Billionaire hedge fund manager Bill Ackman believes high-quality stocks are still cheap even though the market recently hit all-time highs.
On the new CNBC interviewThe founder and CEO of Pershing Square Capital Management says his company recently raised $5 billion and is actively deploying that capital, with about 35% already deployed.
“Interestingly, despite the overall market move, I think stocks — companies we like — are still pretty cheap. When people compare market multiples, we’re probably in the low 20s today, 20 to 21 times earnings, something like that. And while the market averages 16 to 17 times earnings in history, the average company 20 years ago is very different from the average company today.”
These are market cap weighted indices. It used to be that large companies were unable to grow very quickly. Now the largest companies are among the fastest growing high quality businesses in the world, so the market mix is much higher quality, faster growing, much better businesses, so if you’re paying a low multiple of the 20s on a total market basis, it can be cheap.
Ackman also points out that “every company is an AI company today.”
“The key is, will AI disrupt your business or will it enhance your business?”
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