A dive inside the Pershing Square portfolio shows Bill Ackman making a focused bet on six stocks. Restaurant chain Chipotle Mexican Grill is among the top holdings.
Only one of the six holdings is a technology stock — Google-parent Alphabet. Ackman, who founded Pershing Square in 2004, picked up Google stock in the first quarter of 2023, when shares had fallen to a two-year low, staying true to his image as more of a value investor than many of his peers.
Potential Pershing Square IPO
On Monday, Ackman's Pershing Square Capital Management announced the sale of a 10% stake in the activist hedge fund to an investor consortium for $1.05 billion. The firm could go public in 2025 or 2026 at a $10.5 billion valuation, according to news reports.
Other publicly traded investment companies backed by activist investors include Stephen Schwarzman's Blackstone Group and Carl Icahn's Icahn Enterprises.
Here's a look inside the Pershing Square stock portfolio as a potential IPO looms. The portfolio bears a track record of long-term outperformance despite usually containing a dozen or fewer stocks.
Inside Pershing Square Portfolio
Chipotle Mexican Grill: Ackman's hedge fund holds 743,984 shares of the fast-casual burrito chain worth $2.16 billion, making it the largest holding at 20.1% of the total portfolio value as of the end of March.
Pershing Square's initial investment came in 2016 when Chipotle was facing food-safety issues. The stock has been a huge winner. The firm paid an estimated $435.71 on average per share. Chipotle trades at a record $3,083 per share on the stock market today.
This top retail stock shows two straight quarters of accelerating earnings growth, as well as double-digit sales growth in each of the latest four quarters.
Alphabet: Roughly 9.4 million class C shares and 4.3 million class A share are held. These shares of the Google parent are worth more than $2 billion combined, making it the second-largest holding at 19.4% of the portfolio, as tracked by whalewisdom.com.
Roughly, Google shows three quarters of accelerating earnings and sales growth. Google stock has been a big winner for Ackman. It's up nicely from the average purchase price of $111.28 per class C share. Shares were near all-time highs at around $176 on Wednesday.
Restaurant Brands: Ackman's firm owns 27.3 million shares of the Burger King parent worth $1.99 billion, making it the third-largest holding with an 18.5% stake.
In the latest four quarters, earnings growth has been volatile for this restaurant stock, offset by mid- to high-single-digit sales growth. QSR stock is down 10% in 2024.
Hilton Hotels: Roughly 9.2 million shares are owned worth nearly $1.96 billion. Ackman has been investing in the hotel chain since Q4 2018.
Travel demand continues despite inflation. Hilton grew earnings and sales by double-digit percentages in three of the last four quarters. Another winning stock for Pershing Square, Ackman paid $87.57 on average per share, and Hilton stock trades above $200 today.
Canadian Pacific Railway: About 15 million shares are held worth $1.33 billion. Earnings have been tepid for this rail stock in the latest four quarters, despite robust sales growth of 44%-55%. It's also been a lackluster performer in the Pershing Square portfolio.
Pershing Square paid an estimated average price of $73.9 per share, and CP stock trades near $77 today. Over the long term, Canadian Pacific has been a consistent earnings grower, with its 70 EPS Rating among the highest in its rail transportation group.
Howard Hughes: Roughly 18.9 million share are held worth $1.23 billion. The diversified real estate company is a laggard in the Pershing Square portfolio. It trades around $66 per share today vs. a reported purchase price of $72.
That reflects earnings weakness, including declines on both the top and bottom lines in each of the last four quarters. But in a March letter to shareholders, Ackman said he believes Howard Hughes is in "the early stages of its decades-long value creation opportunity" and should improve free cash flow in coming years.
In Q1 2023, Ackman-led Pershing Square trimmed top holding Chipotle stock while exiting home-improvement giant Lowe's amid a do-it-yourself spending slowdown.
It grew its stake in Restaurant Brands while keeping other holdings, including Google stock, steady.
The firm initially invested in the search leader in Q1 2023. Back then, the artificial intelligence theme was just getting started, as Microsoft invested in Open AI.
It was a value bet rather than AI mania that drove the Pershing chief's investment. Ackman said that he opened a position in Alphabet stock in early 2023 "at a highly attractive valuation during a period when apprehension about the company's competitive positioning in AI overshadowed the high-quality nature of its business and strong growth prospects."
From inception in 2004 through March 19 this year, the Pershing Square portfolio delivered a 16.5% compound annual return vs. a 10% gain for the S&P 500, according to the investment firm's latest annual report. It lagged the large-cap index year to date through March 19.
While there have been changes over the years, the portfolio typically holds "8 to 12" large-cap holdings, Pershing Square says.
