Investing

Bill Ackman Bets: 2 Stocks That Could Boost Your Retirement Portfolio

Joey Frenette

Published: September 26, 2024 8:00 am

Bill Ackman, the legendary investor running the show at Pershing Square Capital Management, is a terrific investor to follow if you buy into Warren Buffett’s investment philosophies. Indeed, Ackman, who’s heavily influenced by Buffett, is a value-conscious investor himself and has made some extraordinary calls in the past.

More recently, he profited profoundly by hedging his firm’s bets in early 2020, when it was uncertain what the full extent of coronavirus would be on the global economy. Though it was a scary time to make moves, either way, Ackman had the courage and confidence to place his bets while the window of opportunity opened for a very brief period.

Bill Ackman’s Concentrated Portfolio is Full of Gems

More recently, Ackman has seen his fund, Pershing Square, sail steadily higher, thanks to a portfolio heavily concentrated in “wonderful” businesses. At any given time, Ackman’s portfolio is likely to have less than 10 stocks. And though Ackman has been selling shares of some firms in recent quarters, it is remarkable how concentrated his portfolio remains.

Indeed, the late Charlie Munger, Warren Buffett’s right-hand man, was an advocate of putting more capital in the best businesses rather than spreading oneself too thin across a wide range of lesser businesses for the sake of enhancing a portfolio’s diversification. While diversification is always smart, especially for new investors, you can have too much of a good thing.

While I wouldn’t recommend a portfolio as concentrated as Pershing Square’s, I think the concentration of Bill Ackman’s bets is a testament to his belief in the businesses his hedge fund owns shares in. Indeed, the man is a legend who’s done more than his fair share of homework! In any case, two Bill Ackman bets stand out as great buys for a long-term retirement portfolio.

Key Points About This Article

• Bill Ackman’s portfolio is worth checking out as the market landscape shifts amid falling rates.
• Hilton and Nike are two potential gainers that could help build one’s nest egg.
• If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.

Hilton Worldwide

Shares of legendary hotel chain Hilton Worldwide (NYSE:HLT) are currently the largest holding (comprising just shy of 19%) of Pershing Square’s portfolio. After soaring more than 93% in the past two years, the well-run hotel firm has proven quite a potent market beater. Though the valuation is now somewhat extended at 27.6 times forward price-to-earnings (P/E), the name still looks like a fantastic growth bet.

Indeed, HLT stock is a play on appreciation. Still, one can’t ignore the company’s dividend growth prospects as the firm looks to make up for lost time after hitting the pause button on its payout when its business was ravaged by the earlier days of the COVID-19 pandemic.

As interest rates fall and consumers look to spend more heavily on vacation experiences, I expect Hilton will continue to benefit big-time from rising travel spend. Indeed, if you’ve vacationed in the past year and a half, you’ll know that inflation has been particularly nasty regarding various upscale hotel chains.

As Hilton continues to face solid demand while investing in enhancing the customer experience via tech and added luxuries, I’d argue that the firm can continue to justify higher prices.

Nike

Nike (NYSE:NKE) is a new addition to the Pershing Square portfolio, with Ackman’s hedge fund reportedly scooping up around 3 million shares (worth just shy of $240 million) in the second quarter. Indeed, Ackman had booked a nice profit betting on NKE a number of years ago. With the valuation at historic depths, it should be no surprise to see Ackman make a return to the name.

Of late, NKE stock has been battered as consumers forwent sneaker purchases to save money on the rising costs of staples. Despite shedding over 50% of its value from highs, NKE stock remains a prime candidate that could gain if consumer spending comes back online once the Fed can land this economy softly. After the latest round of rate cuts, it seems like an economic soft landing is a top priority for the Fed. Either way, Nike stock looks like a relative bargain at just north of 23 times trailing P/E.

With a new CEO, Elliott Hill, taking the helm next month, there are a lot of reasons to be optimistic. Indeed, Ackman has made a great deal by betting on troubled firms at heavily discounted multiples while pushing for change.

With a new CEO in place, it looks like Nike has that catalyst. The only question is whether Hill, a seasoned Nike veteran, can deliver for investors. It will be interesting to hear more about his strategic plans once he’s had a chance to roll up his sleeves and get to work.