3. Restaurant Brands International Inc. (NYSE:QSR)
Billionaire Bill Ackman’s Q1’2024 Stake Value: $1,855,009,326
Billionaire Ackman owns a $1.85 billion stake in Restaurant Brands International Inc. (NYSE:QSR) as of the end of the first quarter of 2024. Pershing Square expressed its confidence in Restaurant Brands International Inc.’s (NYSE:QSR) management in its 2023 letter to investors and explained its rationale behind holding on to the stock:
In our view, this is the crown jewel of the company, as it is a pure franchised royalty business, with a decades-long opportunity for unit growth. In 2023, QSR’s international business generated systemwide sales growth of 18% and operating income growth of 15%, despite temporary weakness in some markets. The international business comprises nearly half of QSR’s restaurants and nearly a third of its operating income, a strong source of long-term growth and profitability for the company. Despite economic weakness in China, we expect unit growth will be higher in 2024 than 2023 and will eventually return to the company’s historic 5%+ growth rate. While QSR has made substantial progress across its brands, it still trades at a discount to its intrinsic value and its peers, which have lower long-term growth potential.
Read the full letter here.
Restaurant Brands International Inc. (NYSE:QSR) operates over 31,000 restaurants worldwide. It’s behind some of the world’s most famous restaurants, including TIM HORTONS®, BURGER KING®, POPEYES® and FIREHOUSE SUBS. Another solid reason to own Restaurant Brands International Inc. (NYSE:QSR) is its dividend. The company’s dividend yield stands at 3.26% as of June 7. Restaurant Brands International Inc. (NYSE:QSR) has increased its dividend for 10 consecutive years. Restaurant Brands International Inc. (NYSE:QSR) has increased its earnings at a CAGR of 28% over the past nine years. In the first quarter the company saw a 4.6% jump in comps growth. The stock is trading at a forward P/E ratio of 18.22, which is attractive compared to peers and in the context of the growth Restaurant Brands International Inc. (NYSE:QSR) is posting. The company’s earnings are expected to grow 13.70% in 2025.
Pershing Square Holdings stated the following regarding Restaurant Brands International Inc. (NYSE:QSR) in its fourth quarter 2023 investor letter:
“Restaurant Brands International Inc.’s (NYSE:QSR) franchised business model is a high-quality, capital-light, growing annuity that generates high-margin brand royalty fees from its four leading brands: Burger King, Tim Hortons, Popeyes, and Firehouse Subs. Since Patrick Doyle joined as Executive Chairman in November 2022, QSR has announced various strategic initiatives and begun providing investors with more details about the business. Coupled with significant investments over the last few years to drive more consistent growth across each of its brands, QSR has entered a new era of what we believe will be consistently stronger performance.
In February, the company hosted an investor day and introduced a five-year growth outlook comprising 3%+ annual comparable sales and 5%+ net restaurant growth, driving 8%+ system-wide sales and operating income growth. We believe the company can outperform these targets, as expenses will grow slower than sales while it laps its investments at Burger King in the U.S. The company also updated investors on franchisee profitability with significant improvements at each of its brands, including nearly 50% increases in franchise profitability at Burger King in the U.S. and 30% at Tim Hortons in Canada…” (Click here to read the full text)
