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)
4. Alphabet Inc. (NASDAQ:GOOG)
Billionaire Bill Ackman’s Q1’2024 Stake Value: $1,427,771,711
Billionaire Ackman owns a $1.4 billion stake in Alphabet Inc. (NASDAQ:GOOG). In his 2023 letter to investors, Ackman addressed the concerns around Alphabet Inc. (NASDAQ:GOOG) amid the rise of AI language models:
The cumulative impact of AI and machine learning enhancements is perhaps most evident in Google’s core Search franchise. Google Search has evolved from its starting point as a simple results page with “10 blue links” and now provides summary answer snippets for informational and educational queries similar to AI chatbots without any of their latency. For more involved queries, for example, in travel, the company has developed specialized Google Flights and Hotels modules that offer consumers substantial utility and freedom to direct their discovery process. Innovation in Google Search has maintained its leading market position through multiple perceived “disruption” risks over time, including the platform transition from desktop-tomobile and competitive threats from social media and verticalized search. Likewise, we view the company’s integration of generative AI into a wider range of queries, not as a disruptive shift, but as a natural evolution of its Search product which will enhance the user experience and improve conversion for advertisers. We continue to believe Google is one of the most advantaged and scaled players in AI with an unmatched business model. The company’s stock currently trades at approximately 19 times forward earnings, a deep discount to its peers despite its similar rate of projected earnings growth
Read Ackman’s letter here.
Alphabet Inc. (NASDAQ:GOOG) bulls believe the company is just getting started with AI product launches. Alphabet Inc. (NASDAQ:GOOG) is indeed in a strong position to develop an AI ecosystem around its products. For example, demos have shown that Gemini app will help people perform daily personal tasks like note taking, appointments, writing, etc. These features could easily be integrate with other Google apps. Alphabet Inc.’s (NASDAQ:GOOG) app is to urge users to sign up for ‘Google One AI Premium’ plan, which has a $19.99 price tag. Google saw advertising revenue accelerate in Q1 2024, boosted by YouTube in particular growing by almost 21% last quarter. Analysts also believe Alphabet Inc. (NASDAQ:GOOG) is in a strong position to offset any headwinds or lost market share in Google search with YouTube, which saw its ads revenue reach $8.1 billion in the first quarter, a 21% growth. Alphabet Inc.’s (NASDAQ:GOOG) net income in the period came in at $23.66 billion, up 57%, or $1.89 per share.
Lakehouse Global Growth Fund stated the following regarding Alphabet Inc. (NASDAQ:GOOG) in its April 2024 investor letter:
“Alphabet Inc. (NASDAQ:GOOG) delivered a strong quarterly result that came in well ahead of analysts’ expectations. Revenue grew 15.4% (16.0% constant currency) to $80.5 billion and operating income grew 46.0% to $25.5 billion. Revenue growth accelerated across Search, YouTube Ads, and Google Cloud, all whilst the company delivered its highest operating margin since 2021 – showing meaningful progress in the company’s efforts to durably re-work their cost structure. On the Generative AI front, management emphasised the company’s infrastructure advantages including 5th generation TPUs(chips developed by Google specifically for AI training and inference), high performance data centre architecture, and AI models that are 100x more efficient versus 18 months ago. Overall, we believe that Alphabet is well placed for the AI opportunity ahead and still has significant latent earnings power. When combined with a relatively undemanding valuation of 21x forward net profit and over $100 billion of cash on the balance sheet, it’s not hard to see why we remain positive on the range of outcomes in the years ahead.”
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)
2. Hilton Worldwide Holdings Inc. (NYSE:HLT)
Billionaire Bill Ackman’s Q1’2024 Stake Value: $1,958,437,506
Texas-based hotels and resorts company Hilton Worldwide Holdings Inc. (NYSE:HLT) is one of the best stocks to buy in 2024 according to Bill Ackman. Pershing Square owns a $1.96 billion. In April, Hilton Worldwide Holdings Inc. (NYSE:HLT) posted solid Q1 results. Revenue in the quarter rose 12.2% year-over-year to $2.57 billion. Hilton Worldwide Holdings Inc. (NYSE:HLT) expects system-wide RevPAR on a currency neutral basis to increase between 2% to 4% in 2024. Investors cheered Hilton Worldwide Holdings Inc.’s (NYSE:HLT) double-digit growth in sales during the quarter and also liked occupancy rate and higher average daily rates (ADR). EBITDA margins in the period expanded to 29.1%. Hilton Worldwide Holdings Inc. (NYSE:HLT) said its positive results were driven by better-than-expected international RevPAR performance, license fee growth, and timing items. In April, J.P. Morgan started covering the stock with an Overweight rating. JPMorgan’s Ryan Lambert said Hilton Grand Vacations (HGV) has “transformed significantly” since its spin-off from Hilton Worldwide Holdings Inc. (NYSE:HLT) in 2017. The analyst thinks the stock presents an attractive opportunity to gain exposure to the timeshare business at a decent valuation.
Hilton Worldwide Holdings Inc. (NYSE:HLT) is trading at 25x its 2025 EPS estimate set by Wall Street. Compared to the industry median P/E of 18.15 this metric is still high. However, given Wall Street expectations of a 16.00% growth in earnings for Hilton Worldwide Holdings Inc. (NYSE:HLT), the valuation level is justified. Over the next five years, Hilton Worldwide Holdings Inc. (NYSE:HLT) is expected to grow its earnings at 28.53% on a per-annum basis. Revenue growth in 2025 is expected to come in at 8%.
