This hedge fund outperformed the market in Q4 as revealed in its recent 13F filing with the SEC. I take a closer look at Pershing Square's $5.9 billion portfolio and current stock holdings below.
Pershing Square's Latest Form 13F Filing
On February 14th, Bill Ackman's firm Pershing Square filed its quarterly Form 13F regulatory filing. I reviewed the filing to gain a glimpse into the firm's large portfolio.
The hedge fund's stock portfolio totals $5.9 billion according to the latest filing. The list value of stock holdings is up 14.8% when compared to the last quarter. As a benchmark, the S&P 500 was up 6.1% over the same period.
The Ideas section of finbox.io tracks top investors and trending investment themes. You can get the latest data on the holdings discussed below at the Pershing Square page. The following table summarizes the firm's seven holdings reported in the last filing:
| Ticker | Name | Holding ($mil) | % Of Portfolio |
|---|---|---|---|
| QSR | RESTAURANT BRANDS INTL INC | $1,629.3 | 27.7% |
| ADP | AUTOMATIC DATA PROCESSING IN | $1,031.1 | 17.6% |
| MDLZ | MONDELEZ INTL INC | $995.4 | 16.9% |
| CMG | CHIPOTLE MEXICAN GRILL INC | $833.1 | 14.2% |
| HHC | HOWARD HUGHES CORP | $617.6 | 10.5% |
| PAH | PLATFORM SPECIALTY PRODS COR | $401.3 | 6.8% |
| NKE | NIKE INC | $365.0 | 6.2% |
The seven positions above represent 100.0% of the fund's total portfolio. Therefore, it's same to assume that Ackman has high conviction in these holdings.
Pershing Square's 2 Stock Purchases
I also used finbox.io to find Pershing Square's purchases last quarter. Here's the list of the only two stock additions determined by comparing the last two filings:
| Ticker | Name | Purchased ($mil) | % Of Portfolio |
|---|---|---|---|
| MDLZ | MONDELEZ INTL INC | $399.3 | 16.9% |
| NKE | NIKE INC | $365.0 | 6.2% |
The largest stock purchase for the quarter was Mondelez International, Inc. (Nasdaq: MDLZ). Pershing Square increased its position in the company by $399.3 million and the stock now represents 16.9% of the firm's portfolio.
The second stock purchase was Nike, Inc. (NYSE: NKE) which was also a new position for Ackman. The investment manager purchased a sizeable $365.0 million position in the athletic retailer. The stock now representing 6.2% of the firm's portfolio.
Analyst Targets On Pershing Square's 7 Positions
Banks and brokerages often release 12 to 18-month price targets for the stocks they cover. Analyst upgrades and downgrades alone can often impact a company's stock price.
"In the short run, the market is a voting machine but in the long run, it is a weighing machine." - Benjamin Graham
The table below highlights the analyst targets for Pershing Squares stocks.
| Ticker | Name | Upside (Analyst Target) | % Of Portfolio |
|---|---|---|---|
| PAH | PLATFORM SPECIALTY PRODS COR | 37.2% | 6.8% |
| HHC | HOWARD HUGHES CORP | 29.7% | 10.5% |
| QSR | RESTAURANT BRANDS INTL INC | 23.5% | 27.7% |
| MDLZ | MONDELEZ INTL INC | 17.5% | 16.9% |
| ADP | AUTOMATIC DATA PROCESSING IN | 7.8% | 17.6% |
| NKE | NIKE INC | 0.9% | 6.2% |
| CMG | CHIPOTLE MEXICAN GRILL INC | -4.5% | 14.2% |
Platform Specialty Products Corporation (NYSE: PAH) appears to be the most undervalued stock in the fund based on the average price target from Wall Street analysts.
Is It Worth Following Bill Ackman's Trading Activity?
Herbalife (NYSE: HLF). Valeant Pharmaceuticals (NYSE: VRX). Target (NYSE: TGT). These are just a few of the companies that activist investor Bill Ackman has muscled his way into, some of which have left him tattered and others have catapulted him to billionaire status.
When Ackman invests, he places billion-dollar bets on a handful of companies. This Indiana Jones approach has led to some bruising defeats, including a nearly $4 billion loss from a misplaced Valeant position. With rare humility, Ackman apologized to his investors for what he coughed up as a mistake.
One of Ackman’s most infamous bets was his multi-year $1 billion short position on weight loss and nutritional supplements play Herbalife, a position he abandoned amid the rise of the company’s stock despite Ackman’s cries of a pyramid scheme.
Although Ackman and Pershing Square have struggled recently, the hedge fund does have a track record of producing strong returns for investors. And most can agree that with thousands of stocks traded on U.S. exchanges, doing thorough research on each one is nearly impossible for smaller investors. Leveraging the resources of large hedge funds like Pershing Square can be a powerful way to narrow down a stock watch-list. Keeping tabs on Ackman's portfolio can certainly help with this.
Author: Andy Pai
Expertise: financial modeling, mergers & acquisitions
Andy is also a founder at finbox.io, where he's focused on building tools that make it faster and easier for investors to do investment research. Andy's background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights:
- Sears Holdings Corp.'s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores.
- Cerberus Capital Management's $3.3 bn acquisition of SUPERVALU Inc.'s New Albertsons, Inc. assets.
Andy can be reached at [email protected].
As of this writing, I did not hold a position in any of the aforementioned securities and this is not a buy or sell recommendation on any security mentioned.
