Billionaire Bill Ackman Has 57% of His Hedge Fund's $16 Billion Portfolio Invested in 3 Outstanding Stocks

Bill Ackman's Pershing Square Capital maintains a highly concentrated portfolio, with over half of its $16 billion public equity holdings in just three companies: Alphabet, Uber Technologies, and Brookfield. Alphabet (20.7% of portfolio) is favored for its AI monetization potential, evidenced by accelerated Q3 revenue growth in search and cloud, a surging Google Cloud backlog, and an attractive valuation despite recent gains. Uber Technologies (18.5%) is highlighted for its profitable ridesharing business, strategic autonomous vehicle partnerships, strong user growth, and a new $20 billion share repurchase program supporting expected 30% EPS growth. Brookfield (17.7%) is positioned for substantial earnings growth driven by its rapidly expanding insurance business and an anticipated surge in carried interest income from its asset management segment, which Ackman estimates will lead to 30% distributable EPS growth and a bargain valuation.

Analysis

Bill Ackman's Pershing Square Capital maintains a highly concentrated portfolio, with over half of its $16 billion public equity holdings in just three companies, reflecting a long-term value investment strategy. Alphabet (GOOGL), representing 20.7% of the portfolio, is favored for its strong AI monetization, evidenced by a 15% year-over-year revenue growth acceleration in search and a 34% increase in Google Cloud revenue to $15.2 billion last quarter, with an expanded operating margin of 24%. The company's surging cloud backlog, up 82% year-over-year to $155 billion, and a new deal with Anthropic further underscore its growth trajectory, making its 27x forward earnings valuation appealing despite recent gains.

Uber Technologies (UBER), at 18.5% of the portfolio, demonstrates significant operational leverage and profitability. The company reported 15% year-over-year growth in monthly active platform consumers and an 18% increase in total trips and gross booking volume. Adjusted EBITDA grew 35% year-over-year in Q2, supporting a new $20 billion share repurchase program and an expected 30% EPS growth, making its 26x forward earnings valuation attractive.

Brookfield (BN), comprising 17.7% of the portfolio, is positioned for substantial earnings growth driven by its rapidly expanding insurance business, which tripled assets to $135 billion in three years, with a target of $600 billion. Additionally, management anticipates $6 billion in net carried interest income over the next three years and $25 billion over the next decade from its asset management segment. This is projected to accelerate distributable EPS growth to 30%, presenting a bargain valuation at less than 20 times trailing-12-month distributable earnings.

Key Decisions for Investors

• Investors should evaluate the long-term growth potential of Alphabet, Uber, and Brookfield, considering their strategic positioning in AI, operational efficiency, and alternative asset management, respectively.
• Consider the specific financial catalysts highlighted, such as Alphabet's AI-driven revenue acceleration and cloud backlog, Uber's share repurchase program and EPS growth projections, and Brookfield's insurance expansion and anticipated carried interest income.
• Assess the current valuations of these companies relative to their projected growth rates, as the article suggests appealing value propositions despite recent stock appreciation.