Can Bill Ackman Build the Next Berkshire Hathaway?

In the world of value investing, few names command as much respect as Warren Buffett's Berkshire Hathaway. For decades, Buffett's disciplined capital allocation and long-term compounding strategies have defined a model of sustained wealth creation. Now, a new question looms: Can Bill Ackman, the activist investor turned long-term strategist, replicate this success and build the next Berkshire Hathaway?

Ackman's Evolution: From Activist to Compounding Architect

Bill Ackman's capital allocation strategy in 2025 reflects a marked shift toward long-term, high-conviction investments in durable businesses. According to AcquirersMultiple, Ackman's Pershing Square portfolio is heavily concentrated in companies like Uber Technologies (20% of assets) and Brookfield Corporation (19%), both of which exemplify his preference for asset-light, fee-driven models with embedded growth. His stake in Howard Hughes Holdings (HHH) has become a cornerstone of this strategy, with Ackman aiming to transform it into a "modern-day Berkshire" by acquiring Vantage Group, a specialty insurance firm. This move would mirror Buffett's use of float-insurance premiums as a source of low-cost capital-to fund broader investments as described in a Substack article.

Ackman's portfolio also includes significant positions in Amazon, Alphabet, and UnitedHealth Group, all of which are seen as long-duration compounders due to their scalable business models and competitive advantages. Unlike his earlier activist campaigns, which often targeted short-to-medium-term gains, Ackman now emphasizes operational improvements and value unlocking over time, a philosophy that aligns closely with Buffett's buy-and-hold ethos.

Berkshire's Enduring Model: Discipline and Durable Cash Flows

Berkshire Hathaway's 2025 strategy, under the stewardship of Greg Abel, continues to adhere to Buffett's core principles: disciplined capital allocation, undervalued quality businesses, and predictable cash flows. As RuleOneInvesting states, Berkshire added positions in healthcare (e.g., UnitedHealth) and cyclical industries (e.g., Lennar and D.R. Horton) while reducing exposure to large-cap tech stocks like Apple. The company also maintained a cash reserve of over $381 billion, a buffer Buffett described as critical for navigating economic uncertainty.

Berkshire's success lies in its ability to deploy capital efficiently, often through acquisitions or dividends, while avoiding high management fees. Its holding company structure allows it to own entire businesses, fostering a long-term partnership with management teams-a stark contrast to Ackman's hedge fund model, which charges a 1.5% management fee and 16% performance fee.

Strategic Parallels and Structural Differences

Ackman's approach increasingly mirrors Buffett's, particularly in its focus on concentrated, high-conviction investments. Both investors prioritize businesses with durable competitive advantages and long-duration cash flows. For example, Ackman's top five holdings account for the majority of Pershing Square's capital, much like Berkshire's concentrated portfolio. This strategy has historically delivered strong compounding returns: Ackman's 19.8% annualized return since 2004 closely matches Buffett's 19.9% over 60 years.

However, structural differences persist. Berkshire's holding company model avoids the fee-heavy structure of hedge funds, enabling higher net returns for investors. Additionally, Ackman's activist background-marked by aggressive short-term campaigns-contrasts with Buffett's patient, long-term orientation. Yet Ackman's recent pivot toward capital-efficient businesses suggests a strategic evolution toward the Berkshire model.

Challenges and Opportunities

Ackman's quest to build a Berkshire-like entity faces hurdles. Deploying $381 billion in cash reserves is a daunting task for any investor, and Pershing Square's fee structure reduces net returns compared to Berkshire's zero-management-fee model. Moreover, the insurance-driven float mechanism that fuels Berkshire's compounding is harder to replicate in a hedge fund context.

Yet Ackman's access to high-conviction, long-duration assets-such as Uber's evolving platform and Brookfield's fee-based growth-provides a foundation for compounding. If he can sustain his focus on durable businesses and avoid the pitfalls of short-termism, the parallels to Berkshire's model may prove more than symbolic.

Conclusion

While Bill Ackman's journey to building the next Berkshire Hathaway is far from complete, his capital allocation and compounding strategies in 2025 suggest a compelling alignment with Buffett's principles. By concentrating capital in durable, scalable businesses and embracing a long-term horizon, Ackman has positioned Pershing Square to compete with the very model he once sought to challenge. Whether this vision materializes will depend on his ability to navigate structural limitations and maintain the discipline that defines Berkshire's success.