Billionaire Bill Ackman Has 60% of His Hedge Fund’s $10 Billion Portfolio

Bill Ackman is one of the best-known billionaire investors in the world. Despite his star power, he failed to launch a publicly traded investment fund last month, as demand fell short of expectations.

Ackman planned to launch a closed-end fund called Pershing Square USA, which would have put him in charge of investing billions of investors’ dollars. While he originally planned to raise $25 billion for the fund, he significantly lowered the amount before scrapping it altogether as demand failed to materialize.

But investors interested in following Ackman’s investment style can still track his Pershing Square Capital Management hedge fund. Ackman discloses his portfolio holdings quarterly with the SEC, and it’s typically highly concentrated. Currently, he has about 60% of the portfolio invested in just three companies’ stocks.

1. Alphabet (22.1%)

Ackman’s biggest holding based on Pershing Square’s first-quarter disclosure is Alphabet (GOOG 0.95%) (GOOGL 1.01%). He holds about $700 million of the class A shares and over $1.5 billion of the class C shares.

Ackman bought shares of Alphabet when many investors were concerned how AI will impact its core Google business. It turns out AI is very good for Alphabet’s business.

Artificial intelligence is responsible for pushing Google Cloud to a $10 billion quarterly revenue run rate, and its revenue growth is accelerating. Several big-name AI companies are using Google Cloud to train and deploy their AI models and services.

Meanwhile, core Search ad revenue appears unaffected so far by chatbots like OpenAI’s ChatGPT. Revenue increased 14% in Alphabet’s most recent quarter for its main product. That said, it saw some weakness in YouTube ad revenue growth.

While Google continues to invest heavily in its data centers to build AI-training and inference capacity, it’s cutting costs elsewhere in the company. As a result, operating margin is expanding quickly, helping grow the bottom line. Analysts currently expect Alphabet to produce earnings per share growth exceeding 20% per year for the next five years. Meanwhile, the stock trades at just over 20 times forward earnings estimates, making it a very enticing stock right now.

2. Chipotle Mexican Grill (19.5%)

Ackman initially invested in Chipotle Mexican Grill (CMG 2.26%) in 2016 following food safety concerns, which left many customers seeking alternatives. Ackman liked the strong brand and leadership of the business and saw an opportunity to buy shares. While it took some time to turn around, the investment has since produced strong market-beating returns for Pershing Square.

Chipotle has defied the rest of the restaurant industry lately. Same-store sales increased 11% in its most recent quarter, driven by both transaction volume and average sales. Chipotle continues to open new stores, adding 52 new restaurants last quarter. As a result, total revenue growth exceeded…