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This article is part of a series that provides an ongoing analysis of the changes made to Pershing Square's U.S. stock portfolio on a quarterly basis. It is based on Ackman's regulatory 13F Form filed on 11/14/2012. See our Tracking Bill Ackman's Pershing Square Holdings article for an idea on how his holdings have progressed over the years and our previous update highlighting the fund's moves during Q2 2012.

Ackman's portfolio increased around 17% from around $7.59B to $8.90B this quarter. The number of positions went up from 8 to 9. The portfolio remains heavily concentrated with a few large bets: The top five positions account for close to 90% of the total portfolio value.

New stakes:

Burger King Worldwide (BKW): BKW is a ~6% of the U.S. long portfolio stake that was established this quarter at prices between $13.03 and $15.88. The stock currently trades at $15.31. Ackman is very bullish on BKW. His investment in Burger King Worldwide started with a transaction to acquire 29% of the company for $1.4B in April 2012. The acquisition was done through Justice Holdings, a British company controlled by Ackman. That stake is not reported in the 13F filings as Justice Holdings is a UK listed investment vehicle - it is not a 13F security. Including that, the investment in BKW rivals his stakes in Procter & Gamble (PG) and Canadian Pacific Railway (CP), his largest positions. For investors attempting to follow Ackman, BKW is a very good option to consider.

Matson Inc. (MATX): MATX stake was acquired as part of its spin-off from Alexander & Baldwin Inc. (ALEX). It is a small (less than 1%) stake and as such does not indicate a clear bias. The stock is trading at around $22, well-off its spin-off price of around $26 per share.

Stake Disposals:

Citigroup (C): C was a large 11.8% stake that was reduced to an insignificantly small 0.4% position last quarter before the elimination this quarter. The position was first acquired in Q2 2010 and was doubled in Q2 2011 at prices between the high-30s and low-40s. The stock sales last quarter were at prices between $24.82 and $36.87 and this quarter the stock traded between $25.24 and $34.79. It currently trades at around $35. Ackman clearly realized significant losses on this position. The stake elimination indicates a bearish bias.

Stake Increases:

Procter & Gamble Co : PG is a huge ~27% of the U.S. long portfolio activist position established last quarter at a price-range between $59.27 and $67.57. The stake was increased by 28.55% this quarter at prices between $61.19 and $69.76. The stock currently trades at around $66.53. It is Ackman's largest position, well ahead of the Canadian Pacific Railway position. Activist roles are effective when a good portion (over 10% ideally) of the outstanding shares are acquired or otherwise controlled by the investor concerned. This is not the case with Ackman's position in PG as he controls only about 1% of the outstanding shares. It will be interesting to see how this position plays out. About one-fifth of the position is through call options. Although the 13F filings do not include details on the strike price and expiry dates of these options, it is clear Ackman is extremely bullish on PG stock - call options can lose the whole premium if the stock goes down but the upside is unlimited if it goes up.

General Growth Properties (GGP): GGP is one of Ackman's biggest wins at Pershing Square. He acquired the stake during bankruptcy in Q2 2009 in the $1 price-range and the stock currently trades at around $18.47! The stake was increased by around 3.5% this quarter at prices between $17.20 and $20.99.

Stake Decreases:

Alexander & Baldwin Inc: ALEX is a small (less than 0.5%) stake that was reduced by around 60% this quarter at prices between $26.93 and $34.25. The stock currently trades at around $27.38. ALEX position was purchased in Q2 2011 at prices between $44.83 and $54.47 and Matson Inc. was spun-off from ALEX on July 3, 2012 (1:1 ratio). MATX currently trades at around $22. The significant stake reduction indicates a clear bearish bias.

The remaining four positions were untouched during the quarter:

J C Penney (JCP): JCP is 10.67% of the portfolio stake established in 2010 at a purchase price of around $25. JCP has been very volatile with the stock trading as high as $43 and dropping below $17 recently. For investors attempting to follow Ackman, JCP is a good option to consider.

Canadian Pacific Railway and Beam Inc. (BEAM): Ackman is sitting on huge gains on these two large positions: CP is a 22.5% stake first established in Q3 2011 with the bulk purchased in Q4 2011 at prices between $46.05 and $71.82. The stock currently trades well above that range at around $91. Ackman reigned in management and board changes at the company by winning a proxy battle in May this year. BEAM is a spin-off from Fortune Brands and the stock is up around 20% since the spin-off in September 2011. Ackman acquired the stake in Fortune Brands in 2010 and his cost-basis is well below the spin-off price.

Howard Hughes Corp (HHC): HHC is a small 2.85% of the U.S. long portfolio position that was first purchased in 2010. The stake has remained untouched during the whole period. The stock has gained around 80% since that time and so Ackman is sitting on solid gains.

The spreadsheet below highlights changes to Pershing's U.S. stock holdings in Q3 2012:

(click to enlarge)

Source: Tracking Bill Ackman's Pershing Square Portfolio - Q3 2012 Update