How to Invest Like Bill Ackman: Learn from the Best with New Gen

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Bill Ackman / 12 December, 2021

Karla García Gil Journalist

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William Albert Ackman, better known as Bill Ackman, is an American-born activist investor, born on May 11, 1966, whose fortune amounts to some 1.9 billion dollars and with more than 10 billion dollars in assets under management.

He graduated with honors from Harvard University in 1988 and holds an MBA from Harvard Business School. In 1992, he founded the investment firm Gotham Partners with his partner David P. Berkowitz, then in 2004 created Pershing Square Capital Management, a hedge fund management firm. By the following year, Pershing bought a significant stake in fast-food chain Wendy’s International.

Ackman has reiterated that his most successful investments are often controversial, as his main rule is to make a move so bold that no one expects it and no one believes in.

Bill Ackman's biography: What is his investment style?

Bill Ackman's biography: What is his investment style?

The story of Bill Ackman is not the story of a man moving from middle class to bonanza, it is rather the story of the heir building his own legacy. William Albert Ackman was born on May 11, 1966, the son of a mortgage financier and a top New York executive.

Investment Style 

Bill Ackman’s investment style has caused controversy in the world of finance, as it is equally praised and criticized by experts and officials around the world.

Approximately 60% of Ackman’s portfolio is made up of companies that distribute juicy dividends to their shareholders. Thus, more than half of the tycoon’s investments are solid companies, which have given him annualized returns of more than 30 percent.

This investment method is similar to the one used by Warren Buffett, since it has the advantage of offering a constant flow of money even when the market is in a complicated moment.

In this way, Bill Ackman receives through his fund periodic profits that can then be reinvested in other assets.

Trading rules

Some of the guidelines that Ackman follows in his plays are the following:

  1. He manages a concentrated portfolio of no more than 15 companies.
  2. He bets on mid-cap ($2 billion to $10 billion) and large-cap (more than $10 billion) listed companies.
  3. His role is investment manager, so he is dedicated to strategic financial moves, not operational ones.
  4. He is a pioneer in the ROIBD metric (Return on invested brain damage), which is used to compare the potential profitability of an investment to get an idea of whether it is worthwhile to carry out a complete analysis of the company.
  5. He is not afraid of bankruptcies.

In addition, the tycoon tends to go for simple businesses, free cash flow generators, sustainable companies with growth potential, as well as working together with other shareholders.

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