"Tracking Bill Ackman’s Pershing Square 13F Portfolio – Q2 2023 Update"
"….….….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 8/14/2023. 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 2023.Ackman’s 13F portfolio value increased from ~$10.22B to ~$10.82B this quarter. The number of positions remained steady at 7. The portfolio remains heavily concentrated with a few huge bets. The top three positions account for ~49% of the total portfolio value: Chipotle Mexican Grill, Restaurant Brands, 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 had underperformed the S&P 500 since its EOY 2012 inception. This changed in 2019 as they compounded at ~50% in the three years through 2021. For 2022, they were down 9.1% and for 2023 through August 15, 2023, they are up 13.1%. Their original flagship fund’s (2004 inception) track record is excellent with annualized returns of ~16.1% compared to ~9.4% for the S&P 500 index.Note 1: Pershing Square Holdings (PSHZF) has always traded at a discount to NAV. It currently trades at $37.79 per share compared to NAV of $58.53.Note 2: Pershing Square has a ~10% stake in UMG Music Group (UMGNF) at a cost-basis of ~€18 per share. It currently trades at €23.21.To learn more about Bill Ackman, check-out the book “”.Stake Increases:Alphabet Inc. (GOOG): GOOG is a 12.91% of the portfolio position purchased from early March in the low-90s price range. There was a ~13% stake increase this quarter at prices between ~$104 and ~$128. The stock currently trades above those ranges at ~$136.Hilton Worldwide Holdings (HLT): The 12.56% portfolio stake was established in October 2018. It was purchased at prices between $64 and $78. Q1 2020 saw a ~30% stake increase at a cost-basis of ~$70. Q1 2022 saw a ~20% selling at prices between ~$129 and ~$158. The stock currently trades at ~$148. There was a ~7% trimming last quarter and a marginal increase this quarter.Note 1: Their overall cost-basis is ~$72 per share.Note 2: In Q4 2018, Hilton Worldwide Holdings came back into the portfolio after a gap of eighteen months. The previous position was purchased in Q3 2016 and disposed a year later. Pershing Square has said that the new position was acquired at a better valuation compared to their previous purchase. Also, the business structure has transformed into a capital-light model following the spinoff in early 2017 of Park Hotels & Resorts (PK) and Hilton Grand Vacations (HGV).Howard Hughes Corp (HHH): HHH is now a ~12% of the 13F portfolio position. The stake was first established in 2010 as a result of its spin-off from GGP Inc. The majority of the current stake is from the addition of ~10M shares in Q1 2020 at ~$50 per share through a private placement. Q1 2021 saw a ~25% stake increase at prices between ~$78 and ~$102. Q4 20222 saw another ~17% stake increase at an average cost of ~$72 per share. The stock is currently at $77.81. There was a minor increase in the last two quarters.Stake Decreases:Chipotle Mexican Grill (CMG): CMG is the largest 13F position at ~19% of the portfolio. The stake was established in Q3 2016 at a cost-basis of ~$405 per share. The position was sold down by ~30% in Q3 2018 in the high-400s price-range and that was followed with a ~17% trimming over the next four quarters. Q1 2020 also saw a one-third selling at ~$860 per share. There was a ~7% trimming in Q1 2021 at ~$1340 per share. Q3 2021 saw a ~3% increase at ~$1910 per share. There was a ~14% trimming over the last two quarters at prices between ~$1364 and ~$2139. The stock currently trades at ~$1967.Restaurant Brands International (QSR): The QSR stake is a large (top three) ~17% of the portfolio stake. Pershing Square’s original cost-basis was ~$16. Q3 2017 saw a ~32% selling at prices between $59 and $66. That was followed with a ~22% reduction in H1 2018 at prices between $53 and $64. The four quarters through Q3 2019 had also seen a ~28% selling at prices between $52 and $79. In June 2020, they increased