Baron Real Estate Fund stated the following regarding Hilton Worldwide Holdings Inc. (NYSE:HLT) in its first quarter 2024 investor letter:
“We recently acquired additional shares of Hilton Worldwide Holdings Inc. (NYSE:HLT). Hilton is the second largest hotel company in the world with 7,500 properties, 1.2 million rooms, 22 unique brands, and 180 million loyalty members in its database. Hilton has a superior executive team led by long-time CEO Chris Nassetta (over 16 years as CEO).
In March, we attended Hilton’s Investor Day in Washington, D.C. and also spent time with Chris in advance. Our main takeaway from the Investor Day presentations, besides being able to meet with a deeper and impressive layer of the management organization, is that Hilton’s growth prospects over the next five years are superior to the prior five due to: i) accelerating unit growth driven by new and existing brands; ii) several brand ‘seedlings’ planted with significant white space for growth (e.g., Graduate Hotels, SLH, LivSmart); and iii) Hilton’s better ability to capture the brand ‘conversion’ opportunity irrespective of new hotel construction/development…” (Click here to read the full text)
1. Chipotle Mexican Grill Inc (NYSE:CMG)
Billionaire Bill Ackman’s Q1’2024 Stake Value: $2,162,590,372
Billionaire Bill Ackman’s hedge fund decreased its position in Chipotle Mexican Grill Inc (NYSE:CMG) in the first quarter by 10%, ending the period with a $2.16 billion stake in the company. The restaurant chain is still the biggest holding of Pershing Square. In April, Chipotle Mexican Grill Inc (NYSE:CMG) posted strong Q1 results, which showed revenue in the period jumped by 13.9% on a YoY basis, beating estimates by $30 million. Comparable sales in the quarter increased by 7%. For the full year, Chipotle Mexican Grill Inc (NYSE:CMG) expects its comp sales to grow in the mid to high-single digit range. Chipotle Mexican Grill Inc (NYSE:CMG) has been steadily increasing its footprint over the past several years. Back in 2007, the company had just 704 stores. This figure now stands at 3437. One of the biggest signs of Chipotle Mexican Grill Inc’s (NYSE:CMG) strengths is its rising margins, even when the restaurant industry is reeling from high labor costs and squeezing margins. Chipotle Mexican Grill Inc’s (NYSE:CMG) current net margin of 12.45% is the highest it has been in the past decade.
Chipotle Mexican Grill Inc (NYSE:CMG) trades at 47X 2025 EPS estimate of $66.92 set by Wall Street analysts. This P/E is much higher than the industry of 16. Chipotle Mexican Grill Inc (NYSE:CMG) is expected to see revenue growth of just 13-15% per year over the next 3 years, while its EPS growth is expected to come in between 3% to 20%. Analysts expect the American consumer to remain prudent in spending amid higher for longer interest rate scenario and dwindling savings. Therefore, for investors looking for high-growth stock appreciation names, Chipotle Mexican Grill Inc (NYSE:CMG) might not be the ideal choice.
Average analyst estimate for Chipotle Mexican Grill Inc (NYSE:CMG) is $3244.77, which presents just 3% upside potential from the current levels. That means the Wall Street believes the stock has reached its potential and based on current catalysts and growth trajectory it does not have any room to grow significantly.
Rowan Street Capital stated the following regarding Chipotle Mexican Grill, Inc. (NYSE:CMG) in its first quarter 2024 investor letter:
“The best investment ideas are simple. We have previously written about Chipotle Mexican Grill, Inc. (NYSE:CMG). It turned out that this was our best investment idea since starting the fund. The stock is up 10x since we first invested at the end of 2017 (~47% annualized). Sounds absolutely incredible, except that your managers sold CMG back in 2018 (thinking that the stock had gotten ahead of itself), and proudly booked an 85% profit in 6 months, patting ourselves in the back. Interestingly, when we wrote about this in our 2019 letter, describing our big mistake to sell, the stock still went up +270% since that letter, delivering an impressive 30% annual return. This is an incredibly important point! You do not get many Chipotles in your investing career. Companies like these are super rare and the opportunity to buy them at an attractive price (which we got in 2017) is even rarer. Booking a quick profit, paying the capital gains tax and thinking that you will find another CMG to invest your proceeds into is usually delusional.
Along with our personal investment case of CMG, let us compare that to the experience that Bill Ackman had with the same investment. He is a famous hedge fund manager that we greatly admire, who has achieved an incredible track record in the past 20 years running Pershing Square. Bill Ackman has owned the restaurant stock since the third quarter of 2016 at an initial cost basis of about $411 per share (our cost basis was $289). Originally, Mr. Ackman bought 2.88 million shares. He was wise to hold on to CMG stock and it still is the top position in his fund (18% weight). But, if you follow his 13F filings, which are the public filings disclosing large investment manager’s holdings of publicly traded securities, he kept trimming his position as the stock went up. We calculated that if he just sat on his original 2.88 million shares and didn’t sell a share, his position would be worth $8.8 billion today. This would represent ~50% of his entire firms’ assets under management (AUM). But he only has $1.8 billion invested in CMG as of Q1 2024. As Charlie Munger said: ““The first rule of compounding is to never interrupt it unnecessarily.”…” (Click here to read the full text)
While we acknowledge the potential of Chipotle Mexican Grill Inc (NYSE:CMG), our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CMG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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