During the final quarter, Pershing Square Capital, under the leadership of Bill Ackman, undertook a notable reconfiguration of its investment holdings. This strategic shift involved acquiring a fresh stake in Meta Platforms, substantially enlarging its investment in Amazon, and scaling back its exposure to Alphabet (Google) shares. These adjustments underscore Ackman's perspective on the market, particularly his belief in the long-term potential of certain tech leaders.
The disclosures from the fourth quarter reveal that Pershing Square Capital initiated a new position in Meta Platforms, securing 2,673,569 shares. This action signals a strong belief in Meta's future prospects. Concurrently, the fund divested its entire stake in Chipotle Mexican Grill, indicating a shift away from the restaurant sector during this period.
Further analysis of the portfolio changes indicates a significant increase in the fund's Amazon.com Inc. (NASDAQ: AMZN) holdings, which grew by 65%. Additionally, its investment in Brookfield saw a 50% increase. Conversely, Pershing Square substantially reduced its positions in Alphabet Inc. Class A (NASDAQ: GOOGL) by 86% and Alphabet Class C (NASDAQ: GOOG) by 2%. This marks the second consecutive quarter that Ackman's fund has trimmed its exposure to Alphabet shares, suggesting a strategic reallocation of capital towards other growth opportunities.
As of the end of the fourth quarter, the top holdings within Ackman's fund illustrate this new strategic direction. Brookfield represents 18% of the fund with a value of $2.8 billion, followed by Uber Technologies (NYSE: UBER) at 16% or $2.5 billion. Amazon.com now stands as the third-largest holding, accounting for 14% of the fund with a value of $2.2 billion. Meta Platforms, the new addition, quickly rose to become the fifth-largest holding, making up 11% of the fund with $1.8 billion. Other significant holdings include Alphabet Inc. Class C ($1.9 billion, 13%), Restaurant Brands International (NYSE: QSR) ($1.6 billion, 10%), Howard Hughes Holdings (NYSE: HHH) ($1.5 billion, 9.7%), Hilton Worldwide Holdings (NYSE: HLT) ($870 million, 5.6%), and Seaport Entertainment (NYSE: SEG) ($99.3 million, 0.6%).
Pershing's decision to invest in Meta Platforms was elaborated in a recent investor presentation, released just before the 13F filing deadline. The firm expressed its conviction that Meta's current market valuation undervalues its significant long-term growth potential, particularly driven by advancements in Artificial Intelligence. They characterized Meta as a premier business, leading in the expanding digital advertising landscape and poised to benefit immensely from AI integration. Despite concerns regarding Meta's AI-related expenditures, Pershing Square believes these investments will fuel substantial future upside, citing Meta's vast user base of 3.5 billion daily active users, experienced leadership, and attractive stock multiples as key indicators for a bullish outlook.
The adjustments made by Bill Ackman in the fourth quarter reflect a confident move towards companies believed to have strong growth trajectories in the evolving technological landscape. By increasing stakes in Meta and Amazon while reducing exposure to Alphabet, Pershing Square is positioning its portfolio to capitalize on what it perceives as undervalued opportunities and robust future growth, particularly within the influential 'Magnificent Seven' group of tech stocks.