If there’s one thing billionaire investor Bill Ackman is known for, it’s making bold moves in the market. The founder of Pershing Square Capital Management doesn’t do things halfway. With $17 billion in assets under management, his hedge fund operates with precision, holding just 10 stocks in its portfolio. And Ackman’s recent quarterly filing with the Securities and Exchange Commission (SEC) shows he’s not slowing down.
In the third quarter of 2024, Ackman made waves by investing a whopping $2.2 billion into two stocks: Brookfield (NYSE: BN) and Nike (NYSE: NKE). Both moves reflect Ackman’s keen eye for undervalued opportunities—and his willingness to bet big on their potential.
Brookfield: A Strategic Shift in Focus
Brookfield, an alternative investment management giant, has caught Ackman’s attention in a major way. The firm manages assets across diverse sectors like real estate, renewable energy, infrastructure, and private equity. It also operates through notable subsidiaries, including Brookfield Asset Management (NYSE: BAM), Brookfield Renewable Partners (NYSE: BEP), and Brookfield Infrastructure Partners (NYSE: BIP).
Ackman’s interest likely stems from a significant structural change happening within Brookfield Asset Management. As part of a simplification plan, Brookfield’s private interest in its asset management business will soon be exchanged for shares of the publicly traded BAM on a one-for-one basis. This adjustment, set for early 2025, will make BAM eligible for inclusion in major stock indices—a potential game-changer for investors.
Ackman’s move reflects his belief in Brookfield’s future growth. His Pershing Square fund now holds 32.7 million shares of BN, with nearly 26 million acquired in the last quarter alone. This makes Brookfield his largest holding, accounting for 13.5% of the portfolio—surpassing stakes in Hilton Worldwide (NYSE: HLT), Chipotle Mexican Grill (NYSE: CMG), and Restaurant Brands International (NYSE: QSR).
Nike: Betting on a Turnaround
Nike, a global leader in sportswear, has been navigating rough waters recently. Faced with stiff competition from rivals like Adidas (OTC: ADDYY), Deckers Outdoor (NASDAQ: DECK), and On Holding (NYSE: ONON), the company’s market share has taken a hit. Over the past three years, Nike’s stock price has dropped by over 50%, while competitors like Deckers and On have surged.
A significant part of Nike’s struggles can be traced back to its strategic pivot toward a direct-to-consumer (DTC) model. Initially promising, this shift led to inventory challenges and opened the door for competitors to gain shelf space in retail outlets. Now, Nike is undergoing a major restructuring to regain its footing.
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At 22 times earnings, Nike’s valuation is at levels unseen in seven years. Ackman’s confidence in a turnaround is evident: he acquired more than 13 million shares of Nike last quarter, bringing his total holdings to 16.3 million shares worth $1.4 billion. This represents an 11% stake in Pershing Square’s portfolio, making Nike the fund’s sixth-largest holding.
Ackman’s Investing Philosophy: Bold and Calculated
While Ackman has a history of activism—advocating for changes in companies he invests in—his recent moves show a shift toward a more passive approach. That doesn’t mean he’s any less strategic. By identifying undervalued stocks with strong potential, Ackman aims to capitalize on market inefficiencies.
His big bets on Brookfield and Nike highlight his ability to spot opportunities others might overlook. With Brookfield, he’s banking on a structural shift that could unlock significant value. With Nike, he’s betting on a brand revival that could propel the company back to its former glory.
The Bottom Line
Bill Ackman’s $2.2 billion investments in Brookfield and Nike are more than just financial moves—they’re statements of confidence in these companies’ futures. For investors looking to follow his lead, these bets are worth watching closely. Will Brookfield’s corporate restructuring deliver the promised value? Can Nike overcome its challenges and reignite growth? Time will tell, but one thing’s for sure: Ackman’s portfolio is anything but ordinary.
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