We recently published a list of Bill Ackman’s Stock Portfolio: Top 9 Stocks to Buy. In this article, we are going to take a look at where Restaurant Brands International Inc. (NYSE:QSR) stands against other stocks to buy in Bill Ackman’s portfolio.
William Albert Ackman, more commonly known as Bill Ackman, is the founder and CEO of Pershing Square Capital Management, a hedge fund management company. Famous for his concentrated portfolio, with stakes in only 8 to 12 stocks at a time, Bill Ackman’s recent portfolio modification has revealed that 47% of his hedge fund is invested in just three stocks.
Analysis of his portfolio reveals that Bill Ackman invests in stocks that are mispriced relative to the long-term value of the company. Historically, this philosophy has served him well since Pershing Square’s total value was just under $13 billion by the end of the third quarter of 2024 with only 9 stocks.
A longtime supporter of the Trump administration, Ackman has been vocal about the benefits that the newly elected president will bring to the investment front. In addition to the prospects of deregulation and corporate tax cuts that could allow for stock prices to rise and have made many investors bullish on the market, Bill Ackman has more vested interests in the Trump office. Pershing has a roughly 10% stake in the common shares of the government-sponsored entities. He took to X to discuss his hypothesis about how Donald Trump could help these giants exit government conservatorship and be recapitalized, leading to substantial shareholder gains for Pershing Square.
In early 2024, Ackman launched a U.S. closed-ended fund called Pershing Square USA, Ltd., and talked about it during his 2024 letter to investors:
“The launch of PSUS is one of a number of strategic initiatives we plan to undertake which we believe will increase the long term sustainability of Pershing Square Capital Management, L.P., (“PSCM” or the “Investment Manager”), and will benefit PSH by reducing the performance fees that it pays. To this end, in June, we sold a 10% interest in PSCM, the proceeds of which will be used to anchor new fund launches including PSUS.”
However, Pershing Square officially canceled its IPO just one day after filing with the SEC due to a $2 billion listing as opposed to its original target valuation of $25 billion. Finally, while announcing the IPO cancellation on X, Ackman wrote “We will report back once we are ready to launch a revised transaction,” hinting at the possible launch of PSUS without listing shares on a stock exchange.
Our Methodology
The stocks discussed below were picked from Pershing Square’s Q3 2024 13F filings. They are compiled in the ascending order of Pershing Square’s stake in them as of September 30, 2024. In order to assist readers with more perspective, we have included the hedge fund sentiment regarding each stock using data from over 900 hedge funds tracked by Insider Monkey in the third quarter of 2024.
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).
A close-up of a hamburger, french fries, and a soft drink, representing the fast food chain.
Restaurant Brands International Inc. (NYSE:QSR)
Number of Hedge Fund Holders as of Q3: 29
Pershing Square’s Equity Stake: $1.66 Billion
Restaurant Brands International Inc. (NYSE:QSR) is a Canadian American multinational fast food holding company in Bill Ackman’s stock portfolio and one of the two restaurant-related stocks that the hedge fund has stakes in. As of Q3 2024, the hedge fund holds just over 23 million shares of the company valued at roughly $1.66 billion, down slightly from 23.14 million in Q2. Restaurant Brands International Inc. (NYSE:QSR) represents a solid 15.64% of Pershing Square’s portfolio, which held the largest stake in the company in Q3 2024.
Operating in more than 120 countries with 30,000 restaurants, Restaurant Brands International Inc. (NYSE:QSR) owns four prominent restaurant brands: Tim Hortons, Burger King, Popeyes, and Firehouse Subs. It was founded in 2014 with the merger of Tim Hortons and Burger King, and later acquired Popeyes in 2017, and Firehouse Subs in 2021. At the time of the merger, in Q3 of 2014, Pershing Square had a $1.14 billion stake in Burger King Worldwide which transformed into a $1.48 billion stake in Restaurant Brands International Inc. (NYSE:QSR) by Q4 of the same year.
Of the four brands that it owns, Burger King has seen a drop in sales in the US during 2024 due to broad price increases. QSR states that it would adopt a balanced approach to ensure profitability while appealing to customers. Josh Kobza, CEO of Restaurant Brands International Inc. (NYSE:QSR) maintained, “Our balanced approach to everyday value continues to resonate with guests and the team has reacted calmly in the face of heightened promotional activity across the industry.”
Restaurant Brands International Inc. (NYSE:QSR)’s Q3 revenue was 2.29 million with a year-on-year growth of annual sales of 3.2%. Its adjusted operated income of $652 million increased 6.1% organically as compared to the same quarter in 2023. Moreover, the company’s Q3 net restaurant growth expanded by 3.8% compared to the previous year despite cost inflation.
Restaurant Brands International Inc. (NYSE:QSR) offers a 3.67% dividend yield and has raised its dividend for 10 consecutive years. KeyBanc revised its outlook for the stock, decreasing the price target from $80 to $78 while maintaining an Overweight rating on the stock. This suggests that the current trading price of Restaurant Brands International’s stock does not accurately reflect the company’s growth potential in the long term.
However, Ackman’s investment in Restaurant Brands International Inc. (NYSE:QSR) is a sign of his optimism about the company’s prospects. The company has good long-term growth prospects since its brands are much less penetrated in the global market as are its competitors like McDonald’s or KFC.
Insider Monkey’s database indicated that 29 hedge funds out of the 900 funds held stakes in Restaurant Brands International Inc. (NYSE:QSR) as of the end of Q3 2024 as opposed to 22 in Q2.
Pershing Square stated the following regarding Restaurant Brands International Inc. (NYSE:QSR) in its second quarter 2024 investor letter:
“In light of weakening economic conditions and ongoing boycotts, the company lowered its net restaurant and system-wide sales growth outlook this year. In response, the company is enacting a cost savings program which will enable it to grow operating profits by more than 8%. While an uncertain environment may impact unit growth in the near-term, we believe each of the company’s brands will benefit in a slower economic environment with consumers trading down.”
Overall, QSR ranks 4th on our list of stocks to buy in Bill Ackman’s portfolio. While we acknowledge the potential for QSR as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than QSR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.