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Bill Ackman: Insights from the Billionaire Investor's Portfolio

By Damian NowiszewskiMarket OverviewApr 20, 2023 06:10AM ET
www.investing.com/analysis/bill-ackman-insights-from-the-billionaire-investors-portfolio-200637379
Bill Ackman: Insights from the Billionaire Investor's Portfolio
By Damian Nowiszewski   |  Apr 20, 2023 06:10AM ET
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  • Bill Ackman is a billionaire and founder of the London-based Pershing Square Capital Management, known for making profitable investments.
  • His portfolio currently focuses on companies that generate large cash flows, making it more defensive in nature.
  • This article will use InvestingPro tools to examine his portfolio more closely.

What financial instruments do billionaires invest in?

This question has been asked more than once by anyone interested in or actively investing in the financial markets. We can look into the portfolios of the "big shots" thanks to regulations in force in the United States, which, among other things, require investment funds managing more than $100 million to report their transactions in the financial markets.

The reporting and publication take place with a delay of up to 45 days after the end of the quarter, so we do not have the opportunity to see the state of the portfolio in real time. Nevertheless, knowing the capital concentration structure of a given investment fund can be an important guide when developing your investment strategy.

Using the InvestingPro tools, we can view a selection of investment portfolios available under the 'Ideas' section.

Example of Search Results in the Ideas Section
Example of Search Results in the Ideas Section

Source: InvestingPro

Within the section, we can search using the following criteria:

  • Rate of return
  • Portfolio turnover
  • Companies included
  • Investor type
  • Sector concentration

For today's analysis, we will focus on the portfolio of Bill Ackman, the founder of London-based Pershing Square Holdings (LON:PSHP).

Who Is Bill Ackman?

Bill Ackman is an American billionaire, founder, and CEO of Pershing Square Capital Management. The famous investor is known for his stock market acumen, which allows him to make profitable investment decisions with the help of a close-knit and experienced team. When selecting companies, Bill Ackman focuses on those that generate large cash flows, which he believes is one of the key factors in a company's long-term success.

The billionaire is a proactive investor, often responding to changing market conditions at short notice. One example of a successful move was hedging a portfolio during the early stages of the coronavirus, which resulted in a $2.6 billion profit. The famous stock market adage "buy when there's blood in the streets" was particularly evident in the second half of last year when Ackman showed interest in the cryptocurrency market, which was making considerable losses at the time.

Pershing Square Capital Management Portfolio Insights

The portfolio structure is as follows (companies with the largest percentage holdings), according to the latest portfolio update filed with the SEC on 13 February 2023:

Bill Ackman’s Portfolio Structure
Bill Ackman’s Portfolio Structure

Source: InvestingPro

Currently, the portfolio's largest holding is Lowe’s Companies (NYSE:LOW), a U.S. home improvement chain that primarily sells building materials and tools. However, in terms of sectors, the largest component is Hotels, Restaurants, and Leisure.

Bill Ackman’s Portfolio Structure by Industry
Bill Ackman’s Portfolio Structure by Industry

Source: InvestingPro

The focus is on companies in the so-called traditional economy, which are more value-oriented than growth-oriented. This makes the portfolio more defensive, reducing losses in a bear market and the probability of spectacular returns.

2023 Outlook

Over the past five years, his equity portfolio has returned 81.79%, beating the benchmark S&P 500 index.

Equity Portfolio Returns Over the Past Five Years
Equity Portfolio Returns Over the Past Five Years

Source: InvestingPro

A key determinant of returns this year will be the Fed's monetary policy, which significantly impacts the broader equity market. If we do see the long-awaited pivot, then we should see a continuation of the positive trend in returns, which will go hand in hand with a rise in the S&P 500.

Disclosure: The author does not own any of the securities mentioned.

Bill Ackman: Insights from the Billionaire Investor's Portfolio
 

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Bill Ackman: Insights from the Billionaire Investor's Portfolio

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Ra MV Apr 20, 2023 2:50PM ET
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