At the Value Investing Congress Tuesday, Pershing Square‘s Bill Ackman discussed his fund’s most bullish bets. The positions he discussed ranged from a faucet and home security company to a retail clothing store.
Bill Ackman Likes Fortune Brands $FBHS
Fortune Brands Home & Security, Inc. (FBHS) closed at $13.72 a share on Monday, the day before Ackman gave his speech. It closed yesterday at $14.48 a share and is trading at $15.06 a share right now. Ackman is a fan of this company because he says it has significant sale and market share. He also thinks it is worth $22 a share. Ackman likes its balance sheet, explaining that it is strong and limits downside risk. Plus, it has 1.8 debt/EBITDA compared to 4x for its rivals, so there are no concerns about liquidity. In fact, it is only going to get better. Why? Revenue for a company like FBHS that is focused on things like faucets, home security systems, windows and cabinets is only going to increase as the housing market recovers.
Bill Ackman is Also Bullish on $JCP
Bill Ackman also told attendees to the Value Investing Congress that he is bullish on JC Penney & Co (JCP). He likens JCP to a start up that has already established a business. Ackman was so anxious to be on board that he actually had to negotiate his stake and ended up with a seat on its board. To his mind, JCP fits perfectly with his Pershing Square Capital investment philosophy – buy a large minority stake when the company is cheap and work with it to make it more valuable. Ackman thinks the new CEO Ron Johnson is a fantastic addition. Johnson came to JCP from Apple earlier this year. JCP closed Monday at $29.99 a share. It closed today at $31.46.