the firm. He kind of runs everything other than the investment side and the operation. It's amazing there's anything for me to do. I have the privilege of thinking about big ideas, and you know, occasionally a big idea drive some value.
Can we talk about one of those big ideas in Universal Music Group. You come forward with an offer to buy this company, and a lot of people scratch their heads. Why would you do this with the company that has very large majority shareholders where it's tough to put through. What is the game plan?
Actually the the game plan there is absolutely we need the support of Boulay Group, but what we're proposing, I think is very much aligned with what they're interested in. I mean, Universal is sort of a interesting case of a company that's.
Done well in its core business. Right.
Universal remains the dominant company in the recorded music industry. They remain very close to being the number one company the music publishing industry. It's done a very good job with that. But they've not sort of graduated from being operating like a private company into being a public company, and they've lost i would say, the confidence of kind of the shareholders in the analyst community, which is why
the stock. You know, the business value has grown and the multiple that people assigned to the earnings of the company has de cliented, and the result is a stock that trades at the same price that traded. You know, the company first day of trading was twenty five euros, and this is in September of twenty one. Here we are almost five years later that the stock is nineteen euros eighteen euros. So that's not a good performance. The company really needs a reset. It's also listed really in
the wrong exchange. It's really a US company. So our transaction moves the com company from Amsterdam to a US listing. That alone is meaningfully value creating. We kind of recast the balance sheet. The company has unmonetized assets on the balance sheet, their stake in Spotify, and now notably, the company announced in the last couple of days that they're going to sell half their interest in Spotify. We think they should sell the balance The company announced a more
aggressive buyback program. We think there's an opportunity to do more. But our transaction effectively enables a cancelation of about seventeen percent of the outstanding shares, a migration of the company. Here, a new board of the directors, led by Mike Ovitz. You know, Mike, I've known a very long time. I think it can be a very value added value operate to the operations of the company and then just a better a program in terms of how the company communicates
with shareholders. You know, the company right now is sort of analyzing the proposal. We'll hear back from them soon. We've been engaged with the option the big shareholders.
And you're hopeful that they will be receptive to this.
I mean, the company has to do something.
This is a very good solution to the various issues that.
Confront the company.
By the way, on this idea of European versus US exchanges, it feels like that is something that a lot of companies see that they can unlock that they move to a US exchange on the day we talk. For example, I have the ASTROSENICACFO and they did something similar. Does Europe have a real.
Problem, Bill, I mean yes, Look, the exchanges are natural monopolies. And you know, if you today, if you're not listed in a market which has the most demand your stock, your cost of capital is going to be higher than should be. And so they're sort of and I think, you know, Europe has too many exchanges. The what if I were in charge of Europe, I would consolidate the London Stock Exchange. Your next kind of bring the various exchanges, because again it's a natural monopoly and you want the
maximum liquidity and demand in one in one place. But they're sort of nationalism, I think prevents that.
One of the kind of newer features of markets is the prevalence and the explosion of betting markets. And there's this real criticism that we're seeing almost a casinoification of the world where you can bet on anything. They're ETFs listing this week, where you can bet on whether the Dems or the Republicans are going to be winning the House or the Senate. Is it a problem? Does this concern you at all? This trend?
I think the negative is that there's a positive and negative. I think the negative is it's not the most productive activity in the world. And there is a lot of gambling that goes on, whether it's sports betting or otherwise, and there are people and particularly young people, you know, losing money they can't afford to lose betting on the outcome of things that are difficult to predict. So that's
the obviously the unfortunate. It's been like a lottery tickets, you know, it's it's a net loss I think for society. On the positive side, what betting markets allow is they allow people.
To hedge risks that they're exposed to.
It also creates information, you know, you know, looking at where things are priced. You know, the betting markets have done a better job of predicting outcomes or elections.
Some could say because maybe not elections, but there's more insider trading that incentives exist for that to happen.
Yeah.
Look, the people make arguments that the insider trading should not be illegal because that would bring a sort of more transparently one of those people, I believe that I'm not, but you can make some markments for it. So I think it's it's sort of interesting. But you know, the more the market becomes casino like, I think the risk the risk is I guess people get they withdraw capital because they lose confidence, right, and you know, I think
markets are going more and more short term. And if you think about what a stock market is, it's these are very long term assets. So the short termism drives liquidity, which I think on the margin is a positive, but it also can lead to short termism in the way businesses are run well.
I would love to just leave on the note of your hometown city, New York. There's been a lot of discussion about Mayor Mom Donnie making very public pronouncements against specific people, against Ken Griffin, announcing a pie to tear a tax, directly attacking some of the business leaders of this city. I know you were concerned heading into this election and the outcome of it too. How are you feeling now?
Not great about things?
I think Bondammi is not If your goal is to make New York City kind of financially solvent, what you don't want to do is drive out the Ken Griffins of the world. Right, Ken brings very valuable business. That's you know, it's a six billion dollar project which will generate you know, thousands of construction jobs, architecture jobs, marketing jobs, make your list employees who will pay material amounts of taxes because they're highly compensated employees.
And it's that.
It's sort of the the Wall Street and the tax revenues from Wall Street are what enable New York City. Kind of all the people in New York City to have a better life, and if you drive out the Ken Griffins of the world, who notably you know, has made a major contribution to New York not just from
bringing his business there, but he's been very philanthropic. If a four hundred million dollar donation to Morris lom Kettering, which is an institution that doesn't just help New York, is to help people with cancer all over the world to go to get treated there. So it's just not it's not a very smart approach the way.
I can't think about person to square with out thinking about New York City. But could you ever see yourself being driven out.
Of New York I think it's unlikely.
I'm more of the Ghana guy to fight to make sure New York City is a great city than someone.
Who's going to lead.
The problem is, though, that with these policies, even if they have dire economic consequences, Gandhani is incredibly popular and he's still very popular with his base. So how do things change then? How do you fight this tide if there still is this broad based popular support for these types of ideas.
It's an issue.
I mean, I think the answer is a better can thing who you know. Look, where Mandami was correct is that New York is not a very affordable place to live. But you're not going to make it more affordable, like getting rid of.
The biggest drivers of tax revenues for the city.
Mandami already has a budget crisis, but we got to figure out how to run New York City much more efficiently. But when you raise taxes, you know, and the most mobile people, frankly are the ken Grifvenths of the world. Can can choose to locate his business wherever he wants, and he can locate his Jetta wherever he wants.
Very true, though, we are heading into midterms and again affordabilities on the ticket and that's pushed a lot of people left. Are you worried about how this shakes out, that we might get more candidates who want to put forward these types of ideas into economic policy.
Yeah.
Look, I think you look at a country like Argentina and how far it fell right one of the most.
Argentina GDP whatever.
One hundred years ago, it was one of the most significant countries in the world and fell off the map because of socialism and other bad policies. Nice Malay coming back in the country dramatically recovering. It's sort of a great example, and it's crazy to me that socialist ideas can travel into a country like this one.
I have only about thirty seconds, but I've we were remiss if I didn't ask about some of the work that you've been doing trying to make for a one case, those types of investment vehicles more broadly accessible. We had an executive action last week. What are you pushing for at this moment?
I think every American has to own a piece of capitalism. And when you do, you're excited when the stock market goes up and it allows you know, power of compounding, allows you to save for your retirement. You know, we you know, unfortunately, wages cannot compound as fast as stock market, and so I think it's very important for every American to participate in capitalism or or we'll end up in socialism. And that's so I think the President's plan is a
great one. You know, you have to be able to you know, I think if you believe that you're gonna be able to retire comfortably, maybe even leave something for your kids so they got a head start. You know, that makes you believe in the country, and if you can, it makes you angry.
So I think a very important program.
We're going to have to end it there. Thank you so much for joining, really appreciate your time with that will toss it back to New York. That is, of course, Bill Ackman, the founder and CEO of Pursing Square,