the position by roughly two-thirds through forward contracts at $44.20 cost-basis. The stock currently trades at $67.42. There was a minor ~4% trimming this quarter.Lowes Companies (LOW): LOW is currently at 15.58% of the portfolio. It was established in Q2 2018 at prices between $81 and $101 and increased by ~9% next quarter at prices between $95 and $117. There was also a ~40% stake increase in Q1 2020 at ~$84 per share. The four quarters through Q2 2021 saw a ~20% selling at prices between ~$136 and ~$211. That was followed by a ~25% reduction this quarter at prices between ~$199 and ~$226. The stock currently trades at ~$234.Note: Pershing Square's cost-basis on LOW is ~$85 per share.Canadian Pacific Railway (CP): CP is a 11.27% of the portfolio position. A small stake was purchased in Q4 2021 at prices between ~$64.50 and ~$78. The current position was built during Q3 2022 at prices between ~$67 and ~$83. The stock currently trades at ~$77. The last quarter saw a marginal increase while this quarter saw minor trimming.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 ~$0.70 per share. In March 2018, Pershing Square said their Fannie/Freddie pfds now amounts to 21% of the total investment in the two GSEs. Their 2023 Interim Report had the following regarding Fannie/Freddie: “In our view, Fannie Mae and Freddie Mac remain valuable perpetual options on the companies’ exit from conservatorship. ... We believe that it is simply a matter of when, not if, Fannie and Freddie will be released from conservatorship.”The spreadsheet below highlights changes to Pershing Square’s 13F stock holdings in Q2 2023:Source: John Vincent. Data constructed from Pershing Square’s 13F filings for Q1 2023 and Q2 2023.Info from Annual Report/Presentation and May Performance Report – Performance – 2.5% vs 8.86% for 2023. Interest Rate Swaptions Single name and Sovereign CDS exposure is now Zero. SPARC – to begin search for a transaction once the registration statement becomes effective – fifth amendment to the registration statement filed. UMG – 15% revenue growth averaging ahead of targets – digital streaming (Amazon, Apple, etc.) raising prices – renewals could provide more opportunity. LOW - 15x PE is low – has line of sight to $20 EPS over medium term. CMG – pricing power intact and it expanded margins in 2022. QSR – Patrick Doyle new CEO for Domino’s. HLT – inexpensive multiple in light of its long-term earnings growth prospects. HHC – purchased 2.3M shares in Q4 2022 at average price of $72 – now owns 32% of company – MPC focused on states with in-migration – Texas & Nevada. Fannie/Freddie – confident in long-term value despite adverse court rulings effectively ending shareholder litigation – believe re-privatization is an eventuality, but may take some time. CP – With Kansas City Southern acquisition, it will have the only direct route from Canada to Mexico – significant revenue and cost synergies – likely beneficiary of deglobalization and North American onshoring – trading at meaningful discount to intrinsic value.Regulatory filings from 2/13/2023 to 6/7/2023: Form 4 – HHC – 6/2 – 52.5K shares at 74.50 – 16.59M shares, 5/30 - ~92K shares @ 74.4 – 16.44M shares, 13D/A – 5/25 – 16.38M shares – 32.8% of business, Form 4 – 5/24 – 98.5K shares @ 74 – 16.34M shares, Form 4 – 5/19 – 62K shares @ 74.6 – 16.25M shares, Form 4 - 5/17 - ~60K shares acquired at ~74, 16.25M shares – Form 4 – 5/16 – 66K shares acquired at 74.5 – 16.18M shares – Form 4 – 5/11 - ~24K shares acquired at 74.5 – 16.12M shares – Form 4 – 5/4 – 31K shares @ 74.8 – 16.1M shares – Form 4 – 4/26 – 59K shares @ 74.75 – 16.06M shares – Form 4 – 4/17 – minor – Form 4 – 4/12 – 18K shares @ 74.95 – 16M shares – Form 4 – 3/27 – 24K shares – 15.98M shares – Form 4 – 3/20 – minor – Form 4 – 3/15 – 62K shares @ 74.7 – 15.96M shares.Long Summary for SA: “Their long-term performance is stellar, and it is trading at roughly one-third discount to NAV.”NAV as of latest at"