We recently got an updated look at the portfolios of many notable hedge funds, and there were a few moves from notable billionaire Bill Ackman's Pershing Square. These include a couple of large stock sales, as well as a couple of new positions.
One of the sales in particular stood out, as it has been one of the fund's best performers and is a member of the "Magnificent Seven." Here's a rundown of Pershing's latest moves, and what Ackman could be looking to do next.
Pershing made some big stock sales in the second quarter
Once a quarter, U.S. institutional investors who manage portfolios of $100 million or more must file SEC Form 13F, which provides a fresh look at their holdings. Studying the moves of top managers like Bill Ackman can be a great source of ideas for your own portfolio. It's especially noteworthy when they buy or sell a big-name stock -- like one of the Magnificent Seven, the giant innovators that have been driving the market higher in recent years.
Ackman actually decided to reduce four of Pershing's stock positions in the second quarter. Here's an overview of what they were:
Company (Ticker Symbol) | Shares Sold | Estimated Proceeds |
|---|---|---|
Alphabet (NASDAQ: GOOGL)(NASDAQ: GOOG) | 2,197,949 | $403.1 million |
Chipotle Mexican Grill (NYSE: CMG) | 8,384,035 | $525.3 million |
Hilton Worldwide Holdings (NYSE: HLT) | 228,890 | $50.0 million |
Canadian Pacific Railway (NYSE: CP) | 129,887 | $10.2 million |
TOTAL | $988.6 million |
Data source: Pershing Square SEC filings, as of 6/30/2024. Estimated proceeds are based on market value at the end of Q2. Alphabet sales include Class A (GOOGL) and Class C (GOOG) shares.
While it wasn't the largest sale, the one that stood out to me was Alphabet, a member in good standing of the Magnificent Seven. Not only was Alphabet the company's largest investment (it still is), but it has been an excellent performer for Pershing, nearly doubling in just over a year of ownership, as Pershing first reported owning Alphabet in the first quarter of 2023.
To be clear, we don't know exactly why Ackman chose to sell some of its Alphabet stake (or any of these other stocks). Maybe it was profit-taking. Maybe Ackman thinks the Magnificent Seven stocks are getting a bit too expensive. Or maybe Ackman wanted to raise capital for a future investment -- more on that in a bit.
It's also worth noting that both of the large sales took place sometime during the second quarter, at least two and a half months ago, which was fortunate timing. Alphabet's latest earnings report sent the stock sharply lower a few weeks ago, and Chipotle recently lost its CEO to Starbucks.
2 new additions to the portfolio
It's also interesting to note that Pershing added two brand-new stock positions during the second quarter. Ackman and his team bought a stake in asset manager Brookfield Corp (NYSE: BN), as well as in apparel giant Nike (NYSE: NKE).
To be sure, these weren't massive investments -- at least not by Ackman's standards. The two positions combine for about $500 million in market value, and all of Ackman's existing investments are worth over $1 billion each.
But it is significant when Pershing buys a new stock, as it traditionally maintains a small, concentrated portfolio. Even after adding these two, there are only 10 stocks in this portfolio that's worth more than $10 billion. In fact, these are the first new stocks added to the portfolio since Alphabet, over a year ago.
What could Ackman have in his sights?
One key takeaway is that Pershing Square was a net seller of stocks during the second quarter, and while we don't know the exact buying and selling prices, the company sold about half a billion dollars more than it bought.
While we also don't know exactly what Ackman's plans are, we do know that he recently initiated an attempt to take real estate developer Howard Hughes Holdings (NYSE: HHH) private. Pershing already owns 37% of Howard Hughes, and buying the rest would cost several billion dollars, so Ackman might be raising cash in anticipation of a potential deal.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Matt Frankel has positions in Brookfield Corporation, Howard Hughes, and Starbucks. The Motley Fool has positions in and recommends Alphabet, Brookfield, Brookfield Corporation, Canadian Pacific Kansas City, Chipotle Mexican Grill, Howard Hughes, Nike, and Starbucks. The Motley Fool recommends the following options: long January 2025 $47.50 calls on Nike and short September 2024 $52 puts on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.
Bill Ackman Just Sold a 'Magnificent Seven' Stock. Here's What He Might Buy With All the Cash. was originally published by The Motley Fool