TLDR
- Bill Ackman’s Pershing Square Capital has 56% of its $16.5 billion fund invested in Alphabet, Brookfield Corp, and Uber Technologies
- Alphabet represents 22.6% of holdings with Google Cloud revenue up 34% and new Gemini AI deal with Apple worth billions
- Brookfield Corp holds 17.7% position with carried interest revenue surging 152% to $154 million in Q3 2024
- Uber Technologies at 15.5% shows monthly active users growing 17% while adjusted EBITDA climbs 33% year-over-year
- Ackman’s concentrated strategy targets undervalued companies with strong AI, asset management, and mobility growth potential
Billionaire hedge fund manager Bill Ackman runs Pershing Square Capital with a focused investment approach. His firm concentrates more than half its $16.5 billion public stock portfolio in just three companies.
Ackman buys stocks when he believes the market undervalues their potential. He conducts extensive research before making large bets on companies. His top three positions have all grown since he first invested.
The three stocks dominating his portfolio are Alphabet, Brookfield Corp, and Uber Technologies. They combine for 56% of total holdings. Each represents a different bet on future growth in technology, finance, and transportation.
Alphabet Stock: Ackman’s Largest Holding at 22.6%
Alphabet forms Ackman’s biggest position in the Pershing Square portfolio. He purchased shares around two and a half years ago. At the time, he believed markets underestimated the company’s AI strength while overestimating ChatGPT’s threat to Google.
Google Cloud business has delivered strong results with 34% revenue growth in the third quarter. Operating margins in the cloud division continue expanding. The company’s Tensor Processing Units are winning customers and improving profitability.
Google Search revenue reached 15% growth in Q3 2024. The company added AI Overviews to search results without damaging ad revenue. User engagement actually increased with the new AI features.
Alphabet signed a major deal with Apple to power Siri using Gemini AI technology. This partnership will generate billions in revenue. It also deepens the relationship between the two tech giants. With a forward price-to-earnings ratio of 30, the stock trades at fair value for its growth rate.
Brookfield Corp: Asset Management and Insurance Growth
Brookfield Corp accounts for 17.7% of Ackman’s portfolio. The Canadian company earns most of its value from subsidiary Brookfield Asset Management. A fast-growing insurance business provides additional revenue.
The asset management division generates carried interest fees. These fees are paid when funds beat their benchmark returns. Brookfield only books this revenue after investors receive their preferred returns first.
Carried interest income is climbing fast. Net carried interest hit $154 million in the third quarter compared to $61 million last year. The company expects this growth to continue as new funds launch and older funds mature.
Management projects $25 billion in total carried interest over the next decade. Brookfield collects 33% of these fees on recent funds without any associated costs. The insurance segment called Wealth Solutions should double its assets in five years. This division is expected to triple profits by 2030 while maintaining 15% returns on equity.
The stock trades at 24 times trailing distributable earnings. This valuation looks cheap given the projected growth in both business segments.
Uber Stock: Ride-Sharing Platform Embraces Autonomous Vehicles
Uber Technologies represents 15.5% of Pershing Square’s holdings. Some investors worry autonomous vehicles will destroy Uber’s business model. Ackman sees the opposite outcome with Uber becoming critical infrastructure for self-driving cars.
Uber’s platform matches riders with drivers and optimizes routes. This demand aggregation helps autonomous vehicle companies maximize car utilization. Alphabet’s Waymo already partnered with Uber to launch robotaxis in multiple cities.
Uber works with Nvidia to develop AI models for autonomous driving startups. The company signed several partnerships with self-driving vehicle companies in the past year.
Monthly active users grew 17% in the third quarter. Users are taking more trips with frequency up 4% per person. Strong user growth drives revenue while costs grow slower. Adjusted EBITDA jumped 33% in the latest quarter.
Uber’s enterprise value equals 22 times trailing adjusted EBITDA. This multiple appears reasonable for a company growing users and expanding into autonomous vehicles.
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