Bill Ackman Buys Nike
Legendary Investor Series
Legendary investor Bill Ackman significantly increased his positions in NIKE and Brookfield and opened a new, smaller position in Seaport Entertainment.
At the same time, he reduced his existing position in Hilton. His remaining positions in Alphabet (Google), Chipotle, Restaurant Brands, Howard Hughes, and Canadian Pacific were either unchanged or essentially unchanged.
Bill Ackman is the founder of Pershing Square Capital Management and a legendary investor. He likes to run a concentrated portfolio of companies, takes the long view, is a value investor, and acquires significant stakes in companies to force strategic changes.
He often does this by acquiring a seat on the board of directors, which gives him a strong voice in the management of the company. He has been doing this for a long time. Here's a 2016 news article about Chipotle, a company he still owns (one of his top 5 investments).
“Chipotle Mexican Grill (CMG), under pressure from activist investor Bill Ackman, appointed four more members to its board, including nominees from Ackman’s Pershing Square Capital Management.”
Source: https://fortune.com/2016/12/16/chiptole-bill-ackman-board-members/
By the way, Bill Ackman is the kind of activist investor that the management of Dividend Aristocrat companies doesn’t like (see my article about Dividend Aristocrats). They keep investors like him at bay by focusing on retail and other investors who value reliable, growing dividends year after year - without fail. Neither approach is wrong - just different ways to run a business.
Getting back to Bill Ackman, what can we learn from his recent changes in investments?
Significant Increases and New Acquisition
Bill Ackman's portfolio analysis is based on the latest SEC filing from November 2024, which details Bill Ackman's portfolio as of September 30, 2024, compared to his previous portfolio as of June 30, 2024.
As mentioned above, legendary investor Bill Ackman significantly increased his positions in NIKE and Brookfield, and opened a new small position in Seaport Entertainment.
NIKE, Inc. (2020 to Dec 2024)
NYSE: NKE, US Dollar
Source: https://stockanalysis.com/stocks/nke/
Nike is the 7th largest position in Bill Ackman's portfolio, representing 11.1% of his portfolio by market value.
Most people are familiar with the brand Nike. Nike is a global company that designs, manufactures and markets athletic footwear, apparel, equipment and accessories. It is known for its innovative products, including athletic footwear and apparel for various sports and fitness activities, and also markets a wide range of branded merchandise. In addition, Nike enters into marketing and sponsorship agreements with athletes and sports teams to promote its brand.
Nike is currently trading at a near five-year low and well below its all-time high of around $180 per share in 2021. Bill Ackman likely sees long-term value in buying this iconic company at a steep discount to its all-time high.
Notably, Bill Ackman significantly increased his stake in Nike between June 30, 2024 and September 30, 2024, increasing his stake from 3,040,132 shares to 16,280,338 shares; an increase of 13,240,206 shares. This is noteworthy for potential investors in Nike because the current share price of $76.42 is quite close to the average price during Ackman's recent acquisition period of $78.42. This means that potential investors can enter Nike at a price comparable to what Bill Ackman paid.
Brookfield Corporation (2020 to Dec 2024)
NYSE: BN, US Dollar
Source: https://stockanalysis.com/stocks/bn/
Brookfield Corporation is the second largest holding in Bill Ackman's portfolio, representing 13.5% of his portfolio by market value.
Brookfield is a massive alternative asset management company, following the famous Blackstone as a very close number 2. There are regular asset managers or investment firms like Warren Buffett’s Berkshire Hathaway. “Regular” in the sense that they tend to focus on regular, publicly traded stocks and bonds. Then there are alternative asset managers like Blackstone or Brookfield, that specialize in managing investments that fall outside traditional asset classes like stocks and bonds. These include private equity, real estate, hedge funds, infrastructure, and commodities.
Here are the top 5 global alternative asset managers and their respective assets under management (AUM):
Blackstone, AUM: $1.1 trillion
Brookfield Asset Management, AUM: $1.0 trillion
Hamilton Lane, AUM: $947 billion
Apollo Global Management, AUM: $733 billion
KKR (Kohlberg Kravis Roberts & Co.), AUM: $619 billion
Source: https://investingintheweb.com/blog/largest-alternative-asset-managers/
The two massive global asset managers Blackstone and Brookfield are currently, among other investments globally, battling it out in India, as foreign capital moves into India - but that is a topic for another day.
On another side note, legendary investor Jim Rogers has also been very bullish on investing in India lately.
