Bill Ackman, the founder and CEO of Pershing Square Capital Management, is a renowned billionaire institutional investor and hedge fund manager with a net worth of over $3.5 billion. The Harvard University-educated finance executive is known for his leveraged contrarian bets on the stock and bond market.
In 2020, just days before the U.S. announced a total lockdown, Ackman hedged his investments, predicting a complete shutdown of the economy through credit default swaps, netting a profit of over $2 billion. Just days after Ackman implemented his strategy, the government imposed a nationwide lockdown, causing the stock market to crash.
Ackman also shorted 30-year U.S. Treasuries, citing the Federal Reserve's hawkish market stance and predicting long-term bond prices to crash. However, given the rising market uncertainty, Ackman closed his short position, pocketing $200 million from the trade.
"There is too much risk in the world to remain short bonds at current long-term rates," Ackman said. "The economy is slowing faster than recent data suggests."
Pershing Square Holdings gained 11.6% since the beginning of 2023 through Oct. 17, outperforming the Dow Jones Industrial Average Index's gains over the same period.
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Some of Ackman's equity holdings include:
Chipotle Mexican Grill
Ackman's Pershing Square Holdings owns 953,608 shares of Chipotle Mexican Grill, Inc. CMG, having a weightage of 18.9% in the fund. Chipotle surged over 49% year to date, making it one of his best equity investment bets this year. Ackman holds a 3.4% stake in Chipotle.
Chipotle has been boasting top- and bottom-line growth in the latest quarter, driven by rising demand for dine-in, takeout and online orders, as consumer spending levels remain high.
The multinational company opened 62 new restaurants in the third quarter ended Sept. 30, contributing to an 11.3% year-over-year rise in revenue. The global fast-food restaurant chain's earnings per share (EPS) increased 23% from the same period last year to $11.32 in the last quarter.
The Fortune 500 company is poised to maintain this growth rate over the next year, as it estimates opening 285 to 315 new restaurants globally in fiscal 2024.
Restaurant Brands International
Restaurant Brands International Inc. QSR owns four renowned quick-service beverage and restaurant chains: Burger King, Tim Hortons, Popeyes Louisiana Kitchen and Firehouse Subs. It is one of the world's largest quick-service restaurant companies, operating more than 30,000 restaurants in over 100 countries.
Ackman owns over 23.3 million shares of Restaurant Brands, making it Pershing Square Capital's second-largest stock holding, accounting for 16.7% of the fund's assets.
Restaurant Brands International's consolidated system-wide sales rose by 10.9%, or $1.1 billion, year over year in the third quarter ended Sept. 30. The momentum is expected to continue this quarter, as strong consumer spending levels this holiday season are expected to spill over into the restaurant sector.
"I am confident we are well positioned to enter 2024 with momentum,” Restaurant Brands International CEO Josh Kobza said.
KeyBanc Capital Markets has an Overweight rating on Restaurant Brands with a price target of $82, indicating a potential upside of over 22%.
Alphabet Inc.
Ackman owns over 11 million shares of Google parent company Alphabet Inc. GOOGL. He owns over 9.3 million shares of Google's nonvoting shares and 2.1 million shares of the shares with voting rights.
Ackman’s investment in Alphabet’s stock constitutes approximately 12.9% of Pershing Square Capital’s portfolio as of June 30. Alphabet's nonvoting-class stock is up 48.2% year-to-date the stock with voting rights has surged over 47% so far this year.
While Google lags behind competitors such as Microsoft Corp. in the cloud computing and artificial intelligence (AI) sectors, the company's substantial advertising revenue has offset this. The company reported ad revenue of $59.65 billion in the third quarter, surpassing consensus analyst estimates of $59.12 billion. However, its cloud revenue came in at $8.41 billion, falling short of the Wall Street estimate of $8.62 billion.
Google has been taking steps to consolidate its position in the AI and cloud industries, launching custom-built AI chips and AI-powered tools for its cloud software customers. Alphabet has pledged to invest up to $2 billion in Anthropic AI, a major competitor of Microsoft-backed OpenAI.
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Photo: Bill Ackman. Collage created using photo by Center For Jewish History, NYC on Wikimedia and Engan Akyurt on Unsplash
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