Billionaire investor Bill Ackman says the stock market still offers compelling value despite the recent rally to new all-time highs.
In a new Bloomberg interview, Ackman says he sees several converging forces he believes the market has not yet fully priced in.
“We have massive AI spending. We have massive energy spending. We have a tax bill that’s driving investment. Every day there are how many deals that are being announced. The administration is very supportive of transactions as opposed to an FTC, which would stop everything. So I think you’re going to see lots of reason to be bullish on markets generally.”
Amid the bullish backdrop, the billionaire believes the best businesses in the world are still attractively priced even after the market’s recovery from its March 30th low.
“We’re above stupidly cheap bottom. For each of our companies, we build a model. Our go-forward next three-year IRR (internal rate of return) was something north of 30% at the bottom. You don’t see that with really high-quality companies. It’s probably now in the mid-20s. It’s still a very high rate of projected return for some of the best businesses in the world. That suggests to me the market’s cheap. Some of this is a case where the highest quality companies are cheap.”
While Ackman is bullish on the markets, he says he sees one factor as the primary risk to his constructive outlook.
“We have a war still underway, but I think we have by far the upper hand… That’s the biggest overhang on the market. We close the Strait. It obviously has an impact. Some four percentage points or something of oil on a daily basis can move a market. And that has an impact, causes inflation in the short term. But I think it’s a short-term phenomenon.”
As of Wednesday’s close, the S&P 500 is trading at 7,135.
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