Bill Ackman

I don't regard Bill Ackman as a macro-oriented investor so when he makes the occaisonal macro call on TV, it usually gets more attention that it deserves. But he's a great value/growth investor who does an incredible job managing an ultra-focused small portfolio of solid companies.

He had a tough start to the year, losing 26% in the first half but his letter says that was narrowed to -10.6% by August 16. Even with the drawdown , that's 1517% since inception in 2004 or 16.1% annualized. There aren't many who can boast that kind of return, including 26.9%, 70.2% and 58.1% in the past three years.

His latest letter has surfaced online (read it here) and it touches on his macro approach:

Our approach to investing capital is to find extremely durable, well-capitalized, high-quality growth companies that can
survive any storm. If we are successful in our investment selection, we can largely ignore shorter-term factors that drive
stock market movements and remain focused on our portfolio companies’ underlying business performance. As long as
our companies continue to deliver the results we expect, we do not need to make any material adjustments to our portfolio’s
composition. In other words, we can sail through the stormy seas with a focus on the long-term horizon.

We don’t, however, ignore global events that create risk and uncertainty. While we try to consider every potential risk
that could impact our portfolio companies and invest in businesses that can withstand these risks, the world is and will
remain a highly uncertain place, so a high degree of vigilance will always remain appropriate. Staying knowledgeable about
global macro and political events is important for assessing risk for our portfolio companies and in selecting new company
investments. It also occasionally offers opportunities for profits from carefully selected hedging transactions.

One of our strategy’s important competitive advantages is our ability to profit from unanticipated market events enabling us
to generate large profits and liquidity from hedges during periods when equity prices are likely to decline substantially. Our
investments in: (1) index and single-name credit default swaps before the Great Financial Crisis, (2) investment grade and
high yield index CDS in the weeks prior to Covid impacting the markets, and (3) interest rate swaptions in late 2020 to the
present day in light of our concerns that interest rates would rise more quickly and remain at higher levels than anticipated,
are all good examples of the importance of our understanding and foreseeing the impact of global macro risks and hedging
them when we can identify an asymmetric means to do so.

His portfolio consists of just a handful of names:

  • QSR
  • CMG
  • CP
  • HHC
  • LOW
  • UMG
  • HLT

I only know a few investors running a +$100k account with just seven names, let alone $18.5 billion.