Billionaire Bill Ackman’s Latest Stock Picks

PERSHING SQUAREBill Ackman doesn’t do much turnover in Pershing Square’s portfolio: a small number of concentrated positions, with little change from quarter to quarter (see Pershing Square’s stock picks over time). This is partly because of his long-term, special situations emphasis. The fund recently filed its 13F for the third quarter of 2012, disclosing many of its long equity positions as of the end of September. Here are some of the changes that Pershing Square did make over the previous three months:

Burger King. Pershing Square took a position of about 38 million shares in Burger King Worldwide Inc (NYSE:BKW), which is up about 2% from its June IPO. Burger King is trying to create value by converting many of its restaurants to franchises, which has led to lower revenues and only somewhat lower costs. Its trailing earnings multiple is quite high, suggesting that the market is depending on much better results from this shift in ownership (though the forward P/E of 22 is still higher than at many other restaurants). We think that investors should probably be looking at other restaurants instead, with McDonalds for example being a considerably cheaper stock.

Alexander/Matson. In mid-2012 shipping and logistics company Alexander & Baldwin Holdings changed its name to Matson Inc (NYSE:MATX) and spun out its real estate property operation as Alexander & Baldwin Inc. (NYSE:ALEX). Ackman now has positions in both stocks after having previously owned the old Alexander stock. Hedge funds like to invest in spinouts because management of each company can now focus more on the specifics of what had formerly been one of a larger company’s business segments (read more about spinouts). Our read on the two companies is that Alexander, at 47 times consensus earnings for 2013, doesn’t look like a good value while Matson seems to be improving as a more focused business. Matson’s forward P/E of 15 warrants caution, however, as it is based on high expectations for next year. The spinout story complicates the analysis and so if investors are interested they should definitely look at a company much more closely before buying.

Building positions. Ackman is closely identified with shopping mall operator General Growth Properties Inc (NYSE:GGP), which he had recommended in May 2009 and earned strong returns on; he is currently urging management to sell the company to Simon Property Group though he has been unsuccessful so far. Pershing Square’s ownership of the company ticked up slightly during Q3. General Growth Properties business has been about stagnant recently, and we’re not particularly bullish on the shopping mall industry. We think that we’d avoid the stock. Pershing Square also added to its position in The Procter & Gamble Company (NYSE:PG) with about 28 million shares in its portfolio at the end of September. Procter & Gamble looks good from a defensive perspective- the stock’s beta is 0.3, and the dividend yield is above 3%- but its business has been down. Sell-side analysts expect better results in the next couple years, with expected earnings coming in higher on a forward basis, but we’re not particularly confident in those projections given the company’s recent performance. At a trailing P/E of 18, we’re not sure that it’s a good deal either. Warren Buffett’s Berkshire Hathway has owned a large position in Procter & Gamble but has been selling share more recently.

We don’t think that any of these moves by Pershing Square necessarily make for good picks. Burger King seems overvalued, and Procter & Gamble looks to be priced pretty fairly- not much value opportunity there either. The other three companies we’ve noted here are tough to evaluate, but certainly none of them stand out as screaming buys.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!