Coming back to Bill Ackman. Bill Ackman, an asset manager, buying another asset manager (Brookfield Corporation) is certainly not a typical move, but it is not unusual either. I wasn’t able to find a primary source (like an interview or article by Bill Ackman) where he talks about his reasoning for buying Brookfield. There are, however, a number of secondary news sources stating his reasons, such as:
Brookfield's ability to deliver steady returns, particularly in sectors resilient to economic downturns (a concern among many asset managers in the US – including Warren Buffett, who currently keeps a record cash balance)
Brookfield is undergoing a major corporate restructuring aimed at simplifying its structure and enhancing shareholder value. This includes relocating its headquarters to New York from Canada, which he believes will improve visibility among investors and potentially increase the company's market capitalization as it becomes eligible for inclusion in major U.S. stock indices.
He views Brookfield as undervalued, with expectations of significant appreciation over the next five years.
Brookfield is currently trading at around $57 per share, which is very close to the all-time high of $61 per share that it hit recently.
Bill Ackman significantly increased his stake in Brookfield between June 30, 2024 and September 30, 2024, increasing his stake from 6,854,510 shares to 32,735,883 shares; an increase of 25,881,373 shares.
This is noteworthy for potential investors in Brookfield, as the current share price of around $57 is well above the average price during Ackman's recent acquisition period of $47 per share (with a low of around $40 per share). This means that potential investors will have to pay a premium to reflect Bill Ackman's recent acquisition of Brookfield.
Bill Ackman also started a very small position (0.5% of his portfolio by market value) in Seaport Entertainment. Given its small size, I won't discuss it in detail here.
Significant Reduction
Bill Ackman didn't have any exits during the period, but he reduced his existing position in Hilton by 17.7% from 8,952,290 shares to 7,370,168 shares. However, Hilton remains a very important investment for Bill Ackman, representing his third largest position and 13.2% of his portfolio by market value. Given the continued large size of Hilton in Bill Ackman's portfolio, the 17.7% reduction feels more like profit taking than a reduction to exit, as Hilton is trading near an all-time high.
Hilton Worldwide Holdings Inc. (2020 to Dec 2024)
NYSE: HLT, US Dollar
Source: https://stockanalysis.com/stocks/hlt/
Detailed Quarter to Quarter Portfolio Changes
This analysis is based on the latest SEC filing from November 2024. In that filing, he reported his portfolio as of September 30, 2024. This was compared to his prior SEC portfolio, which was as of June 30, 2024.
Bill Ackman’s Portfolio as of September 30, 2024
This shows his portfolio as of September 30, 2024, as reported in his latest SEC filing in November 2024. The companies highlighted in green show significant increases and a new acquisition. The company highlighted in orange shows a significant decrease. All are explained above.
The remaining positions in Alphabet (Google), Chipotle, Restaurant Brands, Howard Hughes and Canadian Pacific were either unchanged or essentially unchanged.
As can be seen, Bill Ackman runs a very concentrated portfolio, with $12.9 billion invested in just 9 companies. For ease of viewing, the different types of investments in the same company were summarized. This impacted 2 companies – Alphabet (Google) and Seaport Entertainment.
Bill owns two forms of Alphabet (Google) shares: GOOG and GOOGL. The first one comes without voting rights. The second one comes with voting rights. The Seaport Entertainment position shown below is a combination of outright shares (SEG) and rights (SEG-RT).
Source: https://www.sec.gov/Archives/edgar/data/1336528/000117266124005218/xslForm13F_X02/infotable.xml
Bill Ackman’s Portfolio as of September 30, 2024 vs June 30, 2024
This view shows the changes in Bill Ackman's portfolio from June 30, 2024 to September 30, 2024, as reported in the latest SEC filing in November 2024.
Summary
Bill Ackman's Pershing Square Capital Management has made significant changes to its portfolio as discussed above. The most interesting opportunity for people who want to mirror Bill Ackman's investment might be Nike at this point, as the current stock price is likely very close to the prices that Bill Ackman paid for his latest large Nike acquisitions between June 30, 2024 and September 30, 2024.
Thank you for reading the article. Hope you enjoyed it.
Hungry for more? Subscribe to the newsletter - it's free and fabulous.Enjoyed this article? Don't keep it to yourself! Share it with a friend or two. It's free, and they might even buy you a coffee as a thank you.Your Fringe Finance
Disclaimer
Neither the author nor Fringe Finance is a financial advisor or a tax professional. This article is for illustrative and educational purposes only and does not constitute a specific offer of any product or service.
Past performance of stocks and assets is not an indicator or guarantee of future performance of stocks and assets.
The information in this blog does not constitute an offer to buy or sell, or a solicitation of an offer to buy or sell, any of the securities mentioned herein.
We believe the information provided is accurate and current. However, we do not guarantee its accuracy and it should not be considered a complete analysis of the topics discussed.
Any opinions expressed reflect the author's judgment at the time of publication and are subject to change.
Seek guidance from qualified financial and tax experts before taking action.