Billionaire Bill Ackman Holds 60% of His Hedge Fund’s $10 Billion Portfolio in Just 3 Stocks

Bill Ackman is one of the world’s best-known billionaire investors. Despite his fame, he failed to launch a publicly traded investment fund last month after demand fell short of expectations.

Ackman had planned to launch a closed-end fund called Pershing Square USA, which would have allowed him to invest billions of dollars from investors. While he had initially planned to raise $25 billion for the fund, he significantly reduced the amount before abandoning it altogether after demand failed to materialize.

But investors interested in Ackman’s investing style can still follow his hedge fund Pershing Square Capital Management. Ackman discloses his portfolio holdings quarterly with the SECONDand it is generally very concentrated. Currently, about 60% of the portfolio is invested in the stocks of just three companies.

1. Alphabet (22.1%)

Ackman’s largest holding, according to Pershing Square’s first-quarter disclosure, is Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL)He holds approximately $700 million in Class A shares and more than $1.5 billion in Class C shares.

Ackman bought Alphabet stock when many investors were concerned about the impact artificial intelligence could have on its core business, Google. It turns out that artificial intelligence is very beneficial to Alphabet’s business.

Artificial intelligence is driving Google Cloud’s quarterly revenue, which now hits $10 billion. Revenue growth is accelerating. Several large AI companies are using Google Cloud to train and deploy their AI models and services.

Meanwhile, search ad revenue doesn’t appear to have been impacted so far by chatbots like OpenAI’s ChatGPT. Revenue grew 14% in Alphabet’s most recent quarter for its core product. That said, YouTube ad revenue growth has been somewhat muted.

As Google continues to invest heavily in its data centers to build out its AI training and inference capabilities, it is cutting costs in other areas of the business. As a result, operating margin is expanding rapidly, which is helping to boost the bottom line. Analysts currently expect Alphabet to generate earnings per share growth of more than 20% annually over the next five years. At the same time, the stock is trading at just over 20 times forward earnings estimates, making it a very attractive stock right now.

2. Chipotle Mexican Grill (19.5%)

Ackman initially invested in Chipotle Mexican Grill (NYSE: CMG) In 2016, following food safety concerns, many customers looked for alternatives. Ackman liked the company’s strong brand and leadership and saw an opportunity to buy shares. While it took a while to recover, the investment has since produced above-market returns for Pershing Square.

The story continues

Chipotle has been challenging the rest of the restaurant industry lately. Same-store sales increased 11% in the most recent quarter, driven by transaction volume and average sales. Chipotle continues to open new stores, adding 52 new restaurants in the most recent quarter. As a result, total revenue growth exceeded 18%.

In addition, it manages its costs and increases its operating margin.