Here’s How Billionaire Bill Ackman’s Top Picks Performed In the Fourth Quarter

#2 Air Products & Chemicals, Inc. (NYSE:APD)

Shares held (as of September 30): 20.55 million
Total Value (as of September 30): $2.62 billion
Percent of Portfolio (as of September 30): 18.79%

Air Products & Chemicals, Inc. (NYSE:APD) gained about 2% in the fourth quarter, making it the second best performer in Ackman’s portfolio. Despite the company reporting mixed fourth quarter results (with EPS beating estimates by $0.02 and revenue missing by $110 million), Air Products and Chemicals is a great long term holding given its wide moat. With a return on equity of 17.3% and a return on assets of 7.3%, Air Products and Chemicals earns admirable returns on capital and given the company’s cash flow and CapEx plans, its 2.75% dividend yield is safe. Moreover, last year, Air Products and Chemicals announced plans to spin-off its Materials Technologies business Versum, which will generate around $1.5 billion of capital that can be used for investment in Air Products and Chemical’s core business or returned to shareholders through buybacks.

“We believe that Versum can comfortably support its new capital structure given its strong free cash flow generation. At the one-year mark of [APD’s CEO] Seifi’s tenure at Air Products, we are delighted with the results achieved thus far and remain optimistic about the company’s future prospects,” Ackman said.

Hedge fund sentiment towards Air Products has been stable, with the number of funds long the stock almost unchanged at 77 at the end of the third quarter, versus 76 at the end of the second quarter. Ackman’s holdings in Air Products was also unchanged in the quarter.