Billionaire Bill Ackman’s Pershing Square recently published its 2018 Annual Investor Letter, in which, among other things, discussed in thesis every position from its 13F portfolio. If you want, you can track a copy of the fund’s annual letter 2018 – here. Bill Ackman said about Starbucks Corporation (NASDAQ:SBUX), one of the 2018 additions to its equity portfolio, that it should continue to achieve long-term high earnings.
Starbucks (“SBUX”)Starbucks, a new addition to the portfolio in 2018, is the global dominant brand in the specialty coffee category, with 30,000 owned and licensed stores that generate approximately $35 billion in annual systemwide sales. The category benefits from a loyal customer base with a frequent consumption habit and trade-up potential. Starbucks’ market position is protected by a wide moat with competitive advantages over both low-cost and boutique players. Starbucks is one of the rare mega-cap businesses with a long runway for reinvesting free cash flow at exceptionally high rates of return. New Starbucks stores have industry-leading unit economics, which we estimate generate a pretax return on investment of 55% in the U.S. and 75% in China. The company should continue to grow revenues at a high-single-digit rate driven by unit growth in underpenetrated markets such as China where per-capita coffee consumption is less than 1% of U.S. levels, and product innovations which have generated continued same-store-sales growth.Despite an enviable long-term track record, Starbucks’ stock was down modestly over the three years prior to our investment while earnings grew 50% over that timeframe, allowing us to acquire Starbucks shares at a 25% discount to the company’s historical average valuation multiple of 26 times forward earnings. We believe that the reduced valuation was driven by concerns regarding a slowdown in U.S. same-store sales, the perceived risk to its achieving its long-term financial growth targets, and uncertainty due to the company’s senior leadership transition and management turnover. Starbucks has demonstrated strong progress in addressing each of these concerns since we made our investment. Driven by a resurgence in Starbucks’ core beverage category, U.S. same-store sales grew 4% in each of the last two quarters, following four consecutive quarters of between 1% and 2% growth. Tailwinds that should drive continued growth include the rollout of the Nitro cold beverage platform from 40% of the store base in January to 100% by the end of September, new marketing efforts to less frequent customers, loyalty program changes to allow members to earn rewards more quickly, the rollout of delivery, and the wind-down of inventory rationalization efforts. Management unveiled updated long-term financial growth targets at its biennial investor day in December, which we believe will prove to be conservative over time, particularly management’s operating profit margin guidance. We are impressed by the bold actions the new leadership team has taken to simplify the business and drive improved results including portfolio realignment, an ongoing overhead reduction program, and a $20 billion share buyback program, which should reduce shares outstanding by about 20% over the 2018-2020 timeframe. In 2018, Starbucks’ shares including dividends increased 27% from our average cost at inception and an additional 11% year-to-date in 2019. Despite this outsized return since our investment, we believe prospective returns remain compelling as the company should continue to grow long-term earnings at a high rate due to strong secular growth and outstanding unit economics.
Starbucks Corporation is an American world famous coffeehouse chain, which manages more than 30,000 location over the world. It was launched back in 1971, in Seattle, Washington. Since the beginning of the year, its shares have gained almost 15%, and on March 29th, it was trading at $73.96.
At Q4’s end, a total of 42 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 27% from the previous quarter. The graph below displays the number of hedge funds with bullish position in SBUX over the last 14 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Starbucks Corporation (NASDAQ:SBUX) was held by Pershing Square, which reported holding $757 million worth of stock at the end of September. It was followed by Cedar Rock Capital with a $636.6 million position. Other investors bullish on the company included Millennium Management, Two Sigma Advisors, and Arrowstreet Capital.
In its last financial report for the first quarter of Fiscal 2019, ended December 30, 2018, Starbucks Corporation disclosed consolidated net revenues of $6.6 billion, up by 9% from the corresponding period in 2017. It also reported GAAP EPS of $0.61, down by 61% over the previous year, and Non-GAAP EPS of $0.75, up by 15% from the same period in 2017.
Disclosure: None.
This article was originally published at Insider Monkey.
