Apr 28, 2020 · 1h 38m · knowledge-project
#82 Bill Ackman: Getting Back Up
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this wide-ranging interview on The Knowledge Project, Pershing Square founder Bill Ackman speaks with Shane Parrish about overcoming severe professional setbacks, executing his historic $2.6 billion COVID-19 hedge, and applying the investment and capital allocation principles of Berkshire Hathaway.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Shane holds 11.9% of the talking time here. How this is scored →
Shane as informed peer 2.5 Guest teaching 2.5 Guest disagreement 0.8 Shane pushing back 0.2
speaking balance: gold is Shane, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 43:10 Ackman calling out Herbalife's active smear campaign
Ackman strongly denounces false advertisements financed by Herbalife targeting him personally, highlighting the hostility surrounding the trade.
Hardest push from Shane ▶ 20:31 Ackman rejecting Parrish's premise about research depthAckman immediately refutes Parrish's suggestion that Pershing Square claims to do more research than anyone else, clarifying their edge is time horizon.
Biggest teaching moment ▶ 56:24 Correcting the superficial $27M hedge narrativeAckman breaks down how CDS contracts represent multi-year liabilities across billions in notional exposure, disproving the headline framing that it was a cheap lottery ticket.
Shane holds their own ▶ 1:12:10 Parrish quoting Charlie Munger on capitalism without failureParrish synthesizes Ackman's argument against corporate bailouts with Munger's famous aphorism, receiving explicit praise from Ackman.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Shane as informed peer | Guest teaching | Guest disagreement | Shane pushing back | Why |
|---|---|---|---|---|---|---|
| Episode Hook: Dealing with Failure and Persistence | 1 | 0 | 0 | 0 | Introduction and disclaimer segment where Shane Parrish introduces Bill Ackman and sets the podcast agenda. | |
| Formative Lessons: Parental Influence, Philanthropy, and Independence | 4 | 1 | 0 | 0 | Ackman discusses lessons from his parents regarding persistence and philanthropy. Parrish demonstrates familiarity with philosophical concepts by referencing Rawls' veil of ignorance. | |
| The Psychology of Setbacks and the Power of Incremental Progress | 3 | 2 | 0 | 0 | Parrish asks about handling public business failures, and Ackman shares his mindset of taking small daily steps to climb out of adversity. | |
| Managing Severe Stress, Personal Crises, and Maintaining Perspective | 2 | 1 | 0 | 1 | Ackman reflects on personal crisis and perspective during stress, noting how divorce compounded business challenges. | |
| Physical Well-being, Nutritional Philosophy, and Daily Habits | 1 | 2 | 0 | 0 | Ackman outlines his daily health regimen, intermittent fasting, and views on sugar and carbohydrates in a friendly, conversational exchange. | |
| Information Intake and Modern News Curation | 2 | 1 | 0 | 0 | Ackman details his media intake and the role of his analytical team versus his high-level review of investment candidates. | |
| Investment Framework and the Starbucks Case Study | 3 | 4 | 2 | 1 | When Parrish suggests Ackman claims to do more research than anyone else, Ackman gently corrects the claim and explains their real edge lies in time arbitrage. | |
| Index Funds, Corporate Governance, and Market Swings | 3 | 3 | 0 | 0 | Ackman analyzes the governance dilemmas of index funds and how reduced market float amplifies trading volatility. | |
| Investing Heroes and the Problem with Late-Stage Private Markets | 2 | 3 | 1 | 0 | Ackman discusses his role models and explains why late-stage venture capital setups harm corporate transparency. | |
| The Distortions of Venture Capital Valuations | 2 | 4 | 1 | 0 | Ackman explains the internal mechanics of venture capital fund markups and liquidation preferences that distort perceived valuations. | |
| The Value and Perils of Short Selling | 2 | 3 | 3 | 0 | Ackman defends short sellers as essential fraud detectors while venting frustration over Herbalife's sustained PR campaign against him. | |
| Sounding the Alarm on COVID-19 and the CNBC Appearance | 3 | 2 | 3 | 0 | Ackman details the timeline of his controversial March 2020 CNBC appearance, refuting allegations that he talked down markets for personal profit. | |
| Mechanics and Asymmetric Payoffs of the CDS Trade | 3 | 5 | 2 | 1 | Ackman breaks down the precise structure of his CDS hedge, correcting the simplistic media narrative that it was merely a $27M risk. | |
| Economic Recovery Trajectory: Temporary Shock vs. the Great Depression | 2 | 3 | 0 | 0 | Ackman explains why an intentional, health-induced economic shutdown differs fundamentally from the structural collapse of the Great Depression. | |
| Real Estate Resilience, Malls, and Remote Work | 3 | 2 | 0 | 1 | Parrish asks what would invalidate Ackman's real estate thesis; Ackman explores the long-term impact of remote work and testing technologies. | |
| Capitalism, Corporate Bailouts, and Restructuring Airline Capital | 4 | 2 | 1 | 0 | Ackman outlines why bailouts shouldn't protect over-leveraged equity holders, and Parrish reinforces the argument by quoting Charlie Munger. | |
| The Long-Term Psychology of Leverage and Berkshire Hathaway's Advantage | 3 | 2 | 0 | 0 | Ackman discusses how crises recalibrate generational attitudes toward financial leverage and how Berkshire Hathaway is situated. | |
| Deconstructing the Berkshire Hathaway Model | 2 | 4 | 0 | 0 | Ackman breaks down Berkshire Hathaway's insurance float model, asset deployment advantages, and historical portfolio missteps. | |
