Billionaire Investor Bill Ackman Owns Just 6 Stocks

Billionaire investor Bill Ackman first rose to fame during the housing crisis that sparked the Great Recession when he shorted shares of Municipal Bond Insurance Association and purchased credit default swaps against the company's debt.

Since then, Ackman and his fund Pershing Square Capital Management have had other victories, including getting the fast food chain Wendy's to spin off Tim Horton's, and some epic battles with the dietary supplement and marketing company Herbalife.

Since Pershing's founding in 2004, the fund has generated annualized returns of 17%. Today, Pershing owns just six stocks. Let's take a look.

Lowe's: 23.5% of the portfolio

The large home improvement retailer Lowe's (NYSE:LOW) is currently the largest position in Pershing's portfolio, valued at more than $2 billion. Pershing first initiated the position in the second quarter of 2018 (it had briefly owned the stock in 2011) and while there have been some sales over the years, Lowe's has been a big winner for Ackman. Pershing first purchased shares of Lowe's for an average price of around $90 and today the company trades at around $210 per share.

Lowe's is clearly one of those stocks that greatly benefited from the pandemic because people were spending much more time in their homes, which drove home improvement purchases. Even after things have normalized, people are still utilizing their homes much more than they did before.

Restaurant Brands International: 17.8% of the portfolio

Restaurant Brands International (NYSE:QSR) is one of the largest fast-food companies in the world, formed in 2014 by a $12.5 billion merger between the fast-food giants Burger King and Tim Horton's. In 2017, the company acquired Popeyes.

Given Ackman and Pershing's past with Tim Horton's, it's no surprise to see them having a big position in this one, which Pershing has been in on since the beginning. It first purchased 38 million shares in 2014, spent the next six years selling a large portion of those shares, and then did a big reup in 2020 when it purchased another 10 million shares.

Restaurant Brands largely operates a royalty-based franchise model, which allows its restaurants to navigate the high inflationary environment because royalties are based on revenue from the franchise stores, which generally increases in an inflationary environment. Strong brand power enables companies to pass higher costs on to consumers without too much pushback.

Chipotle Mexican Grill: 17.5% of the portfolio

If you haven't guessed yet, Ackman seems to have a taste for popular consumer-facing restaurant chains, and another one he has held since 2016 is Chipotle Mexican Grill (NYSE:CMG). Chipotle has also been a big winner for Ackman. Pershing purchased the bulk of Chipotle shares for an average price of $375, and the stock now trades at around $1,610.

As a result of high inflation, Chipotle has raised its prices intensely. As of July of last year, prices were up about 20% from the end of 2020. But the price hikes really haven't slowed down Chipotle's main customer base. While the company does trade at 50 times earnings, that's pretty much in line with its historical range.

Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Canadian Pacific Railway, Chipotle Mexican Grill, and Howard Hughes. The Motley Fool recommends Lowe's Companies and Restaurant Brands International. The Motley Fool has a disclosure policy.