Pershing Square Holdings Portfolio
Interested in peeking inside the portfolio of billionaire investor Bill Ackman’s hedge fund? In this article, we highlight the stocks which make up the Pershing Square Holdings portfolio, analyse the Pershing Square Holdings stock performance and much more!
Table of Contents
What Is Pershing Square Holdings Ltd?
Pershing Square Holdings Ltd is an investment trust which is listed on the London Stock Exchange and is a component of the FTSE 100.
The investment trust allows UK investors access to the hedge fund Pershing Square Capital Management which is based in New York and managed by billionaire investor Bill Ackman.
Pershing Square Holdings Stock Performance
Data as of 31 July 2024. Past performance is not a reliable indicator of future results.
Ackman’s fund has performed very strongly in recent years, easily outpacing the wider FTSE 100 over the last five years.
Although, given the FTSE has posted a fairly underwhelming total return of 30% over that period, that’s perhaps not the most impressive record. Far more impressive is that Ackman’s Pershing Square Holdings has also significantly outpaced the high flying S&P 500 index over the same period.
Pershing Square Holdings Portfolio
So, how has Ackman managed to outperform both the FTSE 100 and S&P 500 so convincingly over the last half-decade? What’s inside the Pershing Square Holdings portfolio?
Well, actually, not an awful lot.
Pershing Square holds a highly concentrated portfolio which, at the time of writing, consists of just 8 stocks, and two of these are just different share classes of the same company.
No excessive diversification for Ackman then. No, he is instead a proponent of holding large, long-term positions in a limited number of high-conviction stocks. He lets his winners run and is not scared to cut poor performers from the portfolio - his short-lived, ill-timed position in Netflix which lost $400 million being a prime example of the latter.
Of course, this concentrated approach does present the risk of one or two underperformers having an outsized negative effect on the entire portfolio, which is precisely why many investors stress the importance of diversification. But this clearly hasn’t hindered Pershing Square’s performance of late.
Chipotle Mexican Grill
Chipotle Mexican Grill is an international chain of restaurants which operates over 3,300 locations, the vast majority of which are in the US. At the time of writing, it is the largest position in the Pershing Square Holdings portfolio.
Pershing Square first invested in Chipotle in 2016 after its share price had been beaten down by food poisoning outbreaks at a number of its locations the previous year. The stock has gone on to be a big winner for Pershing Square.
Alphabet
Alphabet is the parent company of Google, a company which needs little introduction. Pershing Square holds both Class A and Class C shares of Alphabet, the former having voting rights whilst the latter does not.
Combining the share classes, Alphabet is one of the largest positions in the Pershing Square Holdings portfolio and is also the most recent acquisition at the time of writing. After concerns that Alphabet would be negatively impacted by AI, its share price declined, presenting Ackman with what he believed to be an attractive valuation.
Restaurant Brands International
Restaurant Brands International is a fast food holding company, which owns Burger King, Tim Hortons and Popeyes.
Between them, Restaurant Brands International and Chipotle currently account for almost 30% of the entire Pershing Square portfolio holdings, from which we can make a deduction. Ackman appears bullish on restaurants.
Hilton Worldwide Holdings
Hilton Worldwide Holdings manages and franchises hotels and resorts around the world.
In 2018, a year and a half after exiting a previous position in Hilton, a broader market sell off provided Ackman an opportunity to make a large investment in the hotel chain.
Howard Hughes Holdings
Howard Hughes Holdings is a property development and management company which was formed by a spin-off from General Growth Properties in 2010.
During the financial crisis in 2008, General Growth was struggling to stay afloat. Ackman came along and scooped up shares of the Real Estate Investment Trust (REIT) in which he became the largest shareholder.
As the REIT filed for bankruptcy in 2009, Ackman stepped up again and provided financing to help save the company. In 2010, as part of a wider reorganisation, General Growth spun-off the Howard Hughes Corporation to shareholders.
Although it has since exited its position in General Growth Properties, netting an enormous return in the process, Pershing Square still owns a large shareholding in Howard Hughes following the spin-off. In fact, in 2023, Pershing Square bought 2.1 million more shares in the company, taking its ownership stake to more than 30%.
Canadian Pacific Kansas
In December 2021, Canadian Pacific Railway completed an acquisition of Kansas City Southern, making it the only railroad company with a direct route from Canada to Mexico. Around the same time, Ackman began buying shares in the company.
This was the second time Ackman had invested in the railroad company, returning to the scene of one of his greatest successes.
During his previous investment in Canadian Pacific, which he sold in 2016, Ackman conducted a successful activist campaign which resulted in an overhaul of the company’s board and the appointment of a new CEO. It also netted Pershing Square a profit of around $2.6 billion.
Universal Music Group
Universal Music Group (UMG) is one of the biggest record labels in the world and the largest music rightsholder.
Pershing Square acquired 10% of UMG before its IPO on the Euronext Amsterdam Stock Exchange in 2021. Despite a perceived threat of AI to the industry, Ackman remains bullish on the company, describing it as “high-quality”.
Pershing Square Holdings Fees
Despite the exceptional recent performance, Pershing Square Holdings trades at a fairly hefty discount to its Net Asset Value (NAV). This means that the Pershing Square Holdings share price is lower than the total value per share of its holdings. At the time of writing this discount is around 30%.
A chief reason often given for this discount are the unpopularly high Pershing Square Holdings fees.The fund charges an annual management fee equal to 1.5% of the net assets and a 16% performance fee above a high-water mark.
Investing in Pershing Square Holdings with Admiral Markets
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FAQ
What stocks does Pershing Square Holdings own?
At the time of writing, Pershing Square Holdings has equity positions in Alphabet, Chipotle Mexican Grill, Restaurant Brands International, Hilton Worldwide Holdings, Howard Hughes Holdings, Canadian Pacific Holdings and Universal Music Group.
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