The world of high finance often pits legendary investors against each other in quiet competition. Two of the most prominent figures, Warren Buffett and Bill Ackman, have historically approached investing in distinct ways – yet both have delivered impressive returns. While Buffett, the “Oracle of Omaha,” built his empire on patient value investing, Ackman made a name for himself as an aggressive activist investor. Now, Ackman is signaling a possible shift, aiming to emulate Buffett’s long-term, holding-company model.
The Similarities: Core Strategies of Elite Returns
Despite their different public personas, Buffett and Ackman share key principles that underpin their success.
Concentrated Portfolios: Both investors defy conventional wisdom by concentrating their holdings. Instead of diversifying across dozens of stocks, they place significant bets on a select few. Buffett’s Berkshire Hathaway holds nearly half its $311 billion portfolio in just three stocks: Apple, American Express, and Bank of America. Ackman’s Pershing Square follows suit, with Uber, Brookfield Corp., and Howard Hughes Holdings comprising over half of its $14.6 billion portfolio.
This strategy works because both managers have deep financial insight and the ability to identify undervalued companies.
Buy-and-Hold Discipline: While Ackman was once known for taking activist positions and quickly exiting, he now emphasizes long-term holdings. Buffett’s approach has always been consistent: his favorite holding period is “forever,” prioritizing long-term outperformance over short-term market fluctuations. Both investors now favor durable businesses positioned for sustained growth.
Exceptional Performance: Over six decades, Buffett’s Berkshire Hathaway has averaged a 19.9% annual return – a remarkable track record. Ackman’s Pershing Square, founded in 2004, isn’t far behind, compounding at 19.8% annually. While Ackman’s history is shorter and fees apply, the consistent elite returns are undeniable.
The Differences: Tactics and Scale
Where these investors diverge is in their operational methods and financial structures.
Active vs. Passive Investment: Buffett builds long-term stakes in established businesses, including private companies like See’s Candies and Geico. Ackman traditionally focuses solely on publicly traded equities, seeking opportunities for activist intervention. The difference is one of control: Buffett owns businesses outright, while Ackman influences them from the outside.
Structure and Fees: Berkshire Hathaway is a publicly traded holding company with no management fees for investors. Ackman’s Pershing Square is a hedge fund charging a 1.5% annual fee plus 16% of performance, creating a high-cost but potentially high-reward structure.
Risk Profiles and Scale: Ackman’s activist approach introduces greater volatility, marked by bold bets on companies like Canadian Pacific and Herbalife. Buffett’s more conservative portfolio, backed by over $300 billion in cash, allows for strategic acquisitions that Ackman can’t yet replicate.
What This Means: The Future of Value Investing
Buffett’s announced retirement in 2025 and Ackman’s ambition to build a “modern Berkshire Hathaway” suggest a possible convergence of strategies. Buffett’s legacy is long-term value, and Ackman appears to be shifting towards a similar model. Both managers have proven their ability to maximize shareholder returns, albeit through different means.
Whether Ackman can fully emulate Buffett remains to be seen, but the alignment in long-term goals indicates that the future of value investing may see a blend of patient capital allocation and strategic intervention.