Artificial intelligence is the greatest investment opportunity of our lifetime. The time to invest in groundbreaking AI is now, and this stock is a steal!
AI is eating the world—and the machines behind it are ravenous.
Each ChatGPT query, each model update, each robotic breakthrough consumes massive amounts of energy. In fact, AI is already pushing global power grids to the brink.
Wall Street is pouring hundreds of billions into artificial intelligence—training smarter chatbots, automating industries, and building the digital future. But there’s one urgent question few are asking:
Where will all of that energy come from?
AI is the most electricity-hungry technology ever invented. Each data center powering large language models like ChatGPT consumes as much energy as a small city. And it’s about to get worse.
Even Sam Altman, the founder of OpenAI, issued a stark warning:
“The future of AI depends on an energy breakthrough.”
Elon Musk was even more blunt:
“AI will run out of electricity by next year.”
As the world chases faster, smarter machines, a hidden crisis is emerging behind the scenes. Power grids are strained. Electricity prices are rising. Utilities are scrambling to expand capacity.
And that’s where the real opportunity lies…
One little-known company—almost entirely overlooked by most AI investors—could be the ultimate backdoor play. It’s not a chipmaker. It’s not a cloud platform. But it might be the most important AI stock in the US owns critical energy infrastructure assets positioned to feed the coming AI energy spike.
As demand from AI data centers explodes, this company is gearing up to profit from the most valuable commodity in the digital age: electricity.
The “Toll Booth” Operator of the AI Energy Boom
It owns critical nuclear energy infrastructure assets, positioning it at the heart of America’s next-generation power strategy.
It’s one of the only global companies capable of executing large-scale, complex EPC (engineering, procurement, and construction) projects across oil, gas, renewable fuels, and industrial infrastructure.
It plays a pivotal role in U.S. LNG exportation—a sector about to explode under President Trump’s renewed “America First” energy doctrine.
Trump has made it clear: Europe and U.S. allies must buy American LNG.
And our company sits in the toll booth—collecting fees on every drop exported.
But that’s not all…
As Trump’s proposed tariffs push American manufacturers to bring their operations back home, this company will be first in line to rebuild, retrofit, and reengineer those facilities.
AI. Energy. Tariffs. Onshoring. This One Company Ties It All Together.
While the world is distracted by flashy AI tickers, a few smart investors are quietly scooping up shares of the one company powering it all from behind the scenes.
AI needs energy. Energy needs infrastructure.
And infrastructure needs a builder with experience, scale, and execution.
This company has its finger in every pie—and Wall Street is just starting to notice.
Wall Street is noticing this company also because it is quietly riding all of these tailwinds—without the sky-high valuation.
While most energy and utility firms are buried under mountains of debt and coughing up hefty interest payments just to appease bondholders…
This company is completely debt-free.
In fact, it’s sitting on a war chest of cash—equal to nearly one-third of its entire market cap.
It also owns a huge equity stake in another red-hot AI play, giving investors indirect exposure to multiple AI growth engines without paying a premium.
And here’s what the smart money has started whispering…
The Hedge Fund Secret That’s Starting to Leak Out
This stock is so off-the-radar, so absurdly undervalued, that some of the most secretive hedge fund managers in the world have begun pitching it at closed-door investment summits.
They’re sharing it quietly, away from the cameras, to rooms full of ultra-wealthy clients.
Why? Because excluding cash and investments, this company is trading at less than 7 times earnings.
And that’s for a business tied to:
The AI infrastructure supercycle
The onshoring boom driven by Trump-era tariffs
A surge in U.S. LNG exports
And a unique footprint in nuclear energy—the future of clean, reliable power
You simply won’t find another AI and energy stock this cheap… with this much upside.
This isn’t a hype stock. It’s not riding on hope.
It’s delivering real cash flows, owns critical infrastructure, and holds stakes in other major growth stories.
This is your chance to get in before the rockets take off!
Disruption is the New Name of the Game: Let’s face it, complacency breeds stagnation.
AI is the ultimate disruptor, and it’s shaking the foundations of traditional industries.
