August brought much-anticipated 13F filings from famous investors, allowing stock traders to see what their favorites did in the previous quarter, with much attention turning to Bill Ackman’s Q2 holdings release.
On August 14, Bill Ackman’s Pershing Square Capital Management released their stock holdings report for the period leading up to June 30, revealing only nine stocks worth $10,411,824,000 as of then.
Only two stock purchases for Ackman in Q2
Ackman decided to reinvest only a tiny portion of his sales profits, buying up stocks from currently undervalued companies and some with excellent future prospects.
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By buying 6,854,510 shares of Brookfield Corp (NYSE: BN) and making its presence 2.73% in the portfolio, Ackman decided to let others work for him. This Canadian investment company manages over $725 billion in renewable energy, real estate, and infrastructure investments.
The second purchase is the acquisition of 3,040,132 shares of Nike (NYSE: NKE) for a 2.20% position in his portfolio; the famous investor decided to place some of his cash into the currently struggling sports brand.
NKE shares added 5.07% in the latest trading session after the news of Ackman’s addition. Ackman could be motivated by Nike’s underwhelming Q2 earnings report and the belief that the sportswear brand is strong enough to recover from this temporary setback.
“He’s going to have the ear of the executives at Nike and be able to lend some influence on maybe how to get the ship righted, as it were, for Nike at this point in time to try and find their way back home,” noted client portfolio manager at Zacks Investment Management, Brian Mulberry.
In late 2017, the billionaire made an investment in Nike at a time when the company was facing a decline in market share in North America, primarily due to increased competition from a rejuvenated Adidas. A few months later, in 2018, he decided to exit his position, selling his 0.71% stake and securing a profit of around $100 million.
However, some investors believe that this time, Ackman is not correct, as Oguz O. thinks that:
“I think Bill Ackman’s buying NKE is a big mistake. I understand he believes the brand is very strong and will ultimately make a comeback. However, I think it’s not undervalued, so there is nothing to come back from. It’s already trading at 21 PE earnings with no growth.”
More stock sales than buys for Ackman in Q2
In the second quarter of 2024, Ackman decided to divest more than buy by making notable sales that amounted to an overall 9% reduction in his portfolio.
His largest sale was that of fast-food restaurant Chipotle Mexican Grill (NYSE: CMG), of which he sold 8,384,035 shares, for a 22.54% decrease in this portfolio holding. This sale is potentially motivated by profit-taking, as Ackman bought CMG stock in Q3 2016 and expanded its portfolio position continuously until the previous quarter. CMG stock grew over 700% during this period, reaching an all-time high in June.
The second-largest sale made by Pershing Square Capital Management’s CEO was a 19.51% and 8.46% reduction of Alphabet (NASDAQ: GOOG, GOOGL) stock, with 1,829,613 and 368,336 shares sold, respectively.
His two other sales come from the hospitality sector, with a decrease of 2.49% (228,890 shares) in Hilton Worldwide Holdings (NYSE: HLT) and 0.88% (205,593 shares) in Restaurant Brands International (NYSE: QSR).
Ackman also decided to sell 129,887 shares of railway company Canadian Pacific Kansas City (NYSE: CP), decreasing its portfolio position by 0.86%.
All of these trades align with Ackman’s “value investment” approach, where he looks for famous brands that are currently undervalued but hold great potential for future growth while waiting for them to present an entry point (Nike’s example) and buy the dip, with NKE stock being down 24.05% on a year-to-date (YTD) basis.
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Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