| Wisdom from Warren Buffett and Pershing Square’s Long-Term Vision | 3 | 3 | 1 | 1 | Ackman outlines lessons from Buffett regarding permanent capital structures. Parrish jokingly asks if Ackman will waive fees, which Ackman answers seriously. | |
| SEC Enforcement, Herbalife Settlement, and Exiting Short Activism | 3 | 4 | 3 | 0 | Ackman critiques regulatory inertia at the SEC, discusses the Herbalife enforcement outcome, and introduces his concept of return on invested brain damage. | |
| Democracy, Centralized Authority, and Institutional COVID Responses | 2 | 2 | 1 | 0 | Ackman compares democratic decentralization with authoritarian command-and-control during the early phases of pandemic response. | |
| Lessons for Children and Personal Reflections | 1 | 1 | 0 | 0 | Closing thoughts on parenting values, personal routines, favorite dark chocolate, and Parrish wrapping up the episode. |
Statements from this episode (33)
Ackman: Top business school students lack experience dealing with failure
“The single most important thing you need to understand is how to deal with failure, and the vast majority of people who got to, you know, Harvard Business School, or pick your favorite you know, top business or law school has not had to deal with failure, and …”
Ackman: I really admire Elon Musk for handling near-catastrophe
“Look at Elon Musk. He's been on the brink of failure however many times, and it's, I think, why he's beloved by many, hated perhaps by some, but I really admire the guy in terms of how he's dealt with, you know, near catastrophe”
Ackman Attributes Business Judgment Failures to Distraction From Divorce
“It is, it can be very distracting to be contemplating whether one should stay married While running a business that requires, you know, a lot of, you know, judgment and clarity of thinking, and you know, I ultimately made some, you know, failures of judgment i…”
Ackman: Twitter gave a multi-day lead over traditional news during COVID
“And beginning sort of, as I got deeper into coronavirus, I started using Twitter actually as a news feed and found it to be very, very helpful and interesting. You know, almost having the experience of reading the news a couple of days before You read the news…”
Ackman: If an investment thesis is not obvious quickly, it is probably bad
“In fact, if you have to spend A large amount of time, and it's not obvious. It's probably not a good investment”
Pershing Square Executed Its Massive COVID-19 Portfolio Hedge in One Hour
“I mean, the, just most recently, our hedge that we put on to protect the portfolio, I guess, I wasn't specifically doing work on that investment at all, but I was thinking about the ramifications, for example, of the coronavirus, and then came to a conclusion …”
Ackman: Markets overreact because marginal trading is driven by quarterly focus
“The markets generally overreact to short-term information and noise, because many stocks are traded on the basis of, you know, the marginal buyer and seller is a short-term investor trying to predict whether the stock's going to go up or down on the quarter.”
Ackman: 85% of Pershing Square's capital is permanent public capital
“85% of our capital is in the, you know, comes from a public company. And as a result, we have very, very long duration money, and we don't need to worry about this quarter or this year in making decisions, and that, I think, is a huge advantage.”
Ackman: Heavy Index Fund Ownership Reduces Market Liquidity and Amplifies Volatility
“Having index funds as major holders of securities in stable market conditions actually reduces the liquidity of companies, and it means that sort of hedge funds and more active investors who are making day-to-day buy and sell decisions actually push securities…”
Ackman: Venture-Backed Companies Stay Private Too Long and Suffer Worse Governance
“Look, I think that a lot of companies have stayed private too long, and so I'm actually a fan of the public markets and a fan of public company governance versus the kind of governance that you've seen, certainly in many of the venture-backed companies, WeWork…”
Ackman: I invest in startups partly to identify potential competitive threats
“And I'm a relatively small investor in, you know, startups and I do it for fun. I do it because, you know, occasionally I make a good investment and also it helps me see the future in terms of what potential threats are coming. That might disrupt either a busi…”
Ackman: SoftBank's Mega-Funds Did a Massive Disservice to Startups and Markets
“And so with SoftBank injecting, you know, a hundred billion dollars in marking up the value of companies and giving them capital that they could use to postpone going public, I think it's fundamentally been a disservice to the capital markets and probably to t…”
Ackman: Complex Venture Preference Structures Hide Inaccurate Late-Stage Startup Valuations
“And so the incentive on the part of many of these sort of earlier stage funds is to have markups in the portfolio, because it's a way of showing to your investors that you're making business progress. And I think it does encourage, you know, certain kinds of b…”
Ackman: Short Sellers Uncover Corporate Fraud Much More Often Than Regulators
“I give a lot of credit to the folks at Muddy Waters who have unearthed a meaningful number of fraudulent companies, and I've yet to find an example of a regulator finding a fraudulent company. It's either a journalist often being fed by a short seller or a sho…”
Ackman: Some Tesla short sellers crossed the line trying to harm company
“In the case of Tesla, you know, I do think, you know, some of the short sellers went beyond the role of identifying overvaluation and their attempts to actually harm a company, and that's where I think it goes beyond the pale.”
