An In-Depth Look at Billionaire Bill Ackman’s Concentrated Equity Portfolio

Pershing Square left its position in Canadian Pacific Railway Limited (USA) (NYSE:CP) untouched during the fourth quarter at 13.94 million shares, which were valued at $1.78 billion at the end of 2015. The position accounted for 14.28% of the fund’s concentrated equity portfolio and was the fourth-largest equity position. The shares of the transcontinental railway company have lost 35% over the past year and trade at a forward P/E multiple of 13.81, which is below the average of 15.25 for the companies included in the S&P 500 benchmark. Canadian Pacific Railway Limited (USA) (NYSE:CP) has been attempting to buy Norfolk Southern Corp. (NYSE:NSC), but the target has rejected all takeover offers thus far. Norfolk’s officials believe that regulators would reject such a merger, while Canadian Pacific’s management continues to believe that a potential merger would create a more efficient railway company. Daniel S. Och’s OZ Management cut its stake in Canadian Pacific Railway Limited (USA) (NYSE:CP) by 1.72 million shares during the fourth quarter, to 2.08 million shares.

Bill Ackman’s hedge fund owned 43.37 million shares of Mondelez International Inc. (NASDAQ:MDLZ) at the end of December, which were worth $1.94 billion. The activist firm did not make any adjustments to its Mondelez stake during the quarter. The stock of the global snacking powerhouse is up by nearly 6% over the past 12 months despite losing more than 12% since the beginning of 2016. The company generated net revenue of $29.6 billion during 2015, which was a decrease of 13.5% year-over-year. The decrease was mainly attributable to the adverse impact of currency exchange rates and the negative impact from a transaction related to its coffee business.

In July 2015, Mondelez International Inc. (NASDAQ:MDLZ) combined its wholly-owned coffee businesses with the businesses owned by D.E Master Blenders 1753 B.V. to create a new company called Jacobs Douwe Egberts (JDE). As a result, Mondelez holds a 43.5% equity interest in the combined JDE. Leaving the coffee businesses aside, Mondelez’s management anticipates organic revenue growth of at least 2% in 2016 and double-digit adjusted EPS growth at constant currency. Bill Ackman and his team “continue to be highly optimistic about the potential for Mondelez as it improves its operational efficiency and continues to grow while remaining an attractive merger candidate”. Nelson Peltz’s Trian Fund Management L.P. reported owning 48.03 million shares of Mondelez International Inc. (NASDAQ:MDLZ) through its 13F for the fourth quarter.

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