Activist Investor Bill Ackman's Q3 Portfolio Moves

by: Insider Monkey

Bill Ackman’s Pershing Square is an activist hedge fund. This means Ackman buys stock positions that are large enough to afford him a voice in the company’s management. Then, he conspires to increase shareholder value in the company. Sometimes this means getting a more effective leader put in place, as he did in helping Apple’s Ron Johnson get elected CEO of J.C. Penney Co (NYSE:JCP), while other times it means that Ackman pushes for the company’s split, as in the case of Kraft Foods (KFT). In fact, Ackman has such a strong reputation for successful activist investing that share prices tend to go up when he invests in a company, as when he announced his involvement with Fortune Brands (FO) (read more here).

Ackman Ups the Ante on the FO Horse

By the looks of it, Ackman may be at it again. At end the third quarter, Ackman had roughly $6 billion in his Pershing Square portfolio. Of that, over 18% was devoted to Fortune Brands (FO). FO had been Ackman’s third largest position in the second quarter at just under $1.1 billion. Ackman’s FO position now tops his position in JCP, which was his largest in the second quarter at $1.34 billion.

Top Holdings in Ackman’s Pershing Square Portfolio

Ackman did not increase his position in JCP, nor in General Growth Properties (NYSE:GGP), which was the second largest position in Ackman’s portfolio during the second quarter. At the end of the third quarter, it ranked third in his portfolio. KFT had ranked fifth in Ackman’s portfolio during the second quarter but, as of the end of September, it ranks fourth, after Ackman increased Pershing Square’s position in the company by 13.28%. Citigroup (NYSE:C), which had been Ackman’s fourth largest position in the second quarter, slipped to the fifth largest position. Ackman did increase Pershing Square’s holding in the company during the third quarter, by 11% in fact. Citigroup had slipped in rankings because Ackman increased his other top holdings more.

New Positions for Ackman

Ackman also initiated several new positions in the third quarter. The largest amongst these was Lowes (NYSE:LOW) and Canadian Pacific Railway (NYSE:CP). Ackman’s position in LOW accounts for nearly 7 percent of his portfolio. Ackman recommended the stock at the Great Investors’ Best Ideas event in Dallas. According to Ackman’s filings, he initiated a position of 21.2 million shares in the company during the third quarter. Ackman also initiated a position in CP of 4 million shares, at a value of 3.22% of Pershing Square’s portfolio. Ackman “said in a regulatory filing that CP Rail shares are undervalued and an attractive investment, and that it expected ‘to engage in discussions’ with the Calgary-based company about a wide swath of its business. CP Rail, which is the sixth biggest by revenue of the seven North American Class 1 railway companies is valued similarly to its peer but is less profitable.”

Ackman’s Other Positions

Bill Ackman also changed up his other holdings in the third quarter. Ackman received shares in Fortune Brands Home & Security (NYSE:FBHS) after the spin-off, while selling out a position in Greenlight Capital Re (NASDAQ:GLRE), David Einhorn’s reinsurance company. Ackman added to Pershing Square’s stake in Family Dollar Stores (NYSE:FDO) as well.

Disclosure: I am long C.