When the stock market was in freefall late-March, few investors netted profits, and certainly not to the tune of $2 billion like Bill Ackman.
On March 23, Ackman officially sold his bets against the market, netting him a total gain of $2 billion after commissions. This came shortly after the investment guru announced on CNBC that the coronavirus outbreak would result in a serious market crash and that "hell is coming". Ackman was certainly right. With the funds coming in from his bet, Ackman reestablished his existing positions in Berkshire Hathaway, Hilton, Lowe's, and Restaurant Brands.
With Pershing Square Capital netting 58.1% by year-end 2019, the question looms, what made Pershing square so successful?
Ackman is a sort of activist investor, appearing on television to push his holdings to other investors and share why his companies are so great. Such an example is of his doubling down of Hilton Worldwide during the pandemic, a move in a sector where he believes will eventually rebound.
Funny enough, Ackman has a huge bet on a fellow investor: Warren Buffett. Ackman currently holds approximately 4 million shares of Berkshire Hathaway, worth roughly $555 million. Ackman attributes the fund's strong double-digit performance last year to Buffett's presence.
That's the thing about Ackman. He's a man that finds true value in stocks and invests based on company fundamentals.
On Starbucks, Ackman believes their digital ordering and delivery service, along with their no-touch pick up has made them well-adapted to cater to the consumers in their sector. For Lowe's, Ackman believes that they will rise from the lockdown stronger as when consumers spend time at home, they tend to do more home repairs and upgrades. Lowe's also has the cash flow to withstand the short term impact, which made Lowe's a 'buy'. Chipotle, Ackman believes that consumers are looking for healthier alternatives nowadays, along with Chipotles easy-to-deliver burritos and bowls, the company's digital delivery service should prosper.
If there's one thing investors should learn from Ackman, it's that logically envisioning how the company can contribute to current economic climates will give a better perspective on whether or not one should invest in a specific stock.
Too often we can get caught up on the up and down trends of a certain stock, but if we just take a step back and see the impact the company has on society, then we can traject its future share price. To become a better investor, one needs to look at all facets of a company, and look at stocks as more than just a price tag.
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