Bill Ackman on Investment Mistakes, the SVB Crisis and Economic Policy

In a March 2023 interview, Pershing Square founder Bill Ackman discusses investment mistakes, the unfolding Silicon Valley Bank crisis, and his views on taxation and inequality with Harry Stebbings. His market positions, proposals and predictions are time-specific and reflect the perspective of an investor with financial interests.

Ackman and David Berkowitz met more than 100 prospective investors before raising roughly $3.1 million for Gotham Partners. Six people ultimately backed them. He says the pitch emphasized detailed research, a value-investing strategy, their own money at risk and a record of achievement, despite their lack of an investment track record.

Entrepreneurs were particularly receptive to backing two young founders, Ackman recalls. One person declined to invest in the fund but acted on their written ideas; after those investments performed well, he contributed $500,000, bringing them above their minimum fundraising threshold.

Ackman says Berkowitz remains a trusted friend. They shared an apartment and an office while starting out and later entrusted each other with important family responsibilities. His lesson is to choose business partners carefully and look for someone one can trust through difficult periods.

He says he forms an initial view of character quickly but the level of trust depends on the task. In his account, a few disappointments occurred when he ignored his own reservations. He also knew Berkowitz for some time before they started working together.

Asked what drives him, Ackman says he is moving toward happiness, relationships, achievement and self-actualization. He describes himself as generally optimistic despite professional setbacks, a divorce and periods of sadness.

He recalls challenges around his criticism of bond insurer MBIA’s credit rating, subsequent investigations and litigation, and Gotham’s winding down. He also points to a difficult period from late 2015 through 2017. These are his recollections of complicated events rather than an adjudication of the disputes.

During hard periods he tries to sleep, exercise, eat well, surround himself with people who care and make some progress each day. His tennis analogy is not to let a past mistake distract from the next point. Once a setback is over, however, he examines what could be learned.

Gotham had expanded from liquid securities into private investments while retaining a structure that allowed redemptions. Ackman says the mismatch between illiquid assets and redeemable liabilities contributed to the wind-down. He describes Pershing Square’s focus on liquid large-cap public companies as a lesson from that experience.

The firm also examines missed opportunities, not only losses on positions it bought. An investment that fit the team’s knowledge but was never sufficiently researched can be costly too. Ackman believes the opportunity cost of missing a major winner can exceed the loss on a bad investment.

He says Pershing Square bought roughly $1 billion of Netflix after its shares had fallen about 50%, then sold after the next quarter’s results undermined its thesis. He estimates the loss at about $400 million. Although he calls the firm a long-term investor, new information led it to change course within months.

Ackman also regards insufficient position size as a mistake. He says an interest-rate hedge made about $2.8 billion, but believes a larger bet could have produced more. That retrospective estimate is his judgment, not a guaranteed alternative result.

Position size begins with the amount of capital the firm is willing to risk. He uses Universal Music Group as an example of a business he considers robust, lightly indebted and predictable, where he believes the risk of permanent impairment is low enough to support a large position. Pershing Square owns the shares and Ackman is a board member.

By contrast, he says an interest-rate derivative was far out of the money with a limited life, making the potential loss high. The position was about 1.5%, under 2%, of capital; in hindsight he thinks it could have been larger. His risk estimates and proposed sizes are not assurances of future performance.

A hedge can also be attractive on its own merits, he argues: if a position both protects the portfolio and offers a favorable payoff, he may size it differently from ordinary insurance. He compares it to buying more coverage when one expects a storm.

On changing his mind, Ackman says facts inconsistent with the original thesis are a signal. He says concentrated positions mean mistakes can produce large headline losses. He claims roughly 90% of the firm’s investments over twenty years were profitable; the interview does not independently verify that figure or define its measurement.

Ackman says public advocacy initially helped a small activist fund persuade other shareholders when its own stake was too small to force change. He now also values Twitter as a way to put arguments before people in finance, media and government. Public statements can serve his policy aims as well as his investment strategy.

He argues that financial independence gives him freedom to express views that might cost others their jobs. He describes using social media to speak about the bank crisis and says he wanted officials to guarantee deposits to prevent runs. This reflects his 2023 view, not a neutral assessment of the risks.

Harry asks whether Pershing Square was short regional banks. Ackman denies ever being short or long them and says he decided not to invest so he could speak publicly without that direct conflict. He says the firm did own Fannie Mae and Freddie Mac and had broad exposure to American businesses and markets.

Ackman argues that SVB’s unusually large exposure to long-duration fixed-income assets made it different from First Republic. He says uncertainty about deposits could nevertheless spread to other banks. His assessment of their balance sheets and safety was made during a fast-moving crisis.

