Bill Ackman Says MSFT, AMZN and NFLX Fit His ‘Enormously Valuable’ 20-Year Investing Test

Pershing Square CEO Bill Ackman’s mega-cap tech holdings reflect his strict framework for long-term investing. Ackman holds Microsoft Corp. (NASDAQ:MSFT), Amazon.com Inc. (NASDAQ:AMZN), and Netflix Inc. (NASDAQ:NFLX) in his portfolio, favoring the type of durable businesses that he says remain ‘enormously valuable’ over two decades.

The 20-Year Test

In a podcast interview with Nicolai Tangen, CEO of Norges Bank Investment Management, Ackman defined his criteria for an ideal stock.

“A great company is a business you could buy today. The markets could shut for 20 years, and you know with an enormous degree of certainty that you’ll own something that’s enormously valuable 10 or 20 years from now,” Ackman said. He added that Pershing Square prefers “businesses that look like royalty collecting companies like annuities.”

Read Also: Bill Ackman’s 20-Year Investing Rule Puts These Cash-Flow and Moat ETFs in Focus

Backing AI Infrastructure

Ackman applies this long-term framework to his technology holdings. During an interview on CNBC‘s “Squawk on the Street,” Ackman defended the heavy artificial intelligence capital expenditures by Amazon and Microsoft.

He described the tech giants as “well capitalized incredibly dominant franchises that have the balance sheets to make these investments.” Ackman stated that unlike smaller competitors, “Microsoft and Amazon are going to and Meta will be able to use every incremental watt if you will of compute.” Speaking to Tangen, Ackman noted that those names “represent about a third of our portfolio today.”

Streaming as a Utility

Ackman also expressed conviction in Netflix during his CNBC appearance, referring to the company as a “high growth utility.”

He told CNBC that investors can “buy the stock today at one of the lowest valuations in history,” noting it was trading around 18 times earnings. Ackman stated that he expects Pershing Square’s internal rate of return on the stock to be “well north of, you know, well into the 20s,” projecting that earnings growth is going to be in the “mid to high teens for the foreseeable future.”

How Have These Stocks Performed?

Stocks	1-Month	6-Months	YTD	1-Year	5-Years
NFLX	-7.43%	-31.80%	-33.79%	-43.57%	-3.86%
AMZN	-4.44%	-11.65%	4.13%	-5.37%	36.60%
MSFT	0.85%	26.18%	7.92%	0.94%	55.30%

Read Also: Bill Ackman’s Test for a Great Stock: Should Be 'Enormously Valuable' Even if Markets Shut for 20 Years

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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