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One of billionaire Bill Ackman and Pershing Square Capital's major activist investments is Procter & Gamble (NYSE:PG). Ackman has been receiving a lot of attention of late, but it has all been about Herbalife (NYSE:HLF). The news that Ackman had a large short position in Herbalife hit the news in December, and since then it has been a mirage of Herbalife-related hedge fund porn. With all the news coverage on Ackman's newest position, could P&G be getting overlooked?

The stake is 21.7% of Ackman's fund, Pershing Square Capital, but it makes up less than 1% of P&G's outstanding shares. Yet Ackman does have major support of other notable investors. Billionaire Warren Buffet owns 52.7 million P&G shares, and other notable investors include Ken Fisher, Ken Griffin, and Jim Simons (here are all the hedge funds that love P&G).

Ackman first started establishing a position in P&G back in the second quarter of 2012 in an effort to gear up for a campaign against its CEO Bob McDonald. Ackman has called for CEO McDonald's firing, citing the fact that the company has had lackluster earnings and dismal stock performance since he took over in June 2009. Ackman blames McDonald for the company's excessive cost structure and inability to innovate as reasons for constant underperformance.

Since McDonald took over the CEO position in June 2009, P&G has grown its stock price 35%, which is still well below the S&P 500 Index's 62%. McDonald has every intention of keeping the diversified products company intact and has put in place plans of his own in an effort to right the company. He plans to shed some $10 billion in costs.

It has also been speculated that Ackman is pushing for a breakup of P&G's Gillette, Duracell, and Tide products. Worth noting is that Ackman did manage a previous breakup of consumer products company, Fortune Brands (NYSE:FBHS). Ackman still owns over 20 million Beam (NYSE:BEAM) shares as a result of the breakup, which is his fourth largest stock holding.

Ackman did mange to get his top CEO pick elected to his other activist investment of J.C. Penney (NYSE:JCP), but new CEO Ron Johnson has been struggling. Ackman owns a large enough stake in the retailer to make a difference at 17.7% of Penney's outstanding shares, compared to less than 1% of P&G. J.C. Ackman has hedge fund manager Whitney Tilson of T2 Partners as a fellow investor in J.C. Penney (see more picks Ackman and Tilson have in common).

Some of P&G's key competitors include Johnson & Johnson (NYSE:JNJ), Clorox (NYSE:CLX), Colgate-Palmolive (NYSE:CL), and Church & Dwight (NYSE:CHD). These companies are a great source for dividends, with P&G as one of the industry leaders:

Procter & Gamble

Johnson & Johnson

Clorox

Colgate-Palmolive

Church & Dwight

Dividend Yield

3.2%

3.3%

3.3%

2.9%

1.6%

Dividend Payout

69%

76%

58%

47%

38%

P&G's valuation remains relatively in line with its peers, and so the products company might not be a screaming buy.

Procter & Gamble

Johnson & Johnson

Clorox

Colgate-Palmolive

Church & Dwight

Price to Earnings (next year earnings)

16.2

13.3

16.5

18.5

20.4

Price to Sales

2.3

3.1

1.8

3.1

2.8

It also appears that P&G's margins are not overly pressured, as trailing 12 months operating margin is in line with its five-year average:

Procter & Gamble

Johnson & Johnson

Clorox

Colgate-Palmolive

Church & Dwight

Operating Margin (NYSE:TTM)

19.2%

25.6%

16.7%

23.5%

18.7%

Operating Margin (5-year average)

19.9%

25.8%

18.2%

22.9%

16.6%

Although the article is not a long piece on Johnson & Johnson it does appear that the stock might be a better buy than P&G. Johnson & Johnson trades at the cheapest forward price-to-earnings ratio and also has the highest operating margin, not to mention one of the lowest debt ratios and highest current ratios:

Procter & Gamble

Johnson & Johnson

Clorox

Colgate-Palmolive

Church & Dwight

Debt to Assets

24%

16%

65%

39%

14%

Current Ratio

1.0

1.9

1.0

1.3

2.2

Back to the topic at hand, what kind of return could an investor expect from P&G over the next couple of years? Although the price movement may well be limited over the next few years given valuation and lack of catalysts, investors could be rewarded with solid dividends and dividend growth. P&G has grown dividends by an average of 10% annually over the last five years, and assuming it continues to grow dividends at its recent growth rate of 7.7% the dividend yield could be 3.7% in June 2014 -- assuming the price movement is flat.

Last quarter results for P&G were impressive, posting EPS of $1.06 compared to estimates of $0.96. The recent string of earnings beats -- in each of the last four quarters -- has pushed the stock to five-year highs near $70 per share (here's what to expect from P&G earnings).

By splitting up P&G's biggest segments, it would unlock the most value for shareholders. The spin-offs could allow the company to shed lower-margin segments and leverage its faster-growing brands to enter emerging markets. This could award the consumer products company with higher multiples.

Sanford Bernstein & Co. believes that a full breakup value would value its pieces at around $200 billion -- a roughly 5% premium to current market value. Although the premium is not that much higher, the true value would lie in operational and cost synergies. We believe that investors could invest in P&G and wait for a potential breakup, while receiving the dividend payments. But given the size of the company ($190 billion market value), a breakup could prove troublesome, so investors might be able to find other, better-priced companies.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Source: Checking Up On Billionaire Bill Ackman And Procter & Gamble