Exploring the Insights of Bill Ackman: A Deep Dive into Pershing Square Capital Management

Bill Ackman, born on May 11, 1966, stands as a prominent figure in the realm of American finance, renowned for his multifaceted roles as an investor, hedge fund manager, and philanthropist.

Ackman was born to a family where his father served as a mortgage financier and his mother held a prestigious position in New York. His academic pursuits led him to Harvard University, where he excelled, graduating magna cum laude with a Bachelor of Arts in 1988, followed by further studies at Harvard Business School for his MBA.

Embarking on his professional career, Ackman established Pershing Square Capital Management, positioning himself as its CEO. He achieved widespread recognition for his investment approach, characterized by substantial stakes in companies and assertive calls for organizational reform.

Pershing Square Holdings, Ltd., operating under the laws of Guernsey, stands as a cornerstone in the investment realm, meticulously managed by Bill Ackman’s Pershing Square Capital Management. Ackman’s adept oversight has propelled the firm’s assets to soar into the billions, solidifying its stature as a leading investment vehicle. In a strategic move to broaden its investor base, Pershing Square recently unveiled a new fund tailored to entice retail investors across the United States, marking a pivotal step in its growth trajectory.

While initial plans to list its hedge fund publicly in the U.S. were shelved, Pershing Square Holdings remains unwavering in its commitment to navigating the intricate investment landscape, ensuring its enduring influence. With forward-thinking strategies, Pershing Square Holdings continues to shape the future of finance, offering unparalleled opportunities for investors worldwide.

Here are three stocks in the Pershing Square Capital Management portfolio.

Chipotle Mexican Grill (CMG)

Ackman’s interest in Chipotle dates back to at least 2016 when Pershing Square first invested in the company. Chipotle has remained a significant holding in Pershing Square’s portfolio, representing a substantial portion of their assets. While there have been instances of Pershing Square reducing its stake in Chipotle, as reported in 2020, the fast-casual restaurant chain continues to be one of their key investments. Currently, Chipotle Mexican Grill holds a significant position in Pershing Square’s portfolio, valued at approximately $2.27 billion, making it their largest holding at 23.68% of their stock portfolio.

Price to Book Ratio: 7.66

PEG Ratio: 2.69

PE Ratio: 62.16

Price to Sales Ratio: 6.40

Forward PE Ratio: 42.57

Alphabet Inc: (GOOG) (GOOG)

In the third quarter of 2023, Pershing Square nearly doubled its ownership of Alphabet’s Class A shares. As of the end of 2023, Alphabet’s Class A and Class C shares combined constituted 18.5% of Pershing Square’s portfolio assets. Ackman’s investment in Alphabet aligns with his strategy, as he has made significant gains, with estimates suggesting profits of approximately $370 million from his Alphabet investment.

Price to Book Ratio: 6.25

PEG Ratio: 1.27

PE Ratio: 24.49

Price to Sales Ratio: 5.75

Forward PE Ratio: 18.11

Universal Music Group N.V. (UNVGY)

His interest in Universal Music Group dates back to at least 2021 when Pershing Square acquired 7.1% of Universal Music from Vivendi for $2.8 billion, with an option to buy an additional 2.9%. Ackman’s bullish stance on Universal Music Group continued, as evidenced by Pershing Square’s ownership of 105,325,592 shares in Universal Music Group N.V. by the end of 2022. Additionally, Ackman’s involvement in Universal Music Group extends to his nomination as a director on the board of the company. Ackman’s optimism about Universal Music Group’s prospects is underscored by Pershing Square’s continued bullish stance on the company, considering its stock to be trading at a discount to its intrinsic value. The stock trades Over-the-Counter in the U.S.

Trailing P/E: 42.69

Forward P/E: 27.86

PEG Ratio: 2.66

Price/Sales: 4.62

Price/Book: 19.45

Ackman’s endeavors extend beyond financial markets, with his philanthropic endeavors garnering significant attention, showcasing his commitment to various causes and charitable organizations. As a testament to his financial acumen, Ackman’s net worth is currently estimated at a staggering $3.4 billion.

Disclosure: Author had no positions in any of the above at the time the article was written.

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The Future of Artificial Intelligence: Can You Invest In It Now?

by Fred Fuld III

Artificial intelligence, also known as AI, is intelligence demonstrated by machines, as opposed to the natural intelligence displayed by humans.
AI applications include advanced web search engines, recommendation systems, speech recognition, self-driving cars, and much more. Now AI is involved in the areas of writing, both fiction and non-fiction, and graphics.

This Woman Does Not Exist

First, let’s start out with art. The woman that you see above was created with artificial intelligence (and a little input from me). This person does not exist in real life.

I don’t consider myself an artist, but with the help of a website called ArtBreeder.com, I was able to adjust such things as the ethnicity, eye color, hair color, happiness, age, and many other features.

I could have even added eyeglasses, different earrings, makeup, and various aspects of the picture itself, such as color hues, brightness, and sharpness.

And that is only the beginning. I could have even merged her image with another image.

The best part is that you can try it out for free.

Let me give you one more example. I took the image of Benjamin Franklin, from the $100 bill, and made him younger with some facial hair.

Notice the difference? Incredible technology. You should give it a try.

Who Wrote This?

Now I’m going to give you one more example of AI, this time in the form of writing. You can actually use AI to write non-fiction articles and even fiction.

Check out the following in italics. It is an article that I had a website called ShortlyAI.com write, that based on a starting informative sentence, will write a passage or article for you.

Read it and see if you think a software program could have written this.

It is amazing what artificial intelligence can do now. Websites created by researchers have been able to write text and create pictures that seem like a person wrote them. This is the future of AI and it is amazing what we can learn in this new point in history.

Artificial intelligence can perform amazing tasks, from writing articles, pictures, music, etc. The future of AI will bring us closer to robots taking over many jobs from humans. In the future artificial intelligence may be capable of all these things without any help from a human being.

This futuristic idea is not new and journalists have been talking about this for years. The problem with all this new technology is that it may take away certain jobs from humans and make them obsolete. So robots and computer programs could replace humans at some point in the future.

The AI industry has grown rapidly in the past few years and people are still trying to figure out how to use it correctly. The things that artificial intelligence can do today are amazing and we will look back on this time as the beginning of a new revolution.

The future of AI will also bring us to the point where AI will think for itself, not just work on specific tasks. AI is able to learn and grow and help humans with projects. AI will be able to do things by itself that we cannot even imagine at this time.

Artificial intelligence will continue to get better at more tasks, from writing articles, pictures, music, and other media.

Not bad for a computer. Obviously, it could use a little tweaking and some additional information, but it should give you a good idea of what AI can do. Give it a try.

How to Invest in AI

Unfortunately, there are not really any pure plays in the artificial intelligence arena. Most of the major companies are involved in AI in some way. These stocks include:

Alphabet Inc. (GOOG)
Apple Inc. (AAPL)
Amazon (AMZN)
Twilio Inc. (TWLO)
ServiceNow, Inc. (NOW)
NVIDIA Corporation (NVDA)
QUALCOMM Incorporated (QCOM)
International Business Machines Corporation (IBM)
Splunk Inc. (SPLK)
DocuSign, Inc. (DOCU)
CrowdStrike Holdings Inc. (CRWD)
and many others.

One of the closest pure plays is C3.ai, Inc. (AI), with the appropriate stock ticker symbol. The company is an enterprise artificial intelligence software company with customers around the world. This $4.7 billion market cap company is currently generating negative earnings. