Stocks Bought in Q3

Lowe’s Companies, Inc. (NYSE:LOW)

– Shares Bought During Q3: 723,300
– Value of Holding (as of September 30): $968 million

– Q4 Return (through December 14): -18.69%

– Forward P/E Ratio: 15.53

– Forward Dividend Yield: 2.06%

Pershing Square opened a $1 billion position in Lowe’s Companies, Inc. (NYSE:LOW) during Q2 and added another 723,300 shares to it in Q3. This was looking like one of Pershing’s better stock picks in a long time through the middle of September, as shares had gained over 35% since the fund’s stake was revealed in late-May. However, the stock has since given up most of those gains. In Bill Ackman’s Q3 investor letter, he noted that the Q4 weakness in the stock was an overreaction to weakening trends in the housing market and rising interest rates.

United Technologies Corporation (NYSE:UTX)

– Shares Bought During Q3: 407,173
– Value of Holding (as of September 30): $692 million

– Q4 Return (through December 14): -15.03%

– Forward P/E Ratio: 15.23

– Forward Dividend Yield: 2.47%

Pershing Square raised its United Technologies Corporation (NYSE:UTX) position by a modest 8% during Q3. UTX is another stock which has slumped heavily since mid-September, which Ackman blamed on uncertainty surrounding the company’s closing of its Rockwell Collins acquisition. While that deal closed towards the end of November, the uncertainty was only kicked up another notch or three when UTX announced a three-way split of its aerospace, elevator, and HVAC businesses.

Stocks Sold in Q3

Mondelez International, Inc. (NASDAQ:MDLZ)

– Shares Sold During Q3: 16.37 million
– Value of Holding (as of September 30): $0

– Q4 Return (through December 14): +1.37%

– Forward P/E Ratio: 17.28

– Forward Dividend Yield: 2.39%

Pershing unloaded its entire $671 million stake in Mondelez International, Inc. (NASDAQ:MDLZ) during Q3, citing the company’s low organic growth rate and rising interest rates as reasons that the packaged foods giant was unable to meet the fund’s expectations for its investment. We also wondered earlier this year if Candy Stocks like Mondelez (MDLZ) Are Doomed by the Rise of Online Grocery Shopping, which inhibits the purchase of impulse checkout buys like candy.

Chipotle Mexican Grill, Inc. (NYSE:CMG)

– Shares Sold During Q3: 823,357
– Value of Holding (as of September 30): $936 million

– Q4 Return (through December 14): +0.73%

– Forward P/E Ratio: 38.28

Chipotle Mexican Grill, Inc. (NYSE:CMG) has been a strong performer for Pershing Square this year, which prompted the fund to sell off 28% of its stake in Q3. Nonetheless, Ackman is confident that further gains lie ahead, as Chipotle has a number of initiatives planned that could drive further growth next year, including a loyalty program, pickup windows for digital orders, and new menu items.

Automatic Data Processing, Inc. (NASDAQ:ADP)

– Shares Sold During Q3: 195,938
– Value of Holding (as of September 30): $607 million

– Q4 Return (through December 14): -10.51%

– Forward P/E Ratio: 22.55

– Forward Dividend Yield: 2.34%

Pershing trimmed its Automatic Data Processing, Inc. (NASDAQ:ADP) position by 4% in Q3 following a strong run for the stock. Though ADP shares had gained 25% as of the writing of Pershing Square’s Q3 investor letter, Ackman was convinced that a number of potential catalysts remained that could spur both short- and long-term growth.

Disclosure: None