Curated Insights | Bill Ackman

The application of Natural Language Processing (NLP) in patent analysis, as demonstrated by the DistilBERT model’s 63% accuracy in predicting IPC subclass from abstracts, can be a valuable tool for your firm. It can help in assessing the quality of patents held by potential investment targets, thus providing a more nuanced understanding of their intellectual property portfolio.

The article suggests that by fostering more partnerships among managers, the firm could increase productivity by up to 1.3%, which translates to a $1.45 million profit increase. As a CEO, you could encourage more collaboration and partnership among your team leaders to maximize productivity.

The study shows that high and unpredictable worker absenteeism is a common challenge, affecting productivity significantly. It might be beneficial to invest in strategies to reduce absenteeism or create a pool of floating workers to mitigate its impact. This could be a cheaper and more effective solution than trying to reduce absenteeism rates.

Given Ribbit Capital’s successful strategy in investing in fintech and crypto-related startups, it may be beneficial for Pershing Square Capital Management to explore similar opportunities. The growth of the crypto market, with over 220 million users globally and a total market cap of $2 trillion, suggests significant potential.

Ribbit’s focus on DeFi protocols and DAOs could be a valuable insight for your firm. The emergence of these technologies is reshaping the financial infrastructure, making it more open and accessible. With VC investment in crypto startups growing from $90M in 2012 to over $33B in 2021, this sector could offer substantial returns.

As a hedge fund manager, consider using large language models (LLMs) like GPT-3 to simulate economic scenarios and guide investment strategies. These models can be endowed with specific preferences and information, allowing for the exploration of various economic behaviors and outcomes. This could provide valuable insights into potential market reactions and trends, enabling more informed investment decisions.

The article suggests that LLMs can be used to cheaply pilot experiments before implementing them in the real world. This could be a game-changer for Pershing Square Capital Management, allowing you to test new investment strategies or financial products in a risk-free environment before launching them in the market. This could potentially lead to the discovery of new market opportunities and increase the firm’s competitive advantage.

The article emphasizes the importance of employee networks in enhancing innovation and improving information flows. Given that a one standard deviation increase in eigenvector centrality relates to a 3.7% increase in Tobin’s Q, it would be beneficial for Pershing Square Capital Management to encourage and foster these networks within its portfolio companies. This could be achieved through cross-company initiatives, shared learning platforms, or networking events.

The article also highlights that firms with higher eigenvector centrality have about 5% higher R&D expenses. This suggests that investing in R&D can lead to more patented innovations and greater value from patents. As a hedge fund manager, you could consider this when evaluating potential investments, and encourage portfolio companies to allocate more resources towards R&D.

The paper shows that visibility of minority ownership can significantly boost business performance. For instance, Black-owned businesses saw a 52% increase in revenue and a 65% increase in page views. This suggests that investing in minority-owned businesses, particularly those that are publicly identified as such, could yield high returns.

The paper demonstrates how changes by technology platforms can help address disparities. As an influential investor, Pershing Square Capital Management could advocate for similar platform changes in companies it invests in, or even develop new platforms that highlight underrepresented groups. This not only has potential for positive social impact, but also opens up new market opportunities.

The transition to a circular economy represents a multi-trillion-dollar market opportunity. In Europe alone, this transition represents a €230 billion investment opportunity with a €1.5 trillion value creation potential until 2040. Investing in businesses that are developing circular products and business models could yield significant returns.

To accelerate the realization of the trillion-dollar opportunity on circularity, collaboration among stakeholders such as brands, suppliers, technology providers, investors, and governments is vital. Additionally, education is essential to provide clarity on new concepts related to circular economy. As a leader in the investment community, Pershing Square Capital Management can play a crucial role in fostering such collaboration and education.

The article reveals that Amazon-branded products are given additional prominence in search results, which cannot be explained by other observable features such as prices, ratings, or delivery times. This could be a significant factor to consider when investing in or partnering with companies that rely on digital platforms for sales.

The research indicates that carrying an Amazon brand is a meaningful predictor of greater prominence in search, with the effect being 30% to 60% as large as the effect of sponsoring. This could potentially influence consumer choice and purchasing behavior, which could impact the performance of investments in retail and e-commerce sectors.

As the CEO of Pershing Square Capital Management, consider advising the companies in your portfolio to integrate climate targets into their business operations. This approach, as discussed by Bonita Stewart, can improve accountability and transparency, and signal to stakeholders that actions towards climate goals are real. This could involve incorporating climate targets into various board committees, such as audit for metrics and risk, compensation for incentives, and corporate responsibility for oversight.

Lauren Taylor Wolfe’s approach of linking executive compensation to emissions or DEI goals could be a strategy to consider. This could incentivize progress towards sustainability goals and drive economic returns. As an activist investor, this could be a powerful tool to encourage companies to focus on sustainability efforts that make business sense.

Carter Roberts’ suggestion of independent monitoring and verification of climate progress could be a key strategy to build trust with stakeholders. This could be particularly relevant for Pershing Square Capital Management as it would ensure that the companies in your portfolio are genuinely reaching their climate goals.

Deb Spar’s point about the crucial role of government in enforcing accountability through regulations and standards is noteworthy. As an investment management firm, understanding these regulations and standards and how they impact your investments is vital.

The panel’s emphasis on developing climate skills within boards is an important takeaway. This could involve educating board members on climate issues, adding environmentalist board members, and understanding climate regulations.

Wolfe’s suggestion that boards can move markets faster than government by demonstrating the value of sustainable products could be a significant opportunity for Pershing Square Capital Management. By investing in companies with sustainable products that customers value, you could potentially drive market trends and generate significant returns.

As a financial firm, Pershing Square Capital Management should consider investing in generative AI infrastructure and talent. Early adopters in the banking sector have already started this process, and those who lag behind may face competitive disadvantages. Generative AI can automate analysis of financial data to spot trends, improve sales forecasting, and enhance customer service through conversational AI.

The article highlights that regulations often lag behind technology. As such, it’s crucial to prepare for potential regulatory challenges that may arise with the adoption of generative AI. Banks’ oversight frameworks could serve as models in this regard. Additionally, the issue of accountability with open-source models needs to be addressed.

The successful application of generative AI requires properly labeled and managed proprietary data. Tools are emerging to assist with this, and it would be beneficial to incorporate them into your data management strategy.

As AI takes over repetitive tasks, hiring is shifting towards more strategic roles that are augmented by AI. It would be beneficial to adjust your hiring strategies to focus on roles with more data skills.