The float is shrinking: Ackman on index funds, short-term traders and why big tech is still cheap
Key points
Key takeaways from Finimize interview with Pershing Square Capital Management founder and CEO Bill Ackman (October 2026):
AI as nuclear technology. Ackman compares the race to build AI to developing a nuclear weapon — technology with huge potential benefit for mankind but, like its predecessor, "the potential to destroy mankind". He draws the parallel to earlier world-changing technologies, from the detonation of the first nuclear weapon to the pandemic and the financial crisis.
The cynical big-tech case. On hyperscalers, he lays out the bear view: companies with "tons of cash" and strong balance sheets are spending so heavily on AI that they are "becoming weaker", while China is spending roughly $1 for every $8 the US spends against a high implied hurdle rate for these investments.
He rejects it for Microsoft and Amazon. Ackman disagrees with that proposition — Pershing Square owns Microsoft and Amazon (neither a pure hyperscaler), and argues the scale of the fear itself shows how "incredibly powerful" AI is.
Why the float is shrinking. He attributes today's market dynamics to two principal forces. First, the rise of indexation: a bigger percentage of companies is now "owned by index funds that in effect shrinks the effective float" — index funds are permanent owners, so the marginal buyer and seller have more impact on price.
The second force: short-term trading. The bigger, harder-to-calculate force is the growth of short-term, levered trading strategies at firms like Citadel, Millennium and Jane Street — they hunt small advantages, so a company that disappoints or beats expectations sees huge swings in its stock.
Great companies, occasionally insanely cheap. That combination of a shrunk float and volatility has, he says, created the opportunity to own "some truly great companies at occasionally insanely cheap" prices.
Permanent capital lets him be patient. Because Pershing Square and its affiliates are the largest shareholders and hold permanent capital, he can buy and hold on a five-year return basis rather than worry about where the price sits at any single year-end.
The Howard Hughes example. He cites Howard Hughes, a $4bn market-cap company where Pershing Square bought a stake at $100 a share 15–16 months ago — paying a premium to transform a business the market still prices as a real-estate company at $62 today, held back only by higher interest rates.
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