NEW YORK ( TheStreet) - William Ackman, founder of fund Pershing Square and a major investor in JCPenny ( JCP) who recently added to stakes in Citigroup ( C), Family Dollar ( FDO) and Kraft ( KFT) unveiled his new investment focus: Fortune Brands ( FBHS). The investment was an idea created by Wharton grad analyst Ali Namvar, who presented it at the Value Investing Congress on Tuesday to a crowd expecting to hear from Ackman. "We think it's a tremendous stock," said Namvar.
In August, Fortune Brands spun off it's Home & Security business, which is the target of Pershing Square's new interest from its remaining alcohol selling business, now named Beam ( BEAM). The investment is not a full force bet on a housing recovery, Namvar said, but added that with a full housing recovery the company would earn $5 billion, have a EBITDA multiple three times today's levels -- and a stock of $27 a share. "We think it's a great low risk way to profit from a housing market recovery," said Namvar. Ackman added, "in order for the investment to really work we are expecting a housing market recovery." Pershing's best guess is that home starts reach 1.25 million a year within the next five years. "It's hard to find an investment where if things go poorly, nothing bad happens but if things recover we make a fortune," Ackman explained. In total, Pershing Square announced it now owns more than 15% of shares in Fortune Brand Home & Security, and that it started buying an interest prior to its August spin from Fortune parent Beam ( BEAM). >>View Pershing Square's Portfolio