Bill Ackman channels Warren Buffett with his $64 billion bid for Universal Music Group
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Good morning. Is Bill Ackman like Warren Buffett?
The CEO of Pershing Square Capital Management cited a desire to unleash “long-term value” when making yesterday’s $64 billion bid to acquire Universal Music Group. He’s long admired the chairman of Berkshire Hathaway, who handed the CEO role to Greg Abel earlier this year. And Ackman revived talk of creating a modern-day Berkshire last month when filing to list Pershing with a new fund on the New York Stock Exchange.
As investors look at Pershing’s impending IPO as an alternative to Berkshire in the world of value investing, it’s worth comparing the two men and the companies they’ve built.
Investing Approach – Buffett has a six-decade track record of 20% compound annual returns to investors, roughly double the S&P 500. Ackman’s hedge fund has delivered similar returns since its 2004 launch, not including fees. But it’s a choppier journey when you’re an activist investor who names enemies, looks for problems to fix and wages war in public. Pershing’s turnover is double that of Berkshire, though both are relatively low, and it’s a fraction the size. Ackman’s focus on fee growth and asset management is also more akin to Blackstone than Berkshire. Capital can be more nimble than a conglomerate. But Ackman’s UMG bid reinforces a philosophy embraced by Buffett, who prefers to buy “wonderful businesses at fair prices” and work privately with management to unlock value.
Personal Brand – The differences in temperament and tactics are stark. It’s hard to compete with a billionaire who clips McDonald’s coupons and still lives in the house he bought for $31,500 in 1958. While Ackman says he turns off lights and drives around to look for cheap parking, I know who I’d cast for the role of George Bailey in It’s A Wonderful Life. Among other things, Buffett is polite, down to earth, and feels a civic duty to pay higher taxes. Ackman is more polarizing, using his platform to condemn DEI as anti-capitalist, speak out against tariffs, bet on political races, and take a hardball approach to “fixing things.” An everyman, he’s not. Ackman’s unsuccessful campaign against Herbalife made him look out of touch, at least to those of us who had plenty of experience with multilevel-marketing companies.
Still, track record tends to trump personality when it comes to making money. Shares in Fannie Mae and Freddie Mac jumped 40% the day after Ackman called them “stupidly cheap.” Those who love Ackman, vitriol and all, probably don’t care if he morphs into Berkshire’s model as long as he delivers results.
Contact CEO Daily via Diane Brady at diane.brady@fortune.com
This story was originally featured on Fortune.com