Bill Ackman’s top investment strategies remain compelling even at current price levels.
Bill Ackman, the renowned investor behind the hedge fund Pershing Square Capital, adopts a focused approach by investing in a select group of high-conviction companies. This strategy is vital because achieving market-beating returns is challenging when investments are spread too thin, resulting in a portfolio that resembles the overall stock market. Currently, Ackman and his team have concentrated their investments in just ten publicly traded companies, allowing for a more targeted and effective investment strategy.
Ackman is known for deploying significant capital in his highest-conviction investments, often making multi-billion-dollar purchases at once. He prefers to hold these stocks for extended periods, which can lead to substantial returns over time. Consequently, the monthly updates provided to investors by Pershing Square and the quarterly disclosures filed with the SEC serve as valuable resources for generating investment ideas. Notably, Ackman’s top three investment ideas now constitute over half of Pershing Square’s publicly traded portfolio.
Below, we will explore Ackman’s top three holdings in detail.
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1. Uber: The Dominant Ride-Sharing Platform (19.7% of Portfolio)
Ackman has strategically accumulated a substantial stake of 30.3 million shares in Uber (UBER 1.65%), beginning his investment in early 2025 and announcing it on social media platform X in February. This investment quickly became the largest position in Pershing Square’s portfolio, as revealed in the first-quarter 13-F filing.
The value of this position has grown significantly alongside Uber’s stock, which has surged approximately 55% since the beginning of the year, reaching an all-time high. A significant portion of this increase followed Ackman’s public disclosure of the investment, demonstrating the impact of his endorsement on market perception.
Looking ahead, the long-term prospects for Uber appear promising. While some analysts view the rise of autonomous vehicles as a potential threat to Uber’s core ride-sharing business, it could actually present an opportunity for growth. Uber boasts the largest customer base in the taxi service sector, with 170 million monthly active users reported at the close of the first quarter. This extensive user base contributes to Uber’s growing market share, further enhanced by network effects and expanded service offerings.
This customer base is an invaluable asset that many companies developing autonomous vehicles aspire to access. For instance, Alphabet‘s Waymo, a leader in self-driving car technology, has already established partnerships with Uber to operate in numerous urban locations.
In terms of financial performance, Uber is on track to meet its ambitious goals. The company reported a 14% increase in gross bookings last quarter, and with improved operational efficiency, it achieved a remarkable 35% growth in earnings before interest, taxes, depreciation, and amortization (EBITDA). Furthermore, with minimal cash expenditures, Uber generated a 66% increase in free cash flow, translating to over 100% conversion of EBITDA.
Despite the impressive surge in share price, Uber’s stock remains fairly valued, trading at an enterprise value of less than 23 times forward EBITDA estimates as of this writing. Given management’s expectations of EBITDA growth exceeding 30% over the next couple of years, this presents a highly attractive investment opportunity.
2. Brookfield: A Leader in Alternative Asset Management (18.4%)
Over the past four quarters, Ackman has strategically positioned himself in Brookfield (BN 2.58%), a notable Canadian alternative asset management firm. Beyond asset management, Brookfield operates across diverse sectors, including real estate, renewable energy facilities, and infrastructure projects. These cash-generating businesses provide the capital necessary for further investment in operational ventures.
Brookfield’s insurance division, known as Brookfield Wealth Solutions, enhances its financial capability by offering additional capital through policy float, a strategy reminiscent of Warren Buffett‘s approach to growing Berkshire Hathaway. Ackman has expressed interest in adopting similar strategies within his investment philosophy.
Over the last five years, Brookfield has demonstrated robust growth, with distributable earnings per share expanding at an impressive average rate of 19% annually. There is no compelling reason to anticipate a significant slowdown in this growth trajectory in the coming years. Management plans to leverage its considerable cash flows from asset management, insurance, and operational businesses to acquire profitable assets while also returning additional capital to shareholders through stock buybacks. The management team has set an ambitious target of $6.33 in earnings per share by 2029, representing a compound annual growth rate of 16%. Notably, the company achieved a remarkable 30% growth in earnings during the first quarter.
Despite these optimistic growth projections, Brookfield’s stock is currently trading at just 19 times trailing earnings per share, significantly below its industry peers. This valuation appears to undervalue the company’s substantial growth potential, making it an attractive opportunity for investors seeking growth in the alternative asset management sector.
3. Howard Hughes Holdings: Transforming Real Estate into a Diversified Powerhouse (13.3%)
In May, following a strategic acquisition of an increased stake in Howard Hughes Holdings (HHH -0.12%), Ackman resumed his role as executive chairman of the company’s board. This investment involved a significant $900 million cash infusion from Pershing Square, resulting in Ackman acquiring 9 million shares, which translates to a 46.9% economic interest and 40% voting control in Howard Hughes.
This acquisition is vital as Ackman aims to transform Howard Hughes into a diversified holding company, mirroring the successful model employed by Berkshire Hathaway. One of Ackman’s initial strategies includes the establishment or acquisition of an insurance business to bolster the company’s financial foundation.
Currently, Howard Hughes’ core business appears undervalued. According to management estimates, the net asset value of its master-planned communities, condominiums, and operating assets (excluding corporate debt) stands at approximately $5.8 billion per share. The $900 million investment from Pershing Square will enhance this net asset value, yet the company’s total market capitalization remains at around $4 billion as of this writing.
Howard Hughes generates robust operating cash flow through the sale of land to homebuilders and rental income from its commercial and multifamily properties. By controlling the entire acreage of its master-planned communities, Howard Hughes can strategically develop properties to meet demand for office spaces and multifamily housing, ensuring strong returns on capital expenditures. The remaining cash flow can be reinvested in new ventures, particularly as it transitions into a diversified holding company.
While this new structure presents exciting opportunities, it does come with certain challenges. Howard Hughes is obligated to pay Pershing Square $3.75 million each quarter, in addition to a 0.375% incentive fee tied to increasing the business’s value above inflation. Nevertheless, this transformation allows average investors to invest alongside Ackman and gain access to potential private deals he may pursue, rather than solely following Pershing Square’s public investments. Given that the stock trades below management’s net asset value estimate, it represents a compelling investment opportunity for those looking to capitalize on undervalued assets.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Adam Levy has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet, Berkshire Hathaway, Brookfield, Brookfield Corporation, Howard Hughes, and Uber Technologies. The Motley Fool has a disclosure policy.
