Bill Ackman’s Stocks Went Up

A couple of times recently, I have contrasted Bill Ackman’s old-school approach to managing a hedge fund — he’s a famous guy, he makes concentrated high-conviction bets on stocks, he doesn’t hedge much — with the more scientific modern approach of multimanager multistrategy “pod shop” funds, which hire many portfolio managers to make distinct bets, hedging out factor exposure and isolating only their alpha, their skill, their excess returns that are not correlated to the broader market. I noted that the old-school approach seems to have become less popular with institutional investors, and that the pod shops have an advantage in raising money and charging fees these days. Ackman’s simple legible approach, meanwhile, appeals to retail investors, and he’s out raising money from ordinary investors and offering lower fees.

But I neglected to mention one incredibly important advantage of Ackman’s approach, which is that if you do it right, you don’t have to do much. Pick like 10 stocks that are going to go up, buy them all, and then chill. Oh, if the stocks go down, that creates a lot of work for you: You might have to sell them and buy other stocks (that will go up), you might have to reevaluate your process and rethink your life choices, maybe you have to fire an analyst and hire a new one, plus you are going to be spending a lot of time calling up your investors and reassuring them so they don’t withdraw their money.2 But you are trying to pick stocks that go up, ideally ones that go up more than the rest of the market, and if you succeed then you’re done for the year. Pick stocks, buy them, watch them go up, go to the beach. Or go on Twitter! (Or, now, X.) Spend your days getting in fights online, because your lavishly gainful employment only requires like 45 minutes of work per year.