Yesterday, Bill Ackman was at Columbia. Here is the notes taken from that event:
On current affairs, he thinks that leverage by banks should be monitored more closely since they can taken down the world's economy.
Q. What makes a great Investor?
A. analytical skills, confidence to pull the trigger, and the humbleness to admit you are wrong.
The balance b/t confidence and humbleness is the most difficult.
Q. Opinions on CMBS.
A. Real estates values were created through access to debt financing. Since they were marked to market, in an expanding credit market, the values always go up. People can still can financing with 5% down up until to Feb 2007. Now the music has stopped.
His favourites are high quality malls, and apartments more so than office.
Q: Opinion on activism
A. By exercing our proxy fight right, we think we are capitalists rather than activists. Activists are coined by the media.
Q: How to generate investment ideas
A. Ben Graham, Warren Buffett. Turn a lot of rocks. An example would be Wendy's - Tim Horton.
He dislike mechanical methodology even though he agrees that some may be very successful (Simmons at Renaissance Technology).
Of course, there are fertile ground for good returns, i.e., litigations, management changes, spin-offs.
Q. Hedge fund redemption
A. Fund of funds cannot get out of the ones that are not liquid. They are actually selling the ones are still liquid, which is unfair.
In the long run, he think hedge funds should be tradable like closed-end funds.
Q. Most profitable idea
A. CDS. MBiA
Q. Worst idea
A. Pershing's favourites are large-cap company with great management.
Borders was the opposite; they took the position thinking that if only they can improve Borders' operations up to Barnes and Noble, the shares could be worth $34. However, the secular trend has worked against Borders that that thesis may not hold anymore.
Q. Thoughts on aligning management interest with shareholders interests
A. Public and private meetings
Valuation. Experience and track record
Q. Lessons learnt during the years.
A. Return phone calls on time and work diligently. Not afraid of calling people. You don't have to be too young to be right.
Q. Investment strategy in current environment
A. Consolidation will continue.
Treasuries are not a safe to park your money.
Equities in with pricing power are the best place.
Q. What should the new administration do?
A. US. corporations parked money worldwide. Need a tax holiday for retribution.
Fannie and freddie need to be merged and emerge as a public company.
Public work program: infrastructure, energy. On energy, Denmark was a great example.
Friday, December 5, 2008
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