Billionaire Bill Ackman’s Pershing Square Capital Management concentrates its approximately $16.5 billion investable portfolio highly on a few holdings. Among these, three outstanding stocks constitute 56% of its publicly traded equity portfolio, a concentration that highlights its deep-research investment philosophy.
Ackman began investing in Alphabet (GOOGL) about two years ago, stemming from his belief that the market underestimated the company’s AI capabilities while overestimating the threat from products like ChatGPT to Google’s search business. Since then, Alphabet’s progress in the AI field has been significant. Its Google Cloud business revenue continues to grow rapidly, with a 34% year-over-year increase in the third quarter, and its profit margins are also steadily improving. The company’s self-developed Tensor Processing Units (TPUs) have gained widespread adoption, which helps improve profit margins and enhance customer stickiness.
In terms of AI model development, Alphabet’s Gemini series of models has gained market recognition and has been successfully integrated into consumer products like its search engine. Features such as AI Overviews have increased user engagement without harming profitability. Google Search revenue grew by 15% in the third quarter and is expected to accelerate in 2025. Furthermore, an agreement with Apple will see the Gemini model being used in the iPhone’s Siri, which not only brings billions of dollars in potential revenue but also strengthens ties with a key partner. Given the strong momentum of its cloud business and AI applications, the company is expected to maintain double-digit earnings growth, making its current forward price-to-earnings ratio of around 30 times appear reasonable.
The second-largest holding in Ackman’s portfolio is the Canadian conglomerate Brookfield Corporation (BN). Its value primarily derives from its subsidiary Brookfield Asset Management (BAM), with the remainder consisting of its fast-growing insurance business and a small amount of operating assets.
One of the company’s growth drivers is the carried interest income generated by its asset management business. This portion of income is recognized only after the funds managed by the company deliver excess returns for investors, thus having a deferred characteristic. Recently, this income has shown an accelerating growth trend, with net carried interest reaching $154 million in the third quarter, significantly higher than the $61 million in the same period last year. Management expects that with the accelerated establishment of new funds and existing funds entering their harvest phase, carried interest income for 2026 and beyond will see significant growth, potentially totaling $250 billion over the next decade.
Meanwhile, its insurance business (Wealth Solutions) is expected to more than double its asset size within five years and achieve a return on equity of approximately 15%. Management anticipates that the net profit from this business segment will more than triple by 2030. Based on distributable earnings over the past twelve months, the stock currently trades at a price-to-earnings ratio of about 24 times. Considering its earnings growth prospects, the valuation appears attractive.
Despite market concerns that autonomous driving technology could undermine its business model, Uber Technologies (UBER) remains a key investment target in Ackman’s view. The core thesis is that Uber, as a demand aggregation platform, is an indispensable partner for any company trying to promote autonomous taxi services. Its platform efficiently matches supply and demand, optimizes fleet utilization, and helps maximize the utility of autonomous vehicles.
Indeed, Alphabet’s Waymo has partnered with Uber in multiple cities to promote its autonomous driving services. Uber also collaborates with Nvidia to help small autonomous driving companies develop AI models and has signed agreements with several other companies. In its core business, Uber’s monthly active users continue to grow, with a 17% increase in the third quarter, and the number of trips per user has also risen concurrently. While revenue shows strong growth, economies of scale are becoming increasingly evident, with adjusted EBITDA surging by 33% in the most recent quarter. Despite ongoing investments in future technologies like autonomous driving, the company’s earnings growth remains robust. With its enterprise value trading at around 22 times adjusted EBITDA over the past twelve months, the stock price appears attractive.
