When it comes to hedge fund managers, Bill Ackman is in a class by himself. He etched his name into Wall Street history by going against hedge fund norms, acquiring significant stakes in just a few companies, and holding them for the long term. Furthermore, as a well-known activist investor, those stakes sometimes involve troubled businesses and he pressures management to make changes that positively impact shareholder value.
Ackman heads up Pershing Square Capital Management, the hedge fund he founded, which has more than $11.3 billion in assets under management. Pershing typically holds between eight and 12 large-cap North American companies. To make the cut they must be high quality, have limited downside, and generate predictable, recurring cash flows. This playbook has been extremely successful for Ackman as Pershing Square has returned 31% annualized over the past five years, nearly twice the returns of the S&P 500.
To close out 2023, Pershing Square held stakes in just eight stocks, but one stands head and shoulders above the rest.
Image source: Getty Images.
Let the “chips” fall where they may
By far, the largest holding in Pershing Square’s portfolio is Chipotle Mexican Grill (NYSE: CMG). Ackman has amassed nearly 825,000 shares currently worth more than $2.6 billion, making up a massive 23% of his portfolio.
Not only is Chipotle one of the most well-known companies in the world, but it’s also among the most successful. Since the company’s debut in 2006, the stock surged from just $22 to roughly $3,200 as of this writing, generating returns of 14,441%.
In late March, Chipotle announced that its board of directors had approved a 50-for-1 stock split, making it “one of the biggest stock splits in New York Stock Exchange (NYSE) history.” The split will require the approval of shareholders when Chipotle conducts its annual meeting on June 6. If the measure is approved, and there’s no reason to believe otherwise, each shareholder of record will receive 49 additional shares for every one they hold after the market close on June 25.
For context, instead of owing one…
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