1. Lowe’s Companies, Inc. (NYSE:LOW)
Pershing Square’s Stake Value: $2,645,923,000
Percentage of Pershing Square’s 13F Portfolio: 24.54%
Number of Hedge Fund Holders: 72
Lowe’s Companies, Inc. (NYSE:LOW) is the largest holding in Bill Ackman’s Q4 portfolio, with the billionaire owning 10.2 million shares worth $2.6 billion. The stock accounts for 24.54% of the total 13F investments. Lowe’s Companies, Inc. (NYSE:LOW) is a home improvement retailer based in the United States.
Lowe’s Companies, Inc. (NYSE:LOW)’s full-year 2021 revenue stood at $96.2 billion, up from $89.5 billion in the prior year. Similarly, net income in 2021 increased to $8.4 billion from $5.8 billion in 2020.
On March 22, Lowe’s Companies, Inc. (NYSE:LOW) announced its plans to sell $750 million of 3.35% notes due 2027, $1.5 billion of 3.75% notes due 2032, $1.5 billion of 4.25% notes due 2052, and $1.25 billion of 4.45% notes due 2062. The proceeds will be utilized for corporate expenditure.
Wells Fargo analyst Zachary Fadem on April 7 maintained an Overweight rating on Lowe’s Companies, Inc. (NYSE:LOW) but lowered the firm’s price target on the shares to $260 from $295, based on 18-times his full-year 2023 EPS estimate. According to the analyst, this represents a short-term PE ratio that is in line with the 3/5-year averages, which he believes is attributed to the company’s structural topline, improving margins, and continuous business initiatives.
Lowe’s Companies, Inc. (NYSE:LOW) declared on March 18 a $0.80 per share quarterly dividend, in line with previous. The dividend is payable on May 4, to shareholders of record as of April 20. Lowe’s Companies, Inc. (NYSE:LOW) is a reliable dividend king, with close to 60 years of consecutive dividend increases under its belt.
Eric W. Mandelblatt’s Soroban Capital Partners is one of the top stakeholders of Lowe’s Companies, Inc. (NYSE:LOW), with 3.8 million shares worth $989.6 million. Overall, 72 hedge funds were bullish on the stock at the end of December 2021, up from 60 funds in the last quarter.
Here is what Pershing Square Capital Management has to say about Lowe’s Companies, Inc. (NYSE:LOW) in its Q4 2021 investor letter:
“Lowe’s is a high-quality business with significant long-term earnings growth potential
Supportive macroeconomic backdrop
-Aging housing stock, lack of new inventory, robust home equity values, and unprecedented pro project backlog
-COVID-19 causing millennials to enter the housing market
Positioned to grow EPS largely independent of market conditions
-Idiosyncratic revenue opportunities driving share gains
-Self-help initiatives catalyzing operating margin expansion
-Buybacks representing ~8% of current market capitalization planned for 2022
Multi-year business transformation with substantial earnings upside
-Margin target of 13% has substantial upside; Home Depot at ~15.3% and increasing
-Potential to generate high-teens EPS growth over the next several years.
Lowe’s continues to trade at a significantly discounted P/E multiple relative to Home Depot despite materially higher perspective EPS growth. LOW’s share price including dividends increased 63% in 2021 and has decreased 10% year-to-date in 2022.”
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