In this article, we discuss billionaire Bill Ackman’s top 3 stock picks. If you want to see more of billionaire Bill Ackman’s top stock picks, go directly to Billionaire Bill Ackman’s Top 6 Stock Picks.
3. Restaurant Brands International Inc. (NYSE:QSR)
Pershing Square Capital Management’s Stake Value as of 9/30: $1,286,646,000
Percentage of Pershing Square Capital Management’s 13F Portfolio as of 9/30: 16.33%
Pershing Square Capital Management upped its share count in Restaurant Brands International Inc. (NYSE:QSR) by 2% in Q3 to end the period with a stake value of almost $1.29 billion. While the broader market has declined in 2022, Restaurant Brands International Inc. (NYSE:QSR) is actually up almost 13.4% year to date as of November 21 as the company’s results have been strong despite the inflationary headwinds.
For the third quarter, Restaurant Brands International Inc. (NYSE:QSR) reported EPS of $1.17 on revenue of $1.73 billion versus the consensus of $0.80 and $1.66 billion. For the period, global comparable sales rose 9% and Tim Hortons same store sales rose 9.8%. Burger King same store sales increased 10.3%.
Bill Ackman commented on Restaurant Brands International Inc. (NYSE:QSR) in a letter to shareholders on August 2022,
QSR’s 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. QSR is investing in each of its brands to position them for sustainable, long-term growth…
QSR’s franchised-based royalty model is particularly attractive in an inflationary environment. QSR’s revenues benefit when its franchisees increase prices, but its cost structure is not subject to the same inflationary pressures. QSR can continue to grow its business with minimal capital required as its franchisees open new units.
2. Chipotle Mexican Grill, Inc. (NYSE:CMG)
Pershing Square Capital Management’s Stake Value as of 9/30: $1,660,862,000
Percentage of Pershing Square Capital Management’s 13F Portfolio as of 9/30: 21.08%
Bill Ackman’s fund kept its share count in Chipotle Mexican Grill, Inc. (NYSE:CMG) the same in Q3 with a holding of slightly over 1.1 million shares worth $1.66 billion at the end of September. Given the position, Chipotle Mexican Grill, Inc. (NYSE:CMG) ranks #2 on our list of Billionaire Bill Ackman’s Top 6 Stock Picks and the stock accounts for 21.08% of the fund’s 13F portfolio at the end of Q3. Although shares of the burrito chain are down 11.6% year to date, Ackman believes the company is well positioned given the current economic climate.
Bill Ackman commented Chipotle Mexican Grill, Inc. (NYSE:CMG) in an August shareholder letter,
We believe Chipotle is one of the best-positioned consumer companies for the current inflationary world. Given significant
inflation in food and labor costs, management has planned a menu price increase of approximately 4% for August following
a similarly-sized price increase in March. The company has tremendous pricing power due to the superb quality of its food
which is priced at a discount to many competitors with inferior offerings, marketing focused on food quality and freshness
rather than cost, and a customer base that over-indexes to higher-income consumers, some of whom are trading down
from pricier alternatives.Chipotle’s economic model remains firmly intact, with restaurant-level margins in excess of 25% in the second quarter, up
0.8% year-over-year, and a consistent level of profitability expected for the current quarter. The company is debt-free and
generates nearly all its sales in the U.S., insulating its earnings from the foreign currency headwinds facing many other
large consumer companies.To accelerate Chipotle’s growth beyond the company’s continued strong results, management is focused on improving
throughput for in-store orders, and increasing order accuracy and timeliness for digital orders.
In Q3, Chipotle Mexican Grill, Inc. (NYSE:CMG) reported adjusted EPS of $9.51 on sales of $2.2 billion versus the consensus of $9.21 on sales of $2.23 billion. Comparable restaurant sales for the period rose 7.6%. For outlook, management sees fourth quarter comparable restaurant sales growth in the mid to high single digits.
1. Lowe’s Companies, Inc. (NYSE:LOW)
Pershing Square Capital Management’s Stake Value as of 9/30: $1,948,491,000
Percentage of Pershing Square Capital Management’s 13F Portfolio as of 9/30: 24.73%
Pershing Square Capital Management inched up its share count in Lowe’s Companies, Inc. (NYSE:LOW) by 2% in Q3 to end the period with a stake value of almost $1.95 billion, or almost a quarter of Bill Ackman’s Q3 13F portfolio. As a result, Lowe’s Companies, Inc. (NYSE:LOW) ranks #1 on our list of Billionaire Bill Ackman’s Top 6 Stock Picks. Given the Federal Reserve has raised interest rates substantially in 2022, housing demand has softened and growth for Lowe’s Companies, Inc. (NYSE:LOW) isn’t as strong as it was before. For Q3, for example, Lowe’s Companies, Inc. (NYSE:LOW) reported U.S. comparable sales of 3%. For FY22, the company sees comparable sales flat to down 1%. Nevertheless, Lowe’s Companies, Inc. (NYSE:LOW) still has long term growth potential.
Billionaire Bill Ackman commented on Lowe’s Companies, Inc. (NYSE:LOW) in an August investor letter,
Lowe’s is a high-quality business with significant long-term earnings growth potential underpinned by a superb management team that is successfully executing a multi-faceted business transformation…
While we expect that there will be some near-term volatility and continued moderation of DIY demand, growth remains strong for projects requiring professional installation (the “Pro” business) due to a substantial backlog of projects undertaken during COVID, which should support industry growth in the near-term. In addition, we believe the mediumterm growth outlook for the home improvement industry remains strong as demand is likely to normalize at a materially higher level as compared to the pre-COVID era. F
You can also take a look at Warren Buffett’s Top 10 Dividend Stock Picks and 15 Largest Hotel Chains in the US in 2022.