The companies that embrace AI will thrive, while the dinosaurs clinging to outdated methods will be left in the dust.
As an investor, you want to be on the side of the winners, and AI is the winning ticket.
The Talent Pool is Overflowing: The world’s brightest minds are flocking to AI.
From computer scientists to mathematicians, the next generation of innovators is pouring its energy into this field.
This influx of talent guarantees a constant stream of groundbreaking ideas and rapid advancements.
By investing in AI, you’re essentially backing the future.
The future is powered by artificial intelligence, and the time to invest is NOW.
Don’t be a spectator in this technological revolution.
Dive into the AI gold rush and watch your portfolio soar alongside the brightest minds of our generation.
This isn’t just about making money – it’s about being part of the future.
So, buckle up and get ready for the ride of your investment life!
Act Now and Unlock a Potential 100+% Return within 12 to 24 months.
We’re now offering month-to-month subscriptions with no commitments.
For a ridiculously low price of just $9.99 per month, you can unlock our in-depth investment research and exclusive insights – that’s less than a single fast food meal!
Here’s why this is a deal you can’t afford to pass up:
Access to our Detailed Report on our AI, Tariffs, and Nuclear Energy Stock with 100+% potential upside within 12 to 24 months
BONUS REPORT on our #1 AI-Robotics Stock with 10000% upside potential: Our in-depth report dives deep into our #1 AI/robotics stock’s groundbreaking technology and massive growth potential.
One New Issue of Our Premium Readership Newsletter: You will also receive one new issue per month and at least one new stock pick per month from our monthly newsletter’s portfolio over the next 12 months. These stocks are handpicked by our research director, Dr. Inan Dogan.
One free upcoming issue of our 70+ page Quarterly Newsletter: A value of $149
Bonus Content: Premium access to members-only fund manager video interviews
Ad-Free Browsing: Enjoy a month of investment research free from distracting banner and pop-up ads, allowing you to focus on uncovering the next big opportunity.
Lifetime Price Guarantee: Your renewal rate will always remain the same as long as your subscription is active.
30-Day Money-Back Guarantee: If you’re not absolutely satisfied with our service, we’ll provide a full refund within 30 days, no questions asked.
Space is Limited! Only 1000 spots are available for this exclusive offer. Don’t let this chance slip away – subscribe to our Premium Readership Newsletter today and unlock the potential for a life-changing investment.
Here’s what to do next:
1. Head over to our website and subscribe to our Premium Readership Newsletter for just $9.99.
2. Enjoy a month of ad-free browsing, exclusive access to our in-depth report on the Trump tariff and nuclear energy company as well as the revolutionary AI-robotics company, and the upcoming issues of our Premium Readership Newsletter.
3. Sit back, relax, and know that you’re backed by our ironclad 30-day money-back guarantee.
Don’t miss out on this incredible opportunity! Subscribe now and take control of your AI investment future!
No worries about auto-renewals! Our 30-Day Money-Back Guarantee applies whether you’re joining us for the first time or renewing your subscription a month later!
I work for one of the largest independent financial publishers in the world – representing over 1 million people in 148 countries.
We’re independently funding today’s broadcast to address something on the mind of every investor in America right now…
Should I put my money in Artificial Intelligence?
Here to answer that for us… and give away his No. 1 free AI recommendation… is 50-year Wall Street titan, Marc Chaikin.
Marc’s been a trader, stockbroker, and analyst. He was the head of the options department at a major brokerage firm and is a sought-after expert for CNBC, Fox Business, Barron’s, and Yahoo! Finance…
But what Marc’s most known for is his award-winning stock-rating system. Which determines whether a stock could shoot sky-high in the next three to six months… or come crashing down.
That’s why Marc’s work appears in every Bloomberg and Reuters terminal on the planet…
And is still used by hundreds of banks, hedge funds, and brokerages to track the billions of dollars flowing in and out of stocks each day.
He’s used this system to survive nine bear markets… create three new indices for the Nasdaq… and even predict the brutal bear market of 2022, 90 days in advance.