"Tracking Bill Ackman’s Pershing Square Portfolio – Q1 2023 Update"
"Bill Ackman’s 13F portfolio value increased from $8.78B to $10.22B this quarter.Pershing Square added Alphabet during the quarter.The largest three 13F positions are Lowes Companies, Chipotle Mexican Grill, and Restaurant Brands. Together they account for ~53% 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 5/15/2023. Please visit our  article for an idea on how his holdings have progressed over the years and our  for the fund’s moves during Q4 2022.Ackman’s 13F portfolio value increased ~16% from ~$8.78B to ~$10.22B this quarter. The number of positions increased from 6 to 7. The portfolio remains heavily concentrated with a few huge bets. The top three positions account for ~53% of the total portfolio value: Lowes Companies, Chipotle Mexican Grill, and Restaurant Brands.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 May 2023, they are up 2.5%. Their original flagship fund’s (2004 inception) track record is excellent with annualized returns of ~15.9% compared to ~8.9% for the S&P 500 index.Note 1: Pershing Square Holdings (PSHZF) has always traded at a discount to NAV. It currently trades at $34.65 per share compared to NAV of $54.54.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 €20.54.To learn more about Bill Ackman, check-out the book “”.New Stakes:Alphabet Inc. (GOOG): GOOG is a 10.43% of the portfolio position purchased this quarter at prices between ~$87 and ~$106 and the stock currently trades well above that range at ~$123.Stake Increases:Howard Hughes Corp (HHC): HHC is now a 12.52% 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. Last quarter saw another ~17% stake increase at an average cost of ~$72 per share. The stock is currently at $79.39. There was a marginal increase this quarter.Note: Regulatory filings since the quarter ended show them owning 16.59M shares – around one-third of the business. This is compared to 15.98M shares in the 13F report. The increase happened in the mid-70s price range.Canadian Pacific Railway (CP): CP is a 11.48% of the portfolio position. A small stake was purchased in Q4 2021 at prices between ~$64.50 and ~$78. The current large position was built during Q3 2022 at prices between ~$67 and ~$83. The stock currently trades at ~$79. This quarter saw a marginal increase.Stake Decreases:Lowes Companies (LOW): LOW is currently the largest position at ~20% 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. The stock currently trades at ~$211. The last several quarters have seen only minor adjustments.Note: Pershing Square's cost-basis on LOW is ~$85 per share.Chipotle Mexican Grill (CMG): CMG is a large (top three) ~17% of the portfolio position. 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 ~7% trimming this quarter at prices between ~$1364 and ~$1723. The stock currently trades at ~$2023.Hilton Worldwide Holdings (HLT): The large 12.82% 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 ~$143. There was a ~7% trimming 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).Kept Steady:Restaurant Brands International (QSR): The QSR stake is a large (top three) ~16% 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 ~$73.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 ~$0.45 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 Q4 2022 Annual Investor Presentation had the following regarding 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”.The spreadsheet below highlights changes to Pershing Square’s 13F stock holdings in Q1 2023:Source: John Vincent. Data constructed from Pershing Square’s 13F filings for Q4 2022 and Q1 2023.2/9/2023 – Annual Investor Presentation – Performance – Outperformed S&P – Negative 8.8% vs Negative 18.1%. Interest Rate Swaptions contributed 14.2% net to 2022 performance - $384M exposure to realize $2.7B – 6.7x during late 2020 to 2022 – hedging against unexpected rise in interest rates. 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 11/18/2022 to 2/13/2023: Form 4 – 12/28 – HHC – ~10K shares acquired. 12/20 - ~50K shares acquired, 13D/A – 12/7 – 15.84M shares – 31.7% of business, Form 4 – 12/7 - ~650K shares acquired, Form 4 – 11/30 - ~1.6m shares acquired at ~70.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"