Ackman: Herbalife runs paid Google ads targeting my name
“Herbalife is still running a negative campaign about me personally, which I find fairly remarkable. The way you can see this is if you Google my name I don't know if you want to do this right now. What will pop up is an advertisement And it, the advertisement …”
Pershing Square Bought $2.05 Billion in Equities While Unwinding COVID Hedge
“We'd invested two billion fifty million between March 12th and March 18th at 1230 in the stock market buying, you know, additions, adding to our portfolio, buying, repurchasing Starbucks. We had sold half the hedge for a 1,000,000,300, a little more than half …”
Ackman: Dedicated black swan funds surged 1,000% in market crash
“All they do is put on these kind of hedges waiting for disaster, and they're, you know, some of them are up a thousand percent. You know, some of the smaller ones are up a thousand percent in the last month or so.”
Ackman: Pershing Square held $71B notional CDS hedge committing $500M annually
“And we at the peak had seventy billion, actually seventy-one billion of notional insurance that cost about an average of 70 basis points per annum. So about five hundred million dollars. We committed to make five hundred million dollars a year in payments for …”
Bill Ackman Turned $27 Million in CDS Premiums Into $2.6 Billion
“We ended up spending twenty seven million on premium because we built a seventy billion dollar CDS position beginning in the third week of February, you probably had it completely on by the early, you know, first few days of March, and we started taking it off…”
Ackman: Taxpayer money shouldn't save structurally declining businesses
“It makes sense to take taxpayer money and try to save a otherwise dying business. So think about businesses that are in structural decline. This would, you know, likely put them out of business. But I wouldn't spend any of taxpayer resources on them.”
Ackman: Airline bankruptcies will not stop planes from flying
“Airplanes are not going to stop flying because airlines go bankrupt. What will happen is, you know, the, Owners of the planes, the lessors of the planes, and or the bondholders will end up, you know, controlling airlines.”
Government Shouldn't Offer Boeing Better Relief Financing Terms Than Warren Buffett
“Boeing spent many, many tens of billions of dollars on share repurchases. I do think, you know, if Buffett doesn't want to, the government shouldn't come in on terms that are more favorable than where Warren Buffett would provide the company with capital”
Ackman: Mall restructurings will convert excess retail into mixed-use facilities
“And so, again, you'll see restructurings where the lender to the mall ends up with the asset. Someone entrepreneurial decides, you know what, we don't need this much retail. We'll make half of it a hospital, medical facility, office, apartments, and then there…”
Ackman: Pandemic will force corporate America away from aggressive leverage
“I do think this is a depression era moment in the sense, psychologically, the same way that the generation of people that went through the depression thought very different about, differently about financial leverage, you know, than the generations that came a…”
Ackman: Berkshire Hathaway stock is a real bargain in the $180s
“And actually the big opportunity for Berkshire is Berkshire itself prior to the coronavirus crisis was a cheap stock, you know, in the low 200, you know, in the one eighties it's, you know, a real bargain.”
Ackman: Unlike Short Selling, Long Investment Mistakes Shrink as Portfolio Percentages
“The good news is when you buy things as opposed to short things, your mistakes become smaller.”
Berkshire Hathaway's Next Leaders Will Aggressively Push Operating Margins and Efficiency
“It appears to us the next generation is going to be much more focused on, you know, extracting the most from the businesses Berkshire owns.”
Burlington Northern Underperforms Profit Potential Due to Warren Buffett's Hands-Off Style
“I mean, just looking at the Burlington Northern Railroad, we know a lot about railroads by virtue of our experience at Canadian Pacific. It's the largest You know, it should be the most profitable, highest margin railroad in the world. It's not. And I think a …”
Ackman: Pershing Square will eventually hold 100% of capital in public vehicle
“The vast majority of our capital today is 85%, you know, over time that will be 90 or 95, or eventually a hundred percent of our capital will be in a public enterprise that we're the largest shareholder of.”
Ackman: Herbalife settled with SEC for $20M over China disclosures
“In the last six months, and you can Google it, Herbalife paid, settled with the SEC for twenty million dollars for misleadingly describing their China business and their public finance, because it actually, the compensation scheme is precisely the same as, and…”
Ackman: Inability to Short Venture-Backed Startups Enables WeWork-Style Value Destruction
“The market you can't short today is basically, or difficult to short today is the venture backed market. And that's why you're going to see, that's why the WeWorks of the world are allowed to happen and billions of dollars of money gets wasted.”