"Tracking Bill Ackman’s Pershing Square Portfolio – Q2 2018 Update"
"Bill Ackman’s 13F portfolio value increased ~20% from $4.83B to $5.80B this quarter.Pershing Square added Lowes while increasing United Technologies.The largest three 13F positions are Restaurant Brands International, Chipotle Mexican Grill, and Lowes Companies and together they account for ~56% of the portfolio.This article is part of a series that provides an ongoing analysis of the changes made to Pershing Square’s 13F portfolio on a quarterly basis. It is based on Ackman’s regulatory  filed on 08/14/2018. Please visit our  article for an idea on how his holdings have progressed over the years and our  for the fund’s moves during Q1 2018.Ackman’s 13F portfolio value increased ~20% from $4.83B to $5.80B this quarter. The number of positions increased from 7 to 8. The portfolio remains heavily concentrated with a few huge bets. The top three positions account for ~56% of the total portfolio value: Restaurant Brands International, Chipotle Mexican Grill, and Lowes Companies.In addition to partner stakes, the fund also invests the capital from Pershing Square Holdings (PSHZF), a public entity that debut in Euronext Amsterdam in October 2014. This was set up primarily to increase the amount of capital invested that is permanent. Pershing Square Holdings has widely underperformed the S&P 500 since its EOY 2012 inception. Their original flagship fund’s (2004 inception) track record is outstanding with cumulative returns at ~500% compared to ~220% for the S&P 500 index.To learn more about Bill Ackman, check-out the book “”.New Stakes:Lowes Companies (LOW): LOW is a large (top three) 12.70% of the portfolio stake established this quarter at prices between $81 and $101 and the stock currently trades at $98.40.Stake Disposals:None.Stake Increases:Mondelez International (MDLZ): MDLZ is a large ~12% of the 13F portfolio stake established in Q3 2015 at a cost-basis of ~$39. Q1 2016 saw a ~47% reduction at prices between $36.50 and $45. H1 2017 had seen another ~37% selling at prices between $42.50 and $47. Q4 2017 saw an about turn: two-thirds increase at prices between $39.30 and $43.50. The stock currently trades at $41.87. There was a ~30% selling last quarter at prices between $40.50 and $46. This quarter saw a marginal increase.Note: Pershing Square’s latest regulatory filings on Mondelez (10/2017) show them holding a huge position in American style OTC call options. Including that, the ownership stake was at ~5% of the business (~75M shares).United Technologies (UTX): UTX is a ~10% of the 13F portfolio stake established last quarter at prices between $122 and $138 and increased by ~135% this quarter at prices between $118 and $128. The stock currently trades at ~$132. For investors attempting to follow Ackman, UTX is a good option to consider for further research.Note: Dan Loeb (Third Point) established a large activist stake in United Technologies last quarter. He is pushing for a 3-way split: Otis Elevator, Climate, Controls, & Security (CCS), and Aerospace (UTC Aerospace Systems and Pratt & Whitney). Bill Ackman has endorsed this view.Stake Decreases:Restaurant Brands International (QSR): QSR is currently the largest 13F position at ~22% of the portfolio. Pershing Square’s cost-basis is ~$16. Q3 2017 saw a ~32% selling at prices between $59 and $66. The stock currently trades at $62.21. Last two quarters have also seen a ~22% reduction at prices between $53 and $64.Note 1: Per a February regulatory filing, they held ~4M shares of exchangeable units in addition to what is reported on the 13F.Note 2: The QSR stake came about through the merger of Tim Hortons and Burger King Worldwide. Pershing Square had a huge investment in Burger King and those shares got exchanged for QSR shares.Automatic Data Processing (ADP): ADP is a large ~10% of the 13F portfolio stake established in Q2 2017 at a cost-basis of $97.30 and increased by roughly four-times the following quarter at prices between $101 and $119. The stock is now at $141. There was a ~10% trimming last quarter at prices between $108 and $124 and another ~47% selling this quarter at prices between $113 and $140.Note 1: Per a letter to investors in June, their average entry price on ADP was $105 per share.Note 2: A regulatory filing on 6/27/2018 show Pershing Square beneficially owning 24.58M shares (5.6% of business). This is compared to 4.23M shares reported in the 13F report. The rest are in American Style Call Options.Note 3: In November 2017, Pershing Square lost a proxy battle at ADP – his three (including him) board nominations were rejected.Kept Steady:Chipotle Mexican Grill (CMG): CMG is a large (top three) 21.42% of the portfolio stake established in Q3 2016 at a cost-basis of ~$405 per share. The stock currently trades at ~$493.Note: Ackman controls ~10% of CMG.Platform Specialty Products (PAH): On 01/23/2014, Ackman disclosed a huge new stake in Platform Specialty Products Corporation (PAH) in a 13G filing. Pershing Square was a PAH investor prior to its NYSE IPO. Q4 2014 saw a ~30% stake increase at prices between $21 and $28. Ackman’s cost-basis is around $14. The stock currently trades at $12.25. Ackman controls ~20% of the business.Howard Hughes Corp (HHC): HHC is a ~6% of the 13F portfolio position established in 2010 as a result of its spin-off from GGP Inc. (GGP). The stock has returned over 3x since the spinoff. Q3 2017 saw a one-third increase as a result of the conversion of warrants held. There was a ~53% selling (~2.5M shares) in February at ~$128 per share (underwriting agreement) - the transaction was prompted to address FIRPTA issues at PSH. The stock is currently at ~$129.Note 1: Recent regulatory filings show them having an economic interest of 7.6M shares of HHC (~18% of the business) including 5.4M notional common share exposure thru swaps that are not listed in the 13F.Note 2: Ackman  at the Ira Sohn conference in May 2017 - the thesis was focused around how Master Planned Communities (MPC) when developed patiently over a long period of time could create substantial value to shareholders.Fannie Mae (FNMA) and Freddie Mac (FMCC) are other long positions in the partnership - the holdings were disclosed in 13D filings on November 15, 2013 - as they are not , they are not listed in the 13F report. Ackman held just under 10% of the outstanding shares of both these businesses - 115.57M shares of FNMA at a cost-basis of $2.29 and 63.5M shares of FMCC at a cost-basis of $2.14. The combined investment outlay was ~$400M. FNMA & FMCC currently trade at $1.55 and $1.56 per share respectively. In March, Pershing Square  their Fannie/Freddie pfds now amounts to 21% of its total investment in the two GSEs. They said it is a hedge in case the resolution favors pfds more than the common.Note: Bill Ackman also has a short book. There is no regulatory requirement to disclose short positions and so only ones that Ackman voluntarily discloses are known.The spreadsheet below highlights changes to Pershing Square’s US stock holdings in Q2 2018:3/26/2018: Pershing Square  their Fannie/Freddie pfds now amounts to 21% of its total investment in the two GSEs. They said it is a hedge in case the resolution favors pfds more than the common.Regulatory Filings thru 5/16/2018: 13D/A – 3/13/2018 – ADP – 31.8M shares – 7.2% of the business – around 5M shares in stock & call options were sold for portfolio management purposes,"