Bill Ackman is probably best known as the founder and CEO of Pershing Square Capital Management, a leading hedge fund managing more than $10 billion in assets for its clients. Ackman has long touted himself as a fundamental value investor, but has waded into the waters of activist investing from time to time, getting into various high-profile spats with other billionaire investors along the way.
Ackman’s story is certainly intriguing, and his investing success has come with some significant volatility over the years. However, his more recent push into politics is what many may know him for, as Ackman has aligned himself with the likes of Elon Musk and others on the right-leaning side of the spectrum, making Ackman a figure many view through a political lens despite his investing success.
Bill Ackman has most notably held large positions in companies in a highly-concentrated portfolio. It appears that like other prominent investors such as Warren Buffett, Ackman is a believer in the “de-worse-ification” theme. In other words, diversifying a portfolio too much is more likely to lead to market-average returns. Beating the market thus may require taking larger high-conviction bets in companies with real potential to outperform the market over lengthy periods of time.
That strategy certainly seems sound, and it’s one of the reasons why Ackman has been able to amass such a large assets under management number. Let’s dive into three of his top holdings, and what investors may want to make of these picks.
Key Points About This Article:
- Pershing Square Capital Management CEO Bill Ackman is among the most notable hedge fund managers of this era, despite his move into a highly-polarized political arena.
- His highly-concentrated investing strategy has provided periods of outperformance in his portfolio, but let’s dive into three of his top picks and see if they’re worthwhile right now.
- 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 (HLT)
Hilton Worldwide Holdings (NYSE:HLT) is among the largest hotel chains globally, operating more than 6,500 locations with 1.2 million rooms spread across 22 brands. The company’s two largest brands are Hampton and Hilton, which represent nearly half of the company’s total capacity. If you’re thinking of Hilton, you’re probably thinking of their name brand as well as the Hampton banner.
Currently, Bill Ackman has just shy of 20% of his portfolio concentrated in this one stock, so it’s clearly a big story for him and his portfolio. There may be a number of reasons for his position sizing here – post-pandemic tailwinds and a resurgence of travel continue haven’t yet abated, and Hilton and other hotel operators have clearly benefited in this environment.
Additionally, appears to be taking a rather bearish stance on this stock, with a mix of hold and buy ratings leading to a price target of just $217 for this stock, implying there could be as much as 8% downside from here, at the time of writing.
We’ll have to see if Ackman asjusts his positioning in the coming quarters, as 13-F filings roll in. But for now, this is certainly an intriguing pick in going against the grain with where Wall Street sees the hotel operator headed.
Chipotle Mexican Grill (CMG)
Chipotle Mexican Grill (NYSE:CMG) is among the most popular fast casual restaurant chains, serving very popular Mexican-inspired dishes to millions of customers every day. The story of Chipotle is really of a company that’s focused on growth. The company opened 52 new restaurants in Q2, and is aiming to open 200 annually. With around 3,500 locations, this kind of footprint growth should bring about 5% revenue growth each year, irrespective of the company’s same-store sales growth.
On that front, things have certainly gone well for Chipotle thanks to its former leadership team (the company’s CEO recently departed for Starbucks in a high-profile move). Additionally, the stock made headlines with its 50-for-1 stock split which was completed on June 26, reducing its share price from $3,283 to around $66 per share. This move enhanced the company’s attractiveness for retail investors, and has increased the company’s market liquidity for employees and those looking to buy whole shares.
Fundamentally, the company continues to perform well, and Chipotle is widely-viewed as a clear leader and winner in the retail space. For long-term investors like Bill Ackman, this is a stock I think is worth watching in this sector for some time to come.
Restaurant Brands (QSR)
Restaurant Brands International Inc. (NYSE:QSR) is one of the largest quick service restaurant companies globally, operating more than 30,000 restaurants across 120 countries. This is the parent company of a number of popular banners, including Tim Horton’s, Burger King, Popeye’s, and Firehouse Subs. It’s a company I’ve watched for a long time, and is one I’ve been bullish on for quite some time as well. Accordingly, this pick from Bill Ackman is of particular interest to me, given the relative lack of attention Restaurant Brands gets to its U.S. counterparts, due in part to the fact that the company is headquartered in Canada.
Tim Horton’s still makes up the largest percentage of the company’s overall footprint, though its other banners are more important to the growth story behind this name. Restaurant Brands has seen strong international growth in recent years, and that growth is expected to continue in the company’s third-quarter 2024 financial results which will be released on November 5, 2024.
The company’s stock price is relatively reasonably-valued, at a price-earnings multiple of just 18-times (cheaper than the market), and its shares have been less volatile than rivals. Hence, this is a stock that could see significant upside if the market once again grants the company a premium multiple. We’ll have to see how that works out for Ackman and other large investors.
For now, I think Bill Ackman’s three top holdings are certainly worth considering for long-term investors looking to pick individual stocks. These are all companies I own, or have owned in the past, or are on my watch list.
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