Billionaire activist investor Bill Ackman has a unique strategy: focus on a handful of high-quality businesses and invest heavily where he sees potential for significant value. As of now, more than 45% of his hedge fund, Pershing Square Capital’s $13.4 billion portfolio, is concentrated in just three stocks.
Alphabet (16.5%)
Ackman’s stake in Alphabet (GOOG, GOOGL) highlights his confidence in the company’s ability to navigate challenges in artificial intelligence (AI). While many investors worried about competition from AI-driven tools like ChatGPT, Ackman saw opportunity. Pershing Square holds around $2.2 billion in Alphabet’s Class A and Class C shares.
Although he slightly reduced his position in the second quarter, Alphabet’s strong stock performance has kept it as Ackman’s top holding. Alphabet’s AI initiatives, such as its AI Overview product and tools like Circle to Search and Google Lens, have increased user engagement. AI advancements are also boosting revenue for Google Cloud, which saw a 35% increase in revenue last quarter, turning a $440 million loss into a $1.95 billion profit.
Despite regulatory risks, Alphabet’s valuation remains attractive, trading at just over 21 times analysts’ 2025 earnings estimates. Ackman’s focus on companies tied to AI reinforces Alphabet’s potential as a valuable long-term investment.
Brookfield (14.4%)
Brookfield (BN) represents another significant portion of Ackman’s portfolio. Pershing Square’s holdings in the alternative asset management company are valued at approximately $1.9 billion. Ackman began acquiring shares in the second quarter and expanded his stake significantly in the third quarter.
Brookfield operates across sectors like infrastructure, renewable energy, and real estate. The company has a history of moves designed to unlock shareholder value. For example, its transition from a partnership to a corporation in 2020 allowed more institutional investors to buy its shares. Additionally, Brookfield’s 73% stake in its spun-off asset management business is set to become publicly tradable, making it eligible for inclusion in U.S. stock indexes.
Management’s outlook for Brookfield is strong, with expectations of 20% annual free cash flow growth over the next five years. Brookfield’s stock has risen over 40% since mid-2024, but it remains undervalued, trading at just 15 times distributable earnings. This makes it an appealing option for investors looking to capitalize on alternative assets.
Hilton (14%)
Ackman’s investment in Hilton Worldwide (HLT) dates back to 2018, with significant additions made during the COVID-19 pandemic. Today, Pershing Square holds about $1.9 billion worth of Hilton shares, even after selling 18% of its position last quarter.
Ackman’s long-term thesis for Hilton centers on its expansive network of brands and properties, which he describes as a “strong competitive moat.” Since 2019, Hilton has grown its total properties by 36% to over 8,300, and its Hilton Honors loyalty program now boasts more than 200 million members. These factors create a network effect, driving mutual growth between hotels and loyal customers.
Hilton’s stock performance has been robust, trading at an enterprise value-to-EBITDA ratio of about 30. While this is a high valuation, Ackman remains optimistic about Hilton’s long-term prospects. However, given its current price, investors may find more opportunities elsewhere.
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Conclusion
Ackman’s strategy of concentrated investments in high-quality companies allows him to exert influence and unlock value. Alphabet, Brookfield, and Hilton showcase his focus on businesses with strong growth potential and competitive advantages. While these stocks dominate Pershing Square’s portfolio, their distinct strengths make them worth considering for individual investors.