Bill Ackman, the maverick CEO of Pershing Square Capital Management, is one of the world's most celebrated hedge fund managers. With close to $20 billion in assets under management (AUM) and a cult-like following on social media, Ackman's plans for an initial public offering (IPO) have attracted quite a bit of attention. However, the expected U.S. debut of Pershing Square USA, a version of which already exists in Europe, is facing some key hurdles.
First, Ackman has significantly reduced the IPO size, and now plans to raise $2.5 billion to $4 billion for the fund. This is a far cry from the $25 billion fundraising target announced just a few weeks ago. Then there is the delayed timeline, with no reason given - though Bloomberg now reports that pricing is expected on Aug. 5 after the close, with the IPO to debut the next day.
Beyond those uncertainties, the very nature of this particular offering is worth an extra dose of caution, as per Ackman's IPO filing: “Particularly in light of the novelty of the structure and closed-end funds’ very negative trading history, it requires a significant leap of faith and ultimately careful analysis and judgment for investors to recognize that this closed-end company will trade at a premium after the IPO when very few in history have done so.”
Finally, investors should note that the planned IPO is not an opportunity to buy shares of Ackman's well-known Pershing Square hedge fund; instead, Pershing Square USA will launch with minimal assets, primarily cash earmarked for IPO-related investment banking fees.
So, with the fund set to launch into a not-so-popular asset class, and amid sharply reduced funding and delays, the IPO might spark some hesitation even among Ackman's most loyal followers. But there's no need for Ackman acolytes to walk away disappointed, as the billionaire's portfolio is limited to a small handful of key stocks that can be easily recreated.
In this piece, we'll highlight the top stock picks that make up about 75% of Ackman's total equity holdings, for investors looking to DIY the billionaire's approach to markets - minus the IPO red tape and uncertainty.
1. Chipotle Mexican Grill
Founded in 1993 and based out of California, Chipotle Mexican Grill (CMG) is known for its emphasis on fresh, high-quality ingredients, including naturally raised meats and organic produce. Chipotle's menu features customizable burritos, bowls, tacos, and salads, allowing customers to create their meals. Chipotle's credibility can be gauged from the fact that it is one of the most highly valued fast-casual restaurant chains in the world, with a market cap of about $70 billion.
CMG stock is up 13% on a YTD basis.
Coming off a blockbuster Q2, Chipotle reported better-than-expected results as both revenue and earnings increased from the previous year, and surpassed expectations. Total revenues for the quarter came in at $2.97 billion, rising 18.3% as comparable restaurant sales increased by 11.1% from the prior year. EPS improved by 34.4% over the same period to $0.34, edging past the consensus estimate. Looking back, Chipotle's EPS has consistently topped Wall Street's estimates over the past five quarters.
As for Ackman, the billionaire investor owns 37.02 million shares of CMG, and the fast-casual restaurant stock made up 20.1% of his portfolio at the end of Q1.
Overall, analysts have a consensus rating of “Moderate Buy” for CMG stock, with a mean target price of $64.06. This suggests an expected upside potential of about 22.7% from here. Out of 30 analysts covering the stock, 19 have a “Strong Buy” rating, 1 has a “Moderate Buy” rating, and 10 have a “Hold” rating.
2. Alphabet
Google parent Alphabet, a favorite of more than one billionaire investor, is next on the list of the leading hedge fund manager's holdings.
Notably, Ackman owns both classes of publicly traded Alphabet shares. While his holdings of the non-voting Class C shares of Alphabet (GOOG) stand at 9.38 million, accounting for 13.27% of his portfolio, the Class A shares (GOOGL), which confer voting rights, account for 6.11%.
Shares of the search engine giant are up more than 21% on a YTD basis, and Alphabet also offers a dividend yield of 0.12%.
The company's latest results for Q2 came in above consensus estimates, even as investors sold the news. While quarterly revenues of $84.7 billion represented yearly growth of 13.6%, EPS rose by 31.3% to $1.89. Over the past five quarters, Alphabet's EPS have consistently topped analysts' expectations.
