As billionaire investor Bill Ackman launches his new retail-friendly closed-end fund, Pershing Square USA, he is making a bold case against standard index investing: deep research into a handful of exceptional companies vastly outpaces the broader market.
The Math Behind The Outperformance
For retail investors wondering why they shouldn’t just park their cash in an S&P 500 index fund, Ackman points directly to his two-decade track record.
“In January of 2004… you invested $10,000… at the end of last year, you would have had $90,000” in the broader market, Ackman explained in a comversation with TheStreet. “But had you invested in… our strategy… you would have had $460,000.”
Ackman attributes this massive wealth generation—achieved net of all fees—to actively picking the absolute best the index has to offer rather than blindly buying the entire basket.
Betting Big On ‘Concentrated Conviction’
Rather than holding hundreds of equities, Pershing Square targets just a dozen to 15 “super durable growth companies.” During a rapid-fire exchange, Ackman definitively chose “concentrated conviction” over diversified safety.
“We are a very concentrated investor,” Ackman noted. “The top three, the top four can be half the portfolio.” By deeply researching and often stepping in to help these businesses succeed, Ackman is confident he can generate …
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