Bill Ackman manages assets of approximately $14 billion, with a five-year annualized return of 28%. His main holdings are low-profile consumer stocks
According to statistics, the current assets under management of Pershing Square Capital Management, a top global hedge fund founded and managed by Bill Ackman, a billionaire and well-known Wall Street hedge fund manager, are approximately $14 billion. Over the past five years, the annualized return rate has reached an astonishing 28%, more than twice the S&P 500 index during the same period.
So, what is his core investment secret? Which stocks support such an optimistic return rate on a scale of over $10 billion? After in-depth research and analysis of Pershing Square's stock investment portfolio strategy, Wall Street analysts have found that the hedge fund mainly holds the following 8 stocks. By analyzing these holdings, analysts have discovered a simple and effective strategy - not just buying large-cap tech stocks, but focusing on the consumer end and long-term investment principles.
Two core holdings of Pershing Square's investment portfolio:
Analytical data shows that Bill Ackman seems quite bullish on the development trend of the American restaurant industry. Pershing Square's investment portfolio includes Mexican-style casual dining chain Chipotle Mexican Grill (CMG.US), accounting for 18.15% of Pershing Square's overall investment portfolio, with international dining brands Tim Hortons, Burger King, Popeyes Louisiana Kitchen, and Firehouse Subs under Restaurant Brands International (QSR.US).
According to the latest F13 report, Bill Ackman's holdings are as follows:
CMG profit increased by 580%, ranking as the largest holding.
"Sub-investment" closely integrated with two core holdings
Unlike Warren Buffett's portfolio, known as the "Stock God," Ackman has adopted a more balanced strategy in other holdings. In contrast, Apple (AAPL.US) stock held by Buffett is the largest holding of Berkshire Hathaway, while other holdings are relatively small compared to this massive holding. Ackman has taken a more balanced approach in other holdings apart from the core holdings.
Hilton Worldwide Holdings Inc. (HLT.US) accounts for 16% of the investment portfolio, a large chain hotel group with multiple hotel and resort brands worldwide.
Lowe's Companies Inc. (LOW.US) accounts for 2.6% of the investment portfolio, the second-largest home improvement retailer in the United States Howard Hughes Holdings (HHH.US) accounts for 15% of the investment portfolio, and it is a diversified real estate developer based in the United States.
Canadian Pacific Kansas City Limited (CP.US) accounts for 11.5% of the investment portfolio, which is a railway company operating multiple important railway transportation lines in the United States and Canada.
Specific statistics show that the total positions of these "sub-level investments" are not behind Chipotle and Restaurant Brands International, but they are clearly in the second tier. Therefore, we can see that the well-known Wall Street operator Ackman's holdings mainly focus on the consumer sector, while also venturing into additional major discretionary spending categories in the United States such as hotels and home furnishings.
Real estate and railways are two of the oldest industries in the United States, but they remain an indispensable part of the U.S. economy today. For Ackman, having a certain allocation in these two traditional industries is definitely a meaningful investment decision.
Ackman's latest choice is a large tech stock closely related to artificial intelligence: Alphabet
Looking at his past investment style, Ackman's Pershing Square Capital Management has not had a large investment scale in tech stocks, but in the first quarter of 2023, when Pershing Square invested heavily in Google's parent company Alphabet (GOOGL.US), the situation began to change. Ackman increased the allocation of both Class A and Class C shares of this Google parent company, which are two different stock targets of the same company (with Class A shares having voting rights).
Statistics show that Pershing Square increased its holdings of this stock in the second and third quarters of last year. Combining the positions of these two types of shares, Alphabet accounts for approximately 12.7% of Pershing Square's investment portfolio, making it one of the most important investments for the asset management company.
The latest financial report data shows that most of Alphabet's profits still come from the Google search engine business and the advertising business related to YouTube, which have been the fundamental drivers of Google's strong performance for many years. However, Alphabet is also a highly popular concept stock in artificial intelligence. The company has strong cash flow and is developing and deploying generative artificial intelligence technology across its entire business, which could become a "revenue-generating weapon" for this tech giant in the future. Google's Gemini artificial intelligence multimodal large model, claimed to be the "largest and most powerful to date," seems to have gained global recognition, with the stock price continuing to rise after the release of this latest AI model in December.
While Google has been deeply involved in the field of AI for many years, and its number of AI technology patents and influence ranks among the top in the tech industry, all its achievements in the field of AI large models are far from matching the impact of GPT-4 developed by OpenAI. Therefore, Google's AI application products are currently far behind, which is understandable even with Microsoft, a major shareholder of OpenAI, in the picture However, with Google's release of the "largest and most powerful" AI model Gemini to date, it seems that Google's development in the field of AI has suddenly turned for the better.
In terms of stock ratings and price expectations, Wall Street's highest target price is as high as $180.
According to analysts on Wall Street, the following two important insights can be drawn from Ackman's investment portfolio strategy:
Insight 1: Betting on the consumer end
Although technology stocks have attracted a lot of media coverage, the consumer end is undoubtedly the core driving force of the U.S. economy. GDP data shows that nearly 70% of the economic output in the U.S. comes from consumer spending. Ackman has accordingly adjusted Pershing Square's investment portfolio in recent years. Four out of Ackman's eight major holdings belong to consumer stocks, accounting for nearly 60% of the investment portfolio.
Consumer stocks often easily benefit many investors because they usually have very simple business models, which can be more direct than the investment logic of most other industries. Understanding the business operations behind stocks is often crucial for investors, as it can make it easier for investors to identify opportunities and threats.
Insight 2: Be a long-term investor
Some investors may think that professional fund managers are short-term high-frequency traders who frequently buy and sell stocks, but Ackman is clearly not such a high-frequency trader. Although he sometimes gives up some holdings when he believes he has made a mistake, his investment portfolio overall emphasizes a long-term investment principle. The specific dates when Ackman first bought the stocks he currently holds are compiled by the following institution:
It is worth noting that Ackman's investment position in Howard Hughes Holdings, which does not appear in the table above, was established as early as 2010. General Growth Properties, a once-popular shopping mall operator, went bankrupt after the financial crisis, and the subsequently split Howard Hughes officially went public in 2010.
It is often difficult to predict the stock market in the short term. Politics, news, and the economy can easily influence the market. However, over time, the trend of stock prices rising or falling often becomes more apparent, depending on the performance of the company's underlying business, also known as the company's fundamentals. Pershing Square Capital Management's leader Ackman likes to focus on a few highly credible stocks focused on the consumer end and insists on long-term holdings, giving them ample time to achieve investment returns driven by fundamentals