- Bill Ackman discussed his loss-making investment in Warren Buffett’s Berkshire Hathaway during a virtual speech at the Sohn Hearts & Minds conference this week, according to the Australian Financial Review.
- “We have probably lost more money in Berkshire than anyone in the world,” the billionaire investor and Pershing Square chief said.
- Pershing Square invested in Buffett’s company in the second quarter of 2019, held a $1 billion stake at the end of March, and sold the entire position by May.
- Ackman and his team exited Berkshire partly because they were “expecting Buffett to be super aggressive as markets came in, and we were surprised that he was not more so,” he said.
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Billionaire investor Bill Ackman bemoaned his losing bet on Warren Buffett’s Berkshire Hathaway during a virtual appearance at the Sohn Hearts & Minds investment conference this week, according to the Australian Financial Review.
“We have probably lost more money in Berkshire than anyone in the world,” Ackman said.
His Pershing Square hedge fund took a position in the famed investor’s conglomerate in the second quarter of 2019. It later leveraged some of the $2.6 billion it made hedging the pandemic in spring, boosting its holding to 5.5 million shares worth almost $1 billion at the end of March.
Ackman recalled telling his team they shouldn’t sell Berkshire because it would wade into the danger and snap up bargains, as it did during the financial crisis and other tumultuous periods.
"We were expecting Buffett to be super aggressive as markets came in, and we were surprised that he was not more so," the hedge-fund manager said, according to AFR. He added that he views Buffett as an "unofficial mentor" and has "enormous respect" for him, the publication said.
Buffett confirmed a lack of big deals during the company's annual meeting in May. The investor seemed primarily focused on weathering the pandemic, and disclosed that Berkshire had sold its stakes in the "big four" US airlines in April.
Pershing sold its entire Berkshire position shortly after, stomaching a roughly 10% loss, Ackman said at the conference, according to AFR.
Ackman and his team were taken aback that Buffett hadn't tapped his vast cash reserves during the downturn, decided they could be more nimble than Berkshire due to their smaller size, and wanted to free up cash to deploy if markets tumbled again, they said on a conference call in May.
Berkshire's second-quarter portfolio update likely confirmed their view. It revealed that Buffett and his team had not only dumped their airline stocks, but also taken a knife to numerous financial holdings including Wells Fargo and JPMorgan, fueling $12.8 billion in net equity sales in the period.
However, Berkshire shifted gears last quarter, announcing about $19 billion worth of investments. The company struck deals with Dominion Energy and Scripps, and also bought shares in Bank of America, Snowflake, and five Japanese trading companies.
Moreover, its third-quarter earnings last week revealed it repurchased a record $9 billion of its own shares in the period, and made net stock purchases of $4.8 billion. It will reveal which US stocks it bought and sold in a regulatory filing in the next few days.