Moreover, Google maintains a dominant 91% search market share, ranks among the top three cloud providers with an 11% share, and boasts in-house AI expertise. This allows Google to integrate platform-building capabilities while innovating across existing and new offerings.
Analysts have an average rating of “Strong Buy” for Alphabet stock, with a mean target price of $202.33 - which indicates an upside potential of about 19% from current levels. Out of 44 analysts covering the stock, 34 have a “Strong Buy” rating, 3 have a “Moderate Buy” rating, and 7 have a “Hold” rating.
3. Hilton Hotels
Next up in Ackman's portfolio of top holdings, we return to another name from the hospitality sector - Hilton Hotels (HLT). Founded in 1919, Hilton has some of the most recognizable hotel brands in the world, including the eponymous Hilton, Conrad, Waldorf Astoria, and more. The company owns, manages, franchises, and licenses a portfolio of hotels under these renowned brands, with a current market cap of $54.5 billion.
With the ongoing recovery in travel, HLT stock is up 20.2% on a YTD basis, and it also offers a dividend yield of 0.28%.
Hilton's results for Q1 delivered a beat on both the revenue and earnings front. Revenues were up by 12.2% on a YoY basis to $2.57 billion, while EPS shot up by about 24% to $1.53, outpacing the consensus estimate of $1.41. Notably, this marked the fifth straight quarter of the company surpassing Wall Street's EPS estimate.
With its asset-light model and a wide footprint (23 brands and a total of 7,626 properties), Hilton remains well-positioned to benefit from a growing preference for branded hotels. Moreover, Hilton has a sticky customer base; its loyalty members surged from 36 million in 2012 to 188 million in 2024, and more notably, the percentage of hotel occupancy by members has reached 65% from 40% in 2007.
Meanwhile, Ackman own 9.18 million shares of Hilton, which account for an 18.2% weight in his portfolio.
Overall, analysts have deemed HLT stock a “Moderate Buy,” with a mean target price of $220.46 - not too far above current prices. However, the Street-high target price of $254 suggests an upside potential of 16.1% from current levels. Out of 20 analysts covering the stock, 6 have a “Strong Buy” rating, 2 have a “Moderate Buy” rating, and 12 have a “Hold” rating.
4. Restaurant Brands International
Continuing his fascination with the food and hospitality sector, Ackman's next largest holding is Restaurant Brands International (QSR). Founded in 2014 through the merger of Burger King and Tim Hortons, Restaurant Brands is a Canadian-American multinational fast-food holding company headquartered in Toronto, Canada. The company operates and franchises the iconic Burger King, Tim Hortons, and Popeyes Louisiana Kitchen brands. QSR's market cap currently stands at $21.9 billion.
QSR stock is down 11.6% on a YTD basis, and it offers a dividend yield of 3.34% at current levels.
QSR's latest results for Q1 delivered a beat on both revenue and earnings. Quarterly revenues of $1.74 billion were up 9.4% year over year, though EPS declined 1.9% to $0.73. Nevertheless, QSR's quarterly profit topped Wall Street's expectations, just like in the previous four quarters.
Additionally, Restaurant Brands is eyeing an expansion of its footprint. The company's expansion project involves reaching the target of 40,000 stores and $60 billion in worldwide sales by the end of 2028.
For perspective, CEO Joshua Kobza said that the company's brands grew an average of 30% in 2023 in the American market, with Burger King growing 50% more than in 2022 - hinting at the fact that even in a tough, high-inflation environment for fast food, the company's offerings are finding takers.
As for Bill Ackman, the billionaire currently owns 23.52 million shares of QSR, giving the burgers-and-donuts giant a weight of 16.49% of his total portfolio.
Overall, analysts have deemed QSR stock a “Moderate Buy,” with a mean target price of $85 - representing expected upside potential of about 22.6% from current levels. Out of 25 analysts covering the stock, 15 have a “Strong Buy” rating, 1 has a “Moderate Buy” rating, 8 have a “Hold” rating, and 1 has a “Moderate Sell” rating.
