Billionaire investor Bill Ackman isn’t a big fan of diversification in his FTSE 100-listed fund, Pershing Square Holdings. It’s currently invested in just 11 stocks, with just three making up roughly 41% of the portfolio!
Ackman’s known for buying high-quality businesses during periods of fear or market overreaction. Here’s why he’s piled into this trio.
AV anxiety
At the end of March, Pershing Square’s largest holding was Uber (NYSE: UBER). It had $2.2bn — or 18.5% of assets — invested in the global rideshare and food delivery platform.
Presumably it will be more than that now, as Uber stock’s up 15% since March.
The fund acquired its stake earlier this year at what it believed was an “extremely dislocated valuation“. This was due to fear about the impact that autonomous vehicles (AVs) might have on Uber’s business model. Namely, consumers could book driverless taxis outside the firm’s app, which does still appear to be a future threat.
However, Pershing Square believes that AV technology will not be a winner-takes-all market. It thinks multiple players will emerge, and that they’ll choose to partner with Uber to tap into its 170m+ monthly active user base. This will be their fastest route to market.
As an Uber shareholder, this is my belief too. I think the firm will simply match riders with available AVs, regardless of who owns them (Waymo, WeRide, Volkswagen, PONY AI, and perhaps even Tesla one day). And it will take a cut of the fare, just like it does today with human drivers.
After rising 40% year to date, Uber isn’t trading at an extremely dislocated valuation now. But I think it’s still worth considering as a long-term investment.
ChatGPT jitters
Pershing Square’s third-largest holding is Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL). It owns both class of shares, which together made up 14% of the portfolio in March.
Ackman acquired the stake in the Google owner in early 2023 when investors were worried that artificial intelligence (AI) bots like ChatGPT might disrupt traditional search engines.
To be fair, this is a risk, as is a potential economic slowdown that affects digital advertising spend. While the latter’s unavoidable, Alphabet’s navigating the AI chatbot risk admirably. In Q1, revenue increased 12% to $90.2bn, with Search, YouTube, and Google Cloud each delivering double-digit growth.
Over the long term, we think Google has a number of structural advantages in AI from its vast corpus data, including two decades of consumer queries.
Pershing Square, Q1 2025 earnings call.
Trading at just 18.5 times forward earnings, Alphabet shares still look undervalued and worth researching to me.
Tariff trepidation
Finally, investors recently learned that Ackman’s fund had bought shares of Amazon.
Now, we don’t know how large this stake is, but Pershing Square sold its position in Canadian Pacific Kansas City to fund it. If it matches that, it will be worth about $1bn, or 8.7% of assets.
It was initiated in April when panic about tariffs erupted. Pershing Square was able to invest at a historically cheap valuation for Amazon.
An economic slowdown could cause problems for the firm’s growth in the coming quarters. But this is yet another stock I think is worth considering. Amazon has multiple avenues of future growth, including e-commerce, cloud computing, digital advertising, and more.
