Did you know that hedge fund king Bill Ackman owns several Canadian stocks?
It’s not something that’s talked about much on Wall Street, but it’s true.
At the time this article was written, Ackman had three TSX stocks in his portfolio, one of which was his second largest holding. Its longest-standing Canadian holding company, Canadian Pacific Kansas City Railroadis no longer among the larger ones in his portfolio, as Ackman has sold many of his shares. His other two Canadian positions are well worth talking about.
In this article, I examine the two Canadian stocks Bill Ackman holds in his portfolio today and speculate on why he owns them.
Brookfield
Brookfield Corp (TSX:BN) is a Canadian financial conglomerate involved in asset management, insurance, private equity, real estate, renewable energy and infrastructure. It is currently the second largest position in the Pershing Square Holdings portfolio that Bill Ackman manages.
What does Bill Ackman see in Brookfield?
There are many things that Ackman’s company, Pershing Square, has published about Brookfield. The company’s executives appear to think that Brookfield’s stock does not reflect the full value of the company’s publicly traded subsidiaries; Brookfield’s interests in these companies are collectively worth more than Brookfield’s market capitalization. Brookfield has very little debt at the corporate level, so it appears the stock is trading at a discount to the sum of its parts (SOTP). As value investors, Pershing Square finds that aspect of BN stock attractive.
Many investors other than Bill Ackman and Pershing Square have invested in Brookfield stock based on the SOTP discount. I bought the stock in 2023, when it was clearly trading at such a discount. Now that BN shares have more than doubled from their lows, it’s harder to say there’s still a meaningful discount.
For Ackman, the gradually decreasing discount is probably not a problem. Pershing Square’s Brookfield Theorem not only has a valuation component, but also a profit component. In concrete terms, the company’s managers think so Brookfield Asset Management large amounts of unused committed capital will eventually be invested and generate fee-related revenue for Brookfield. This could lead to a significant price increase once the market recognizes the added value.
Restaurant brands International
Restaurant brands International (TSX:QSR) is a Canadian fast food restaurant company that started as three separate companies: Burger King, Tim Hortons and Popeyes Louisiana Kitchen. Tim Hortons and Burger King merged in 2014, resulting in the creation of Restaurant Brands International as an entity. Later, the entity acquired Popeyes, resulting in the creation of one of the world’s largest fast food companies.
What does Ackman like about Restaurant Brands International?
Part of it may be in the name: the company owns quality brands. Tim Hortons is Canada’s largest coffee shop chain, while Burger King is often seen as the second largest hamburger chain McDonald’s. Popeyes also has a dedicated fan base.
Another thing Ackman might like about QSR is its growth. The company grew its sales by 21.8% in the last twelve months, and Popeyes currently has plans for global expansion in the future.
Last but not least, Ackman might like that QSR is trading at fairly sensible multiples: around 20 times earnings at the current price. That’s cheaper than the S&P 500, and QSR is certainly no slouch on the growth front. So there’s a lot that Ackman – and any investor for that matter – likes about QSR.
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