Pershing Square’s Stock Holdings & Investment Analysis

Updated on December 11th, 2020 by Nikolaos Sismanis

Pershing Square Capital is a New York-based hedge fund founded in 2004 and still managed by legendary investor Bill Ackman. Pershing Square is quite unique, as it has been structured as a closed-end fund whose shares are publicly traded, but is still managed like a hedge fund. According to the company’s latest 13F report, Pershing Square has around $7.7 billion worth of public equity holdings.

Investors following the company’s 13F filings over the last 3 years (from mid-November 2017 through mid-November 2020) would have generated annualized total returns of 21.5%. For comparison, the S&P 500 ETF (SPY) generated annualized total returns of 12.2%.

Note:  13F filing performance is different than fund performance.  See how we calculate 13F filing performance here.

You can download an Excel spreadsheet with metrics that matter of Pershing Square’s current 13F equity holdings below:

Keep reading this article to learn more about Pershing Square.

Table Of Contents

Pershing Square’s Legendary Manager, Bill Ackman

Since the fund’s inception, Pershing Square has been primarily managed by Bill Ackman, who initially funded the company with $54 million from his personal funds.

The billionaire hedge fund manager has gained legendary status in the investing community, having executed many successful and creative investment plays.

One such bet which dominated headlines recently involved him turning $27 million into $2.6 billion. Ackman used credit protection on investment-grade and high-yield bond indexes in his controversial bet that the coronavirus would tank the market.

The trade eventually paid off, netting Pershing Square billions in profits, at a time when most portfolios were recording losses. The uniquely structured position was so successful that Wall. St. journalists described Ackman’s bet as the single best trade of all time.

Mr. Ackman has several other noteworthy achievements throughout his career. In 2011 Pershing Square acquired a 14.2% stake in Canadian Pacific Railway Limited (CP). Ackman eventually won a fierce battle with the existing board to install a new CEO and overhaul the company’s business strategy. Over the next 3 years, CP shares quadrupled, just before Ackaman closed on of his most successful trades that netted the activist hedge fund a total of $2.6 billion in profit.

Finally, while Ackman’s coronavirus bet netted him a sizeable return, it’s certainly not Pershing Square’s first. In 2009, Ackman said that he realized a 13-fold return in General Growth Properties, which was on the brink of bankruptcy amid the Great Financial Crisis. By accomplishing a 7-year extension of the company’s $27.3 billion in debt, the mall owner was able to survive, and eventually, buy back Pershing Square’s stake. Ackman’s risky bet is now the second-best in his investing career, turning $60 million into $1.6 billion, exceeding his initial expectations.

Current Portfolio Holdings

Unlike many hedge funds, which will heavily diversify their portfolio holdings by investing in numerous equities, Pershing Square’s philosophy has always involved betting on a few high conviction ideas. All $8.8 billion worth of public equities are currently invested in only 7 stocks.

Source: Company filings, author

Pershing Square’s top three holdings are:

Lowe’s (LOW): Currently occupying around ¼ of the fund’s public-equities portfolio, is its largest position. Ackman has been building the position since 2018, in hopes that Lowes’s market share in the home improvement space will grow against Home Depot. The position was trimmed slightly, by 2% as of Pershing Square’s latest f13 filing. Mr. Ackman has paid an average estimated price of around $95 building the position. Shares are currently trading at around $160, making Lowes a winning bet over the past couple of years.

Chipotle Mexican Grill (CMG): At around 16% of Pershing Square’s equity holdings is Chipotle. Ackman has been buying shares since 2016, betting heavily in the fast-food chain. Shares have more than tripled since, with Pershing Square still holding around 4.1% of the company’s total shares. With an average estimates purchasing price around $386, Chipotle has been one of Pershing Square’s most successful picks, currently trading at $1317/share. No changes were made to this position as of recently.

Restaurant Brands International (QSR): Also occupying around 16% of the fund’s holding is Restaurant Brands. Ackman raised his stake by a substantial 66% over the past few months, now holding an 8.27% stake. After shares lost more than half of their value during March’s coronavirus selloff, Ackman’s investment has been rather successful, with the stock regaining most of its value from its pre-COVID-19 levels. Shares have gained additionally since last quarter, with no changes made to Pershing Square’s position.

Agilent Technologies (A): Occupying just under 15% of Pershing Square’s total holdings, is Agilent Technologies. Mr. Ackman has been consistently increasing his exposure to the company, currently owning around 4% of the outstanding shares. As he explained in his annual letter to shareholders, Mr. Ackman expects “the net impact of the virus on Agilent’s long-term intrinsic value to be minimal.” During its latest earnings report, the company reported revenues of $1.48 billion, an 8% growth YoY. Additionally management shared its FY2021 guidance, forecasting revenues of $5.6B -5.7B, representing a growth of 5% to 7%.

Hilton Worldwide Holdings (HLT): Pershing Square’s strategy of holding large chunks of major corporations is also reflected in HLT, in which Mr. Ackman has bought up a 5% stake. Mr. Ackman has commented that while the pandemic may have adversely impacted the hotel industry, it should also cause independent hotels to seek affiliation with global brands like Hilton, which will contribute to its long-term growth prospects. The company further benefits from a capital-light economic model and a strong balance sheet. The position was trimmed by around 3% compared to last quarter, possibly to book some gains as Mr. Ackman’s intuition has been right.  Shares have run by more than 30$ over the past 6 months

Starbucks Corporation (SBUX): Holding nearly 1% of its total shares and occupying around 10% of Pershing Square’s holdings is Starbucks. The stock marks another success story of Mr. Ackman’s market timing skills. Pershing Square sold its entire Starbucks stake near the stock’s all-time high levels in January, as it had exceeded Pershing Square’s intrinsic value estimates. Ackman repurchased the stock just before shares rebounded amid COVID-19’s massive selloff, scoring a winning swing trade. Starbucks has been one of the most successful of Pershing Square’s short-term trades of this past year. The position was held steady since Pershing Square’s last f13 filing.

Howard Hughes Corporation (HHC): Finally, Howard Hughes is the only real estate-related holding in Pershing Square’s portfolio, at around 7.3% of the total weight. While Mr. Ackman increased his position by 158% by 2019’s year-end, the position was trimmed by around 10% as of Pershing Square’s latest F13 filing. The trim is likely attributed to the company’s exposure to its Houston, Woodlands, and Bridgeland areas, which have been heavily impacted due to the decline in oil prices. However, Pershing Square is still holding nearly 20% of HHC’s shares, significantly backing the Dallas-based property manager.

Final Thoughts

Pershing Square is an unusual hedge fund, in which the public has the opportunity to buy into due to its public market listing. Run by renowned investor Bill Ackman, the company has massively outperformed the market over the past few years, through its uniquely structured plays, and high conviction ideas. While management’s annual fee of 1.3% (previously 1.5%) in NAV and 16% incentive fee may be quite rich, the company’s long-term performance has been well worth it.