Billionaire investor Bill Ackman holds 100% of his $11 billion portfolio in just eight stocks.

Bill Ackman is a legendary figure in the investing world. He manages the hedge fund he founded, Pershing Square Capital Management, which has nearly $11 billion in assets under management. Activist investors have made their wealth by securing significant positions in companies and encouraging management to make positive changes that increase shareholder value.

What sets Ackman apart from his hedge fund peers is that Pershing Square owns large stakes in just eight to 12 companies, and typically holds them for years. It focuses on high-quality, large-scale North American companies with limited downside and predictable, recurring cash flow. This strategy has been a huge success for Ackman, as Pershing Square has generated annualized returns of roughly 31% over the past five years. double performance of S&P 500.

To close out 2023, let’s take a look at the eight stocks that made up Pershing Square’s portfolio and why Ackman chose them.

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1. Chipotle: 22%

Chipotle Mexican Grill (C.M.G. 2.41%) This is Pershing’s largest holding, with approximately 825,000 shares worth more than $2.4 billion. Ackman first bought Chipotle stock in 2016 after the company saw its stock lose half its value due to devastating food safety issues.

Ackman cited Chipotle’s “continuing focus on exceptional food and operational excellence” to fuel the company’s impressive growth. In 2023, revenue grew 14%, resulting in a 38% increase in diluted earnings per share (EPS). Ackman highlighted Chipotle’s same-store sales, up 8%, and margin expansion of 26%, inspiring confidence that Chipotle has a “long runway for strong growth.”

For reference, Chipotle recently announced a 50:1 stock split, the first in the company’s 30-year history.

2. Hilton: 17%

Pershing has been around for a long time. Hilton Worldwide Holdings (HLT -0.89%), with a total value of 9 million shares worth nearly $1.9 billion. Ackman invested in the hotel operator in late 2018, significantly increasing his stake at the height of the pandemic, and is confident that his travel will eventually rebound. That bet paid off big time.

Ackman called Hilton “a high-quality business led by an outstanding management team.” In 2023, Hilton’s revenue increased 17% and adjusted EPS increased 27%. Ackman noted that the company’s revenue was 59% higher than pre-COVID-19 levels, in part due to average daily revenue per room being 13% higher than in 2022. Ackman was also impressed with the company’s market share growth.

3. Restaurant brand: 16%

Astute investors will recognize a trend that is beginning to emerge: continued investment in consumer resilience. Pershing Square holds more than 23 million shares. Restaurant Brands International (QSR 1.03%), holds a stake worth $1.7 billion. The company owns iconic brands such as Burger King, Popeyes, Firehouse Subs, and Tim Hortons. Ackman first invested in the restaurant in 2012, before the company was even public, and then increased his stake during the pandemic.

Ackman is very pleased with Restaurant Brands’ “long-term growth potential as it trades at a discounted valuation.” Global sales increased 12% in 2023, leading to a 16% increase in EPS. He also likes the company’s focus on a pure franchise loyalty model that offers “decades” of growth ahead.

4. Alphabet (Class C stock): 14%

One of the key developments in 2023 was Ackman’s investment. alphabet (GOOG 9.96%). Pershing holds 9.4 million shares of Class C stock, worth $1.5 billion, without voting rights. Ackman cited “misplaced concerns about the company’s artificial intelligence (AI) positioning,” leading to an attractive valuation. That bet is already paying off.

Alphabet’s core advertising business continued to improve throughout 2023, with revenue growing 10% and EPS surging 27%. Ackman believes that despite Alphabet’s heavy investments in AI, the strength of search and YouTube and the growth of Google Cloud will drive margin expansion.

Alphabet’s Class C shares have performed (slightly) better than its Class A shares over the past five years. In May Explain why Ackman possesses more electrons. That said, he also owns Class A stock. (see number 7)

5. Canadian Pacific Kansas City: 11%

In a page taken straight from Warren Buffett’s (and Bill Gates’) playbook, Ackman is betting on North American railroads. Pershing returns to one of his favorite investments in 2021, holding 15 million shares. Canadian Pacific Kansas City (CP -0.50%), worth more than $1.2 billion. Ackman is attracted to “oligopolistic industries with significant barriers to entry.”

Canadian Pacific’s revenue grew 42% in 2023, but EPS rose only 12% due to labor disruptions and the economic downturn. Canadian Pacific completed its acquisition of Kansas City Southern last year, creating the only rail line to run directly from Canada to Mexico. Ackman highlights the revenue and cost synergies and “unique network” this brings, and points out that rail is the cheapest and most viable way to transport heavy freight over long distances.

6. Howard Hughes Holdings: 11%

Of particular note is Pershing’s stake. Howard Hughes Holdings (Hehehe 1.05%), holds about 19 million shares worth $1.2 billion, or a 38% stake in the company. Ackman believes that real estate and land developer ownership of master planned communities (MPCs) will “drive resilient, long-term value creation.” He points to an ongoing shortage of resale home inventory that is fueling the surge in demand for new homes.

Howard Hughes Holdings delivered record pre-tax MPC profits and record operating profit, net of operating assets. If that sounds confusing, it’s not for everyone because this is a complex business designed to generate profits over years or decades, but it’s clear that Ackman is sold.

7. Alphabet (Class A stock): 6%

Pershing also has 4.3 million units. alphabet (google 10.22%) Class A stock — with Voting rights – worth $693 million. Since these are just different types of stocks of the same company, the investment thesis here is the same. (see number 4)

8. Rhodes: 3%

Until recently, Pershing Square held approximately 1.2 million shares. lowes (low -0.04%) It holds shares worth $286 million, but not much more. When the hedge fund’s annual report came out in February, it was revealed that Ackman had sold the remainder of his position. Pershing has maintained its stake in Lowe’s since 2018, generating $1.8 billion in revenue. These results were driven by business transformation, driven by five years of strong same-store sales growth and a 55% increase in operating margins.

Ackman said Pershing exited the investment, citing the macroeconomic environment, difficult industry conditions and increased downside risks.