Billionaire investor Bill Ackman has acquired a significant stake in Alphabet Inc. GOOG GOOGL, drawing parallels to Warren Buffett‘s investment philosophy.
What Happened: Ackman’s investment approach aligns with Buffett’s iconic strategy of seizing opportunities when others are fearful and investing in companies with enduring competitive advantages.
Ackman revealed his rationale for betting on Alphabet at the CNBC Delivering Alpha Summit.
He capitalized on doubts about Alphabet’s artificial intelligence capabilities, using this skepticism as an opportunity to acquire shares at an attractive price.
Comparing Alphabet to Netflix Inc. NFLX, which he had invested in and exited within months last year, Ackman determined that the search and advertising giant was a more predictable wager for long-term commitment, reported Business Insider.
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Ackman acknowledged the influence of Warren Buffett on his investment philosophy. “I’ve been a kind of Warren Buffett devotee,” he told CNBC. “He’s been my unofficial mentor for many years.”
One of the key factors contributing to Buffett’s investment success is his access to permanent capital, which allows him to take a long-term view without being concerned about short-term market fluctuations.
Ackman’s fund, Pershing Square Capital Management, initially acquired approximately 8.1 million Class C shares and 2.2 million Class A shares of Alphabet in the first quarter of the year, amounting to nearly $1.1 billion by the end of March.
With continued confidence, the fund added 1.3 million Class C shares in the second quarter, and as of June 30, the value of the position had risen to $1.4 billion.
“We’ve bought more in the $120s, it’s our second-largest investment,” Ackman revealed, demonstrating his ongoing faith in Alphabet’s prospects.
Currently, Alphabet constitutes approximately 16% to 17% of the fund’s capital, indicating Ackman’s firm conviction in the company’s long-term potential, the report noted.
Why It’s Important: Previously, the Pershing Square founder was asked if he would ever run for office. At the time, he said, “I love my day job… I’ve got a lot more here…my personal business plan … goal, of course, is to have a better record than Mr. [Warren] Buffett.”
He added that Buffett has a track record of over 60 years, while he has been at it for only 30 years.
Ackman also said the U.S. would be well served if it had younger alternative candidates to Donald Trump and President Joe Biden.
Read Next: Here Are The Eyebrow-Raising Moves Warren Buffett, Michael Burry And Bill Ackman Made Recently
Photo: Courtesy of Wikimedia Commons
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