In this article, we will take a detailed look at Billionaire Bill Ackman’s 2024 Portfolio: 6 Best Stocks to Buy in 2024.
Billionaire Bill Ackman recently made headlines after reports suggested he plans to take his investment firm public as soon as next year. A Wall Street Journal report said the 58-year-old billionaire was selling a stake in Pershing Square to investors as part of a funding round that could value the firm at about $10.5 billion. According to data from WSJ, Pershing Square managed over $16 billion in assets as of the end of April. The publication said Ackman has told investors that he plans to at least quadruple assets under management.
Ackman has run a concentrated portfolio for years. As of the end of the March quarter this year, his portfolio was worth over $10 billion, with just seven stocks. And yet Ackman made $610 million last year, coming in at the seventh position in Bloomberg’s annual list of the best-paid hedge fund founders.
In 2022, Ackman, who writes long and fiery posts on Twitter, announced that he was done with activist investing and was taking a “quieter approach.” In 2023, Pershing Square Holdings generated strong NAV performance of 26.7% versus 26.3% for its principal benchmark, the S&P 500 index.
Ackman talked in detail about the fund’s returns and future strategy during his 2023 letter to investors:
“While our investments in hedging and asymmetric instruments have been enormously profitable, we could have done better. In each of the three black swan events of the last 20 years, we had an early and highly variant view of the likely impact and probability of their occurrence and had identified and invested in instruments that offered profits many times their cost. In retrospect, we should have invested more and achieved even greater profits without risking materially more capital.”
For this article we scanned Ackman’s Q1 portfolio and picked his top six stock holdings. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
6. Canadian Pacific Kansas City Ltd (NYSE:CP)
Billionaire Bill Ackman’s Q1’2024 Stake Value: $1,330,972,704
Billionaire Bill Ackman owns a $1.33 billion stake in Canadian Pacific Kansas City Ltd (NYSE:CP) as of the end of the first quarter of 2024. Wall Street is also bullish on the stock. In April, Jefferies analyst Stephanie Moore called Canadian Pacific Kansas City Ltd (NYSE:CP) one of the top railway transportation stocks, as she highlighted the sector’s 10% EPS CAGR. The analyst also noted the sector was trading at ~22x 2024 EPS and ~19x 2025 EPS.
There are multiple reasons why Wall Street likes Canadian Pacific Kansas City Ltd (NYSE:CP). It is the first railroad to connect Canada, US and Mexico through 20,000 track miles and over 30 ports. Strong growth in Mexico and increasing commodity exports are some of the growth catalysts for the stock.
Canadian Pacific Kansas City Ltd (NYSE:CP) still expects high-single-digit annual revenue growth, double-digit core EPS growth and a 90% FCF conversion rate for the period between 2024 and 2028. Canadian Pacific Kansas City Ltd’s (NYSE:CP) earnings per share is expected to increase 13% this year, while the Street expects the metric to grow 19% in 2025 and 17% in 2026. Based on these growth projections, the stock’s forward P/E ratio of 25.00 is justified.
Pershing Square Holdings stated the following regarding Canadian Pacific Kansas City Limited (NYSE:CP) in its fourth quarter 2023 investor letter:
“Canadian Pacific Kansas City Limited (NYSE:CP) is a high-quality, inflation-protected, unique North American railroad that operates in an oligopolistic industry with significant barriers to entry. In 2023, Canadian Pacific made history when it closed the acquisition of Kansas City Southern and renamed the combined company Canadian Pacific Kansas City, creating the only railroad with a direct route connecting Canada, the United States, and Mexico. This transformative acquisition will generate substantial long-term shareholder value as well as create competitive options for shippers and reduce greenhouse gas emissions by converting trucks to rail transportation.
In the 11 months since the acquisition closed, CPKC has already realized $350 million of run[1]rate revenue synergies, exceeding management’s expectations, despite a soft demand environment. Broad-based contract wins across end markets including chemicals, automotive, and cross-border intermodal demonstrate the attractiveness of the company’s unique service product.
CPKC is also ahead of plan on realizing cost synergies as the team successfully integrates the two networks after overcoming some operational challenges in Mexico. We believe CPKC is well on its way to achieving management’s goal to more than double the company’s earnings per share by 2028 while holding capital expenditures at current levels. We continue to believe that CPKC’s one-of-a-kind network and superb team are well positioned to deliver profitable long-term growth in the coming years.”
5. Howard Hughes Holdings Inc (NYSE:HHH)
Billionaire Bill Ackman’s Q1’2024 Stake Value: $1,369,036,888
Real estate development company Howard Hughes Holdings Inc (NYSE:HHH) is one of the best stocks to buy and hold in 2024 according to billionaire Ackman. Here’s how he explained why he likes the stock in 2023 letter to investors:
“In October 2023, HHH announced plans to spin-off its newly-formed Seaport Entertainment division, which will include the Seaport District in New York City, the Las Vegas Aviators baseball team and stadium, and the company’s ownership stake in Jean-Georges Restaurants. The company has appointed Anton Nikodemus, former President & COO of MGM CityCenter and an entertainment industry veteran with over 30 years of experience, as the CEO of Seaport Entertainment. We are optimistic Anton and his team will unlock significant embedded upside potential in Seaport Entertainment’s unique collection of assets. Moreover, we believe the planned separation will further establish HHH as a streamlined, pure-play MPC company. HHH is in the early stages of its decades-long value creation opportunity, and we expect the company to become substantially more free-cash-flow generative in the coming years. Pershing Square purchased an additional 3.0 million shares of HHH in 2023 at an average price of $72 per share and now owns 38% of the company. We believe our purchase price represents a deep discount to the company’s intrinsic value given its uniquely advantaged business model and long-term growth prospects.”
Read Ackman’s full letter here.
Howard Hughes Holdings Inc (NYSE:HHH) has been growing despite the headwinds in the real estate market. Last year the company disclosed $659 million of financings, including approximately $500 million of construction loans across six new development projects. Howard Hughes Holdings Inc (NYSE:HHH) makes money through four segments: MPCs (Master Planned Communities), Strategic Developments, Operating Assets, and Seaport. The Seaport segment is set to spin off, while other segments are performing well.
For 2024, Howard Hughes Holdings Inc (NYSE:HHH) expects segment mid-point projections for MPC EBT of $300 million, Operating Asset NOI of $250 million, and condo sales of $700 million with gross margins of 29%. Taking into account these projections, Howard Hughes Holdings Inc (NYSE:HHH) bulls believe the stock is undervalued. Average analyst price target for HHH is $86, which presents a 30% upside potential.
Pershing Square Holdings stated the following regarding Howard Hughes Holdings Inc. (NYSE:HHH) in its fourth quarter 2023 investor letter:
“Howard Hughes Holdings Inc. (NYSE:HHH) delivered strong business performance in 2023, highlighting the high-quality nature of its well-located master-planned communities (“MPCs”) and resilient business model.
In its land sales segment, the company generated a record $341 million in full-year profits. New home sales in HHH’s communities, a leading indicator of future land sales, increased an impressive 45% in 2023. The surge in new home sales continues to be driven by a significant shortage of resale housing inventory as existing homeowners are reluctant to give up their low-rate mortgages. This dynamic has led to robust homebuilder demand against a backdrop of limited supply of vacant lots in HHH’s MPCs. The resulting supply-demand imbalance has supported strong pricing growth with the company’s average price per acre for residential land sold exceeding $1 million in Q4 2023, up 22% year-over-year, a record-high milestone for the company…” (Click here to read the full text)