His proposed response is a temporary system-wide deposit guarantee, followed by higher deposit-insurance limits with premiums. He believes this would calm depositors while a longer-term framework is developed. The interview does not establish that his proposal would prevent runs or resolve its trade-offs.

He describes three perceived tiers: the assurances given to SVB and Signature depositors, the implicit support he believes large systemically important banks enjoy, and ordinary deposit-insurance limits at other banks. These are his characterization of the situation at that moment, not an account of current coverage.

Ackman worries that deposits moving to very large banks could reduce lending by regional and community institutions. He says smaller banks provide specialized service and finance areas such as small businesses, construction and real estate. Harry asks whether limited partners are wrong to press fund managers to move their cash.

Ackman says his firm keeps limited cash for daily needs and otherwise uses US Treasury money-market accounts or Treasury bills; it holds operating cash at large institutions and monitors them. He also considers returning deposits to SVB given the protections he understood to be in place. These are his practices and contemporaneous views, not individualized financial advice.

Harry raises moral hazard: would broad guarantees encourage poor behavior? Ackman says his suggested government guarantee should be temporary and followed by insurance priced through premiums. He argues that the existing $250,000 limit can be insufficient for businesses meeting payroll and working-capital needs.

If he were in charge, he says he would coordinate with the FDIC and Treasury to stabilize deposits and increase insurance levels. He urges caution about further interest-rate increases while regional banks are under pressure. These were his proposals during the crisis, not policies shown to have been adopted.

He suggests increasing immigration as a way to expand labor supply while addressing wage pressure, instead of deliberately putting people out of work. Harry then asks about politics; Ackman predicts Trump would beat Biden in a hypothetical rematch and favors Jamie Dimon as a potential Democratic candidate. These are his March 2023 political preferences and prediction.

He says he is open to politics someday, though he does not expect his investment work to become boring soon. Discussing money, he says financial resources give him independence and the ability to support causes, including through investment and philanthropy.

Ackman estimates he had given more than $600 million to philanthropy over the preceding decade. He believes profitable businesses can often address problems more effectively than philanthropy alone, and says he likes investments that combine financial returns with solving a problem. The amount and outcomes are his own account.

On marriage, he says compatibility in values and priorities matters, and credits his relationship with Neri for common interests and mutual support. Both have demanding work, making deliberate time together important; he remembers long walks during the pandemic.

Asked about raising children with wealth, Ackman acknowledges his own privileged upbringing and says he does not have a precise answer. He places weight on education, financial security and parents’ lessons about work and money. His experiences do not establish a universal rule for parenting.

In the quick-fire round, he forecasts persistent inflation of around 3–4% for the foreseeable future and argues long-term bond yields did not reflect it. This is his 2023 investment view, not an established future outcome.

He names Warren Buffett, Leon Black and his parents among people he admires. He credits his mother’s local campaign as an early example of activism and says he also learned from watching his father make mistakes.

For a ten-year long investment, he chooses Universal Music Group, which his firm owns and where he sits on the board. He expects global music subscriptions and streaming to increase and considers the business capital-light. His confidence is a forecast with a direct financial interest.

For a hypothetical ten-year short, he declines to name a public company and suggests some incumbents could be disrupted by blockchain. This is a broad speculative view, not a disclosed identified short position.

He recounts the proposed SPAC transaction involving Universal Music and says regulators rejected it for technical reasons. He considers it aligned with shareholders and favors more principle-based regulation. That is his view of the transaction and regulatory decision, not an independent finding.

On inequality, Ackman argues that more people need ownership of appreciating assets. He proposes a tax-exempt account funded at birth with an illustrative $6,500 or $7,000, invested in an index fund and left untouched until retirement.

He estimates that an account could reach $1 million by age 65 if it earned historical market returns, and guesses the program might cost around $20 billion annually. Both figures depend on assumptions, including returns, births and design; he offers them as illustrative estimates, not guarantees or a detailed fiscal plan.

He criticizes like-kind real-estate exchanges and proposes taxing certain borrowing proceeds above an owner’s basis. He also argues that asset managers do not need the tax advantage associated with carried interest. These are his policy proposals, not a description of enacted changes.

Ackman opposes a wealth-tax proposal he associates with President Biden, arguing that taxing gains on private holdings could create liquidity problems for founders. His example and claim about the policy’s effects are his characterization; the interview does not establish the proposal’s precise eligibility or mechanics.

He lists geopolitical tensions, inflation, banking instability and political division among his concerns. He supports aid for Ukraine while arguing that the United States should replenish defense stocks. His comments reflect the circumstances and political views expressed in March 2023.

Despite those concerns, he says he is optimistic about America over ten years and hopes for a political leader who can bring people together. Asked where he will be in five years, he hopes to have learned from mistakes and says he does not know whether politics will be involved.

Harry thanks Ackman for answering his personal questions and closes the conversation.