Bill Ackman on the market outlook and his big bet on music
Bill Ackman is one of the most famous investors active in the market today and his London-listed investment company Pershing Square Holdings (PSH) has enjoyed considerable success in recent years, generating a 58% return in 2019 and a 70% return in 2020, the latter helping it to gain a place in the FTSE 100 index.
While its share price performance has lagged the MSCI World global stock market benchmark this year, Pershing Square Holdings has been playing catch-up in recent months. Its share price is up 12% year to date, better than the 10% return from the FTSE 100 but less than the MSCI World index’s 20% return.
Aside from a setback with Fannie Mae and Freddie Mac, the biggest disappointment in its portfolio this year has been special purpose acquisition vehicle Pershing Square Tontine which was blocked by the US regulator from taking a stake in Universal Music.
However, Pershing Square Holdings instead took a direct stake in Universal Music, and it is this investment which has helped to revive the investment company’s share price in recent months. In August, Pershing Square Holdings said Univeral Music had the potential to be one of its most successful long-term investments.
Now in an exclusive video interview with Shares’ editor Daniel Coatsworth, Pershing Square’s Bill Ackman says: ‘Digitisation of music made it easy to pirate and more convenient to steal music than go to a record store and buy music. That almost killed the industry.
‘Spotify launched and that led to the recovery of the music business and streaming has become more than half of music industry revenues. Universal is the dominant player with a third of global music market share.’
Pershing Square Holdings has a concentred portfolio of stocks, and its manager also uses financial engineering to try and profit from predicting market events. In 2020, Ackman said he made $2.6 billion for various Pershing Square funds from a bet that the coronavirus outbreak would cause a market crash. Since then, Ackman has bought various financial instruments which could yield a positive return if interest rates suddenly go up.
Ackman insists that ‘predicting short-term market movements is a fool’s game and is not something we do.’ However, he has developed a reputation for seeking protection against large market-moving events, sometimes referred to as buying insurance against disaster. But ultimately, he says Pershing Square Holdings’ core strategy is about owning ‘super-durable, undisruptable companies’.
BILL ACKMAN ON THE MARKETS
Find out what Pershing Square Holdings’ manager has to say.
Video 1: How he runs Pershing Square Holdings and uses financial instruments as insurance measures
Video 2: Why he invested in Universal Music
Video 3: His outlook for 2022 and comment on some of the portfolio holdings