Ackman Investing: 9 Companies Pershing Square Bought

Bill Ackman, hedge fund manager of Pershing Square Capital Management, gave a free course 101 on everything an investor needs to know about finance. The video, entitled William Ackman: Everything You Need to Know About Finance and Investing in Under an Hour may be viewed below:

Ackman is a value investor, similar to Warren Buffett or Benjamin Graham. Ackman advises investor look for these four things:

1.     Invest in public companies
2.     Understand how the company makes money  
3.     Invest at a reasonable price
4.     Invest in a company that could last forever
5.     Find a company with limited debt

Ackman’s advice is sound. He cites advantages younger investors have: by starting early with say, $10,000, with money that will not be needed for 5 to 10 years, that money can grow to six-figures. As an extreme example, Ackman reminds investors about the power of compounding. Millions may be made from the initial $10,000 over several decades, if an investor is able to avoid big losses and generated consistent returns like Buffett. Buffett generated around 20% return a year.

Ackman cites Coke (KO) as an example of a public company whose business is understandable. Other characteristics he looks for are businesses that:
  • Can grow over time
  • Sells products that people need
  • Has brand loyalty
  • Has a record of success

Psychology

Besides financial statements and business characteristics, Ackman says that investors need the right psychology of not following the herd. Investors need to resist selling when markets fall, and buying when markets rise.

Conclusion

Ultimately, being financially secure to begin with is the key to successful investing. This gives investors a greater cushion, making it easier to ignore the short-term fluctuations of markets.

Business Section: Investing Ideas

Ackman’s hedge fund has a long position in the following companies:

1. Alexander & Baldwin, Inc. ( ALEX, Earnings, Analysts, Financials): Operates in transportation, real estate, and agribusiness industries in the United States. Market cap at $1.24B, most recent closing price at $28.97.

 

2. Beam, Inc. ( BEAM, Earnings, Analysts, Financials): Market cap at $9.B, most recent closing price at $56.57. Of the long-positions, Ackman has a 13% position in this company

 

 

3. Burger King Worldwide, Inc. ( BKW, Earnings, Analysts, Financials): Market cap at $5.95B, most recent closing price at $17.0. The fund has a 6% position in this company. Since bottoming at $12.91, shares are now at a 52-week high

 

4. Canadian Pacific Railway Limited ( CP, Earnings, Analysts, Financials): Provides rail and intermodal freight transportation services. Market cap at $15.9B, most recent closing price at $91.83. The hedge fund is an activist in this company, with 23% of its long position in CP.

 

5. General Growth Properties Inc. ( GGP, Earnings, Analysts, Financials): Operates as a real estate investment trust in the United States. Market cap at $18.32B, most recent closing price at $19.51. This was a big winner for Ackman’s fund, as the company emerged from bankruptcy and was trading then in the single digits.

 

6. The Howard Hughes Corporation ( HHC, Earnings, Analysts, Financials): A real estate investment and development company, engaging in managing, developing, and leasing commercial, residential, and mixed-use real estate. Market cap at $2.76B, most recent closing price at $72.59.

 

7. Matson, Inc. ( MATX, Earnings, Analysts, Financials): Market cap at $978.03M, most recent closing price at $22.98.

 

 

8. J. C. Penney Company, Inc. ( JCP, Earnings, Analysts, Financials): Through its subsidiary, J. C. Penney Corporation, Inc., operates department stores in the United States and Puerto Rico. Market cap at $3.8B, most recent closing price at $17.36. Representing 11% of holdings, J.C. Penny shares are not performing well, as the company looks for ways to stem a decline in sales

 

9. Procter & Gamble Co. ( PG, Earnings, Analysts, Financials): Provides consumer packaged goods in the United States and internationally. Market cap at $190.25B, most recent closing price at $69.58. This company represents 27% of the long positions in the fund. Shares are trading at close to a 52-week high and pays a dividend of $2.25, or a yield of 3.20%.

 

 

During the Value Investing Congress, Ackman hinted he held a short position in a company, but did not mention what it was. Investors should recognize that any of the long positions above could be used as a hedge against his bearish plays.

Data Source: SEC 13F filings

 

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