Bill Ackman Now Has $12 Billion In Just 11 Stocks

Bill Ackman’s hedge fund, Pershing Square Holdings, is well-known for concentrating bets in fewer than a dozen names at any given time. Indeed, many portfolios get out of hand with the number of holdings, especially over time, as investors opt to initiate new positions while holding existing ones or just trimming them rather than eliminating some of the weeds. Of course, there’s nothing wrong with over-diversifying if you’re a new investor who’s looking to enjoy all the perks that diversification has to offer.

That said, over-diversifying brings little, if any, value to the table after a certain point. And since it gets harder to keep up with a portfolio of more than 30 holdings, it just makes sense to sell out of a few, especially if you’ve spotted an opportunity that’s timelier, and perhaps more of a needle-mover.

In any case, Ackman is a notable disciple of the great Warren Buffett. In fact, I’ve heard Ackman be referred to as “Baby Buffett” a while back. So, it should be no surprise that the man practices what Buffett preaches regarding the number of portfolio holdings. 

Ackman isn’t afraid to concentrate his bets

Indeed, owning too many stocks in a portfolio can make it harder for a portfolio to top the markets consistently, especially if one spreads investment dollars across names that aren’t their best idea at any given time.

“Diversification is protection against ignorance. It makes little sense if you know what you are doing.” Buffett once said. 

Ackman knows what he’s doing, and he’s not afraid to place a big bet on an idea he has conviction in, even if it means parting ways with another cherished holding that just falls short of being best (or least good enough to be in the top seven or so). 

In the latest quarter, Ackman surprisingly sold out of shares of Nike (NYSE:NKE), a name I was convinced he’d stick around for the long haul as new management looked to turn the tide around. In a prior piece, I highlighted how Nike stock, which is currently down close to 64%, was a tough stock to own.

With the company cutting jobs in its tech division, I’m a bit confused as to the path forward, especially since Nike was focused on becoming more innovative again to win back consumers’ business. And while the uphill battle for Nike could be met with outsized returns, I noted in a previous piece that sometimes it’s just better to go with the easier opportunity. For Ackman, Uber Technologies (NASDAQ:UBER) has been the new stock that is more worthy of the limited number of spots in the Pershing Square portfolio. At the time of writing, Uber is the top holding (18.5% weighting) of 10 companies owned in the Pershing Square portfolio.

What about the rest of the portfolio?

While 11 — or 10 if you account for the two classes of Alphabet (NASDAQ:GOOG) shares — is on the high end for the number of holdings by Pershing Square standards, it’s worth noting that the bottom two holdings comprise just over 1% of the portfolio, while the top eight names comprise close to 98% of the portfolio.

Uber, Brookfield Corp. (NYSE:BN), Restaurant Brands International (NYSE:QSR), Howard Hughes Holdings (NYSE:HHH), Chipotle Mexican Grill (NYSE:CMG), Canadian Pacific Kansas City (NYSE:CP), Hilton Worldwide Holdings (NYSE:HLT), and Alphabet (both classes of shares) are the core of Pershing Square and a mighty, and well-diversified core it is.

For investors who like what’s underneath the hood and Ackman’s ability to spot value, Pershing Square may look even more attractive than the rest of the market as it runs into tariff troubles. After paring Nike and buying Uber, the concentrated Pershing Square portfolio looks well-insulated from Trump’s tariff war.

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