Billionaire Bill Ackman runs a niche equity portfolio, owning only around 10 stocks at a time. Ackman is a long-term activist and value investor, and is the founder of Pershing Square Capital. Ackman’s long-time friend Whitney Tilson received an MBA from Harvard and founded T2 Partners in 1999, which has returned a cumulative 175% since inception. We have found five stocks that Ackman and Tilson either love or hate (check out Whitney Tilson’s top picks). Enjoy.
Howard Hughes Corp (NYSE:HHC) is both Ackman and Tilson’s eighth largest 13F holding. The real estate developer is a spin-off of General Growth Properties following its emergence from bankruptcy. Ackman, along with Brookfield Asset Management and Fairhome Capital, teamed up to bring General Growth out of bankruptcy, defeating a rival bid from Simon Property Group. General Growth is now the U.S.’s second largest shopping mall. Tilson is also an owner in Brookfield, while Ackman owns General Growth. The properties owned by Howard Hughes are not well suited for a REIT structure given they need significant developing. As a result, the assets are considered hard to value, but Tilson places a valuation range on the shares between $67 and $125, per his presentation at this year’s Value Investing Congress. Billionaire John Paulson is also one of Howard Hughes’ big-name investors (check out John Paulson’s top picks).
Alexander & Baldwin Inc (NYSE:ALEX) is another real estate company, one that operates in the commercial and agriculture segment. Alexander is Ackman’s 10th largest 13F holding after dumping 60% of his stake last quarter, and Tilson has sold off his entire stake. Alexander has a focus toward Hawaiian real estate, with other operations that include a sugar plantation and a renewable energy generation. The real estate company’s unique portfolio makes it tough to find suitable comparables, but we believe that its 100x plus P/E puts it in overvalued territory. It also appears that Howard Hughes has a robust Hawaiian real estate portfolio, one that Ackman and Tilson prefer to Alexander’s.
J.C. Penney Company, Inc. (NYSE:JCP) is one of Ackman’s largest holdings and 5th in his 13F portfolio, but Tilson sold off all his shares last quarter. Recent issues include the retailer’s strategy to focus on low prices, as opposed to coupons. Analysts expect the new strategies to start yielding results in FY2014. In the interim, same store sales are expected to be down 20% in FY2013 and the stock was down near 40% in 2012, but still trades above other struggling retailer Sears – at 0.4x sales compared to Sears’ 0.1x. Also dumping his Penney stake last quarter was billionaire Jim Simons (check out Jim Simons’ biggest bets).
What about the remaining two?