Bill Ackman
Activist Value
Ackman believes in owning a small number of high-quality businesses that generate strong free cash flow, have pricing power, and operate in industries with high barriers to entry. He focuses on businesses he can understand deeply, with predictable revenue streams and limited leverage. Unlike passive value investors, Ackman actively engages with management to unlock value.
Methodology fidelity
Thematic proxySources reviewed 2026-08-24Pershing Square’s published principles emphasize simple, predictable, free-cash-flow-generative businesses; dominant positions and barriers to entry; strong balance sheets; excellent management and governance; attractive valuation; and, when relevant, an actionable catalyst. Pershing does not publish this nine-metric screen. Every numeric cutoff and the 7-of-9 verdict is an app proxy, positive revenue alone is only a weak stand-in for predictability, and public statements cannot automate management quality or activist catalysts.
Valuation Method
App FCF DCF proxy
App modelPershing Square values each business case by case. The app uses a ten-year FCF DCF with a 10% discount rate and 3% terminal growth for consistency; those constants are not Ackman-published rules.
Screening implementation (9 criteria)
| # | Criterion | Metric | Threshold | Data Source |
|---|---|---|---|---|
| 1 | Revenue Growth | 3-Year Average Revenue Growth | >= 5% | 10-K Revenue (3-year comparison) |
| 2 | Operating Margin | Operating Income / Revenue | >= 15% | 10-K Operating Income, Revenue |
| 3 | Free Cash Flow Yield | (OCF - CapEx) / Market Cap | >= 4% | 10-K Cash Flow Statement, Market Data |
| 4 | Return on Equity | Net Income / Shareholders Equity | >= 15% | 10-K Net Income, Equity |
| 5 | Conservative Leverage | Total Debt / Shareholders Equity | <= 1.0 | 10-K Balance Sheet |
| 6 | Revenue Predictability | Positive revenue history (weak app proxy) | Positive in 5 consecutive years; does not prove predictability | 10-K Revenue History |
| 7 | Adequate Size | Market Capitalization | >= $2B | Market Data |
| 8 | Reasonable Valuation | Price / Free Cash Flow | <= 25 | 10-K Cash Flow, Market Data |
| 9 | Earnings Growth Consistency | Positive EPS Growth in 3+ of Last 5 Years | >= 3 of 5 years | 10-K EPS History |
Intrinsic Value Method
Ackman FCF Valuation
App modelPV of projected FCF (10yr) + Terminal Value, discounted at 10%Projects free cash flow forward using historical growth rate, discounts at 10% required return, adds terminal value assuming 3% perpetual growth.
Verdict Logic
BUY if 7+ criteria pass and stock trades below FCF-based intrinsic value. PASS if 7+ criteria pass but no margin of safety. NEUTRAL if 5-6 criteria pass. FAIL if fewer than 5 pass.
What Would Bill Ackman Buy Today?
Sources
Pershing Square Annual Letters
primary2004-2024Bill Ackman
Detailed investment theses and portfolio commentary revealing Ackman's focus on quality, free cash flow, and activist catalysts.
View source →Pershing Square Core Investment Principles
primary2024Pershing Square Capital Management
The firm’s own presentation lists a simple, predictable, free-cash-flow-generative business and a strong balance sheet among its core principles.
View source →