Hedge fund manager Bill Ackman called Warren Buffett’s investment strategy too conservative and claimed Berkshire Hathaway’s businesses would likely run better under the next chief executive.
The 94-year-old Buffett has been regarded as one of the world’s most successful investors, earning the nickname the “Oracle of Omaha.”
But Ackman, who runs Pershing Square Capital Management, argued during a recent podcast appearance that Buffett’s investment strategy has grown too cautious.
He believes Greg Abel, Buffett’s planned successor, will do a better job running the holding company’s businesses.
“Now you’re going to have more of an operator in charge of Berkshire and I think there’s a lot of value that can be created at Berkshire with better operations,” he told “The World According to Boyar” on Thursday.
Ackman used the Burlington Northern Railroad, which is owned by Berkshire, as an example.
While it may be the largest railroad, “it’s probably the least efficiently operated of all the railroads years ago,” Ackman claimed.
When Abel takes the helm at Berkshire, he’ll likely use a hands-on approach to improve the firm’s businesses, Ackman said.
“I think the next generation of leadership will be a little more disciplined about making sure the right people run the companies,” he added.
Ackman, a former investor in Berkshire, also took aim at Buffett’s investment strategy, revealing that he tried in vain to get him to make a handful of lucrative investments in the past.
Ackman – who made billions on hedges predicting the COVID-induced market crash – said he called Buffett in February 2020 to warn him about the pandemic.
“He dismissed my concerns and when the proverbial sh-t hit the fan, I thought Buffett would be taking advantage of this amazing opportunity to buy stocks, and he was frozen,” Ackman said.
Ackman also claimed he tried to broker a sale of Hilton Hotels to Berkshire, but Buffet passed.
Investment firm Blackstone ended up buying the hotel chain in an all-cash leveraged buyout worth $26 billion in 2007.
“It would have been an incredible home run for Berkshire,” Ackman said.
He blamed the missed opportunities on Buffett’s refusal to switch up his investment strategy.
“Warren sort of has this price discipline where if it trades for more than 10 times operating income, no matter how good the business, he won’t buy it, and that’s worked really well for him for 60, 70 years, [so] why should he change?” he said.
“But we’re in a world where there’s some amazing businesses that have very long-term growth trajectories, where you have to pay more than 10 times operating income to succeed in buying a stock or buying a business, and I think the market has gotten overpriced relative to what he’s prepared to pay,” he added.
Despite the harsh comments, Ackman made it clear he still admires the iconic investor and hopes to exceed his success.
“My long-term ambition has always been to have a better record than Buffett,” he said.
He added that he wants to create a “modern day version” of Berkshire Hathaway with real estate company Howard Hughes as the base.
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