Bill Ackman Will Never Be The Next Warren Buffett

What went wrong for Bill Ackman?

Ackman, who set out to raise some $25 billion in hopes of becoming the next Warren Buffett, pulled his initial public offering. I Photo Cadwalader

The pushy New York-based hedge fund manager, who set out to raise some $25 billion in hopes of becoming the next Warren Buffett, pulled his initial public offering. The foreboding message: reaching the investing masses is hard to do.

Writing for Reuters Breakingviews, Lauren Silva Laughlin noted that Ackman has long wanted to manage capital that’s available indefinitely, “like Warren,” according to a 45-minute presentation posted on retailroadshow.com.

His closed-end Pershing Square USA fund would have enabled him to back companies, and there are faint similarities with his idol.

Both billionaires go big or go home: Buffett with Apple, which accounts for 40% of Berkshire Hathaway’s equity portfolio, and Pershing Square’s chunky stakes in Chipotle Mexican Grill, Canadian Pacific Railway, and other companies where it has pushed for change.

Each man has failed, too: Buffett in newspapers and airlines, Ackman in Valeant Pharmaceuticals, and Herbalife.

If past returns were the only benchmark, Ackman’s pitch might resonate. He says that since 2004 his collective fund returns have surpassed 2,000%, even after fees, more than tripling the performance by Berkshire and the S&P 500 Index over the same span.

Other differences are significant, too. Buffett has six decades under his belt compared to Ackman’s two.

As funds get older and bigger, beating the market is harder—a handicap for $950 billion Berkshire. Ackman also talks about shaking up management teams, as private equity firms do, only without taking control or borrowing as much.

The Oracle of Omaha has lived in the same Nebraska home for more than 50 years; Ackman paid $23 million for a Manhattan penthouse in 2018. Aspiring to be the next Buffett is ambitious, but it takes far more than just invoking his name.