Unlock Premium Data: Up to 50% Off InvestingProCLAIM SALE

Want To Invest Like Bill Ackman’s Pershing Square? Try These ETFs

Published 05/05/2022, 04:58 PM
Updated 07/09/2023, 06:32 AM
UK100
-
US500
-
IYR
-
LOW
-
CMG
-
HHH
-
DPZ
-
HLT
-
PID
-
ITB
-
PKB
-
RSPD
-
QSR
-
PSHP
-
PSHZF
-
EATZ
-
CRUZ
-
HOTL
-

The well-known hedge fund manager, Bill Ackman, is also referred to as an investor activist. In 2003, he founded Pershing Square Capital, an investment adviser registered with the US Securities and Exchange Commission (SEC).

Pershing Square Holdings (LON:PSHP) (OTC:PSHZF) is a closed-end fund run by Ackman. The fund:

“Makes concentrated investments in publicly traded, principally North American-domiciled, companies. PSH is incorporated in Guernsey…”

Pershing Square Holdings Weekly Chart

In December 2020, PSHP stock joined the FTSE 100, the U.K.’s leading equity index.

As reported by the company in its FY2021 annual report, the net return was 26.9% compared to the S&P 500 return of 28.7%.PSHZF Weekly

Over the past year, the stock has increased around 1% and offers a dividend yield of almost 1.5%. According to metrics provided by InvestingPro, the financial health of PSHP stock has a rating of 4 out of 5 compared to peers in the financial sectors.Financial Health

Source: InvestingPro

Those interested in participating in the potential growth offered by Pershing Square Holdings could simply buy PSHP stock. Others could prefer to diversify through exchange-traded funds (ETFs) that give access to the holdings currently held by Pershing Square Capital Management.

InvestingPro website also gives access to these names. Readers can follow the relevant 13F filings by the group on the SEC website as well.

Bill Ackman’s portfolio currently includes six companies. Five of them are consumer discretionary stocks, and the last one is a real estate name. Let’s take a closer look.

Ackman’s Stocks

A quarter of the portfolio is currently in Lowe’s Companies (NYSE:LOW), the home improvement retailer. The company also has the largest market capitalization (cap) among those six holdings.

Since January, LOW stock has lost close to 20%, and the dividend yield stands at 1.59%. Two ETFs that hold LOW are the Invesco Dynamic Building & Construction ETF (NYSE:PKB) and the iShares US Home Construction ETF (NYSE:ITB).

Among the six holdings, two names come with similar weightings and market caps, i.e., Hilton (NYSE:HLT), the global hospitality giant, and Chipotle Mexican Grill (NYSE:CMG), the Mexican food-chain. Their allocations are around 18.5%, and market caps are roughly $41 billion.

The Kelly Hotel & Lodging Sector ETF (NYSE:HOTL) and the Defiance Hotel, Airline and Cruise ETF (NYSE:CRUZ) could appeal to those looking to invest in HLT stock.

For potential investors in CMG stock, the Uncommon Portfolio Design Core Equity ETF (NYSE: UGCE) and the AdvisorShares Restaurant ETF (NYSE:EATZ) could offer an entry to the shares.

The remaining 38% of Pershing’s portfolio is more or less in three companies: Restaurant Brands International (NYSE:QSR), Howard Hughes (NYSE:HHC) and Domino’s Pizza (NYSE:DPZ). HHC is a real estate company, while the other two are in the restaurant business.

Of those three names, the Canada-based QSR stock is the dividend champ with a yield of a hefty 3.9%. It is also at a bargain price in terms of fair (or intrinsic) value, as the stock could increase by 30%. The Invesco International Dividend Achievers ETF (NASDAQ:PID) would be an ETF to consider by those who want to invest in QSR.

Revenue growth is an important metric for long-term investors. In that regard, HHC deserves to be on the radar screen as its growth is over 100% year-on-year. Two additional ETFs worth mentioning are the Genuine Investors ETF (NYSE: GCIG) and the iShares US Real Estate ETF (NYSE:IYR), which invest in HHC. Meanwhile, DPZ stock is also in the EATZ fund.

Readers that wonder how Wall Street analysts rate these six stocks may want to know that they all offer upside potential from their current levels. For instance, LOW could increase by over 40%. Next come CMG (31.5%), HHC (27.6%), QSR (19.7%), DPZ (16.3%) and HLT (4.1%).

Bottom Line

Finally, an alternative for the retail investor is to buy an ETF that holds a combination of these shares. Then the Invesco S&P 500 Equal Weight Consumer Discretionary ETF (NYSE:RCD) deserves further research.

LOW, HLT, CMG, and DPZ are all in this ETF. The fund has lost 15.1% year-to-date, offering long-term investors better value.

The current market makes it harder than ever to make the right decisions. Think about the challenges:

  • Inflation
  • Geopolitical turmoil
  • Disruptive technologies
  • Interest rate hikes

To handle them, you need good data, effective tools to sort through the data, and insights into what it all means. You need to take emotion out of investing and focus on the fundamentals.

For that, there’s InvestingPro+, with all the professional data and tools you need to make better investing decisions. Learn More »

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.