If there is one thing investors know about billionaire investor Bill Ackman, he doesn’t do half measures. The hedge fund manager likes to make big bets on companies and his Pershing Square Capital hedge fund typically only owns a relative handful of stocks at a time. His portfolio, which has $17 billion in assets under management, currently holds just 10 stocks
He recently filed his quarterly 13F filing with the Securities & Exchange Commission and once again didn’t disappoint. Two stocks he dipped his toes into in the second quarter saw Ackman make a big splash with in the third. The one-time activist investor bought large positions in both Brookfield (NYSE:BN) and Nike (NYSE:NKE), spending some $2.2 billion on them. In fact, the alternative investment management firm is now his largest holding.
While Ackman has been known as an activist investor in the past, taking high-profile positions in companies — both long and short — and advocating for change, more recently he is showing his kinder, gentler side, preferring to be a passive investor. He still seeks out undervalued stocks and looks for market inefficiencies in pricing, so let’s see what he likes about Brookfield and Nike.
24/7 Wall St. Insights:
- Billionaire investor Bill Ackman is known for making big bets on stocks and taking an activist position to advocate for change.
- His Pershing Square Capital hedge fund only owns 10 stocks, but it just made two big bets worth over $2 billion.
- 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.
Brookfield (BN)
As noted, Brookfield is an alternative investment management firm, managing a portfolio of assets across various sectors, including real estate, renewable energy, infrastructure, and private equity. It has a number of notable subsidiaries including Brookfield Asset Management (NYSE:BAM), Brookfield Renewable Partners (NYSE:BEP), and Brookfield Infrastructure Partners (NYSE:BIP).
Ackman might be seeking to take advantage of a big change coming to one of BN stock’s subsidiaries. In early 2025, Brookfield Asset Management will be simplifying its corporate structure. When originally created, it spun off its asset management business as a privately held company with two shareholders: Brookfield, which owns 73% of the stock, and the publicly traded BAM, which owns the remaining 27%.
Brookfield will soon exchange its private interest in the asset management business for shares of BAM on a one-for-one basis. BAM will subsequently be eligible for inclusion in various stock indices.
Ackman owns 32.7 million shares of BN, but acquired nearly 26 million of them last quarter. It now represents 13.5% of Pershing Square’s portfolio, leapfrogging over Hilton Worldwide (NYSE:HLT), Chipotle Mexican Grill (NYSE:CMG), and Restaurant Brands International (NYSE:QSR).
Nike (NKE)
The well known consumer apparel company Nike was Ackman’s other big bet in the quarter. He acquired more than 13 million shares in NKE stock to bring his portfolio total to 16.3 million shares worth $1.4 billion. That was a 435% increase in his holdings, good for an 11% position of the portfolio and places the apparel stock as Ackman’s sixth largest holding.
Nike, of course, has been in trouble for a while as its sportswear business stumbled. Intense competition from Adidas (OTC:ADDYY), Decker Outdoors (NASDAQ:DECK) Hoka shoe, and On Holding (NYSE:ONON), the trendy footwear maker.
Having previously transitioned from a heavy presence in the retail space to one focused on direct-to-consumer, a move that originally looked smart because of the focus on e-commerce and digital, it quickly became the source of Nike’s woes. With a large void in inventory that needed to be filled, retailers added all of Nike’s rivals to its shelves, leading to a quick slide in Nike’s market share.
Over the past three years, NKE has lost more than half its value while On rose 63% and Decker surged 184%.
Nike is now in the midst of a major restructuring. At 22 times earnings, the apparel maker trades at levels it hasn’t seen in seven years. Ackman seems to be betting Nike will find its footing again and spark a turnaround.
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