Diversification? Not according to Bill Ackman, whose portfolio is concentrated in 6 stocks.

Only one of the six holdings is a tech stock — Alphabet, Google’s parent company. Ackman, head of hedge fund Pershing Square, bought Google shares in the first quarter of 2023 when the price fell to a two-year low, staying true to his image as a value investor compared to many of his peers.

Pershing Square IPO Ahead?

On Monday, Ackman’s Pershing Square Capital Management announced the sale of a 10% stake in the activist hedge fund for $1.05 billion to a consortium of investors. According to news reports, the company could go public in 2025 or 2026 at a valuation of $10.5 billion.

Вътре в портфолиото на Pershing Square

Chipotle Mexican Grill

Ackman’s hedge fund owned 743,984 shares of the fast-food chain, worth $2.16 billion, making it its largest position at 20.1% of the portfolio’s total value at the end of March.
Pershing Square’s initial investment was made in 2016 when Chipotle was facing food safety issues. Stocks are a big winner. The firm paid approximately $435.71 per share. Today, Chipotle shares are trading at a record $3,073 in the market.
This leading trading stock has posted two consecutive quarters of accelerated earnings growth, as well as double-digit sales growth in each of the past four quarters.

Restaurant Brands

Ackman’s firm owns 27.3 million shares of Burger King’s parent company, worth $1.99 billion, making it the second-largest position at 18.5% of the portfolio, according to whalewisdom.com.
Over the past four quarters, earnings growth has been volatile for this restaurant stock, offset by moderate to high single-digit sales growth. Shares of QSR are down 10% in 2024.

Alphabet

The firm owns approximately 9.4 million Class C shares and 4.3 million Class A shares. These shares of Google’s parent company are worth more than $2 billion in total.
Google reports three quarters of accelerated earnings and sales growth. Google stock is another big winner for Ackman. They are up significantly from the average purchase price of $111.28 per Class C share. Shares were near their highs of about $172 on Tuesday.

Hilton Hotels

The firm owns approximately 9.2 million shares worth nearly $1.96 billion. Ackman has invested in the hotel chain since the fourth quarter of 2018.
Travel demand continues despite inflation. Hilton has grown earnings and sales by double-digit percentages in three of the past four quarters. Another winning stock for Pershing Square, Ackman paid an average of $87.57 per share, and Hilton shares are trading above $201 today.

Canadian Pacific Railway

The firm owns about 15 million shares worth $1.33 billion. Earnings have been weak for this rail stock over the past four quarters despite healthy sales growth of 44%-55%. It also underperformed Pershing Square’s portfolio.
Pershing Square paid an estimated average price of $73.9 per share, and CP shares are trading near $77 today. Over the long term, Canadian Pacific has been a consistent growth player, with an EPS rating of 70, which is among the highest in its group.

Howard Hughes

The firm owns approximately 18.9 million shares worth $1.23 billion. The diversified real estate company is an underdog in Pershing Square’s portfolio. It is trading around $66 per share today compared to a reported purchase price of $72.
That reflects earnings weakness, including declines in revenue and earnings in each of the past four quarters. But in a March letter to shareholders, Ackman said he believes Howard Hughes is in the “early stages of a multi-year value creation opportunity” and expects to improve free cash flow in the coming years.

In the first quarter of 2023, Ackman-led Pershing Square trimmed its top position in Chipotle shares, while it exited home improvement giant Lowe’s due to a slowdown in DIY spending.
The firm increased its stake in Restaurant Brands while holding its other holdings, including Google stock, steady. The initial investment in the search leader was made in the first quarter of 2023. At that time, the topic of artificial intelligence was just starting, while Microsoft invested in Open AI.
It’s more likely that value investing rather than AI craze prompted Bill Ackman to invest in the search giant, even though Google is now considered one of the leading AI stocks.

Over the past 20-plus years through March 19, Pershing Square’s portfolio has delivered an annual compounded return of 16.5%, compared with 10% for the S&P 500, according to the investment firm’s latest annual report. Recently, it has lagged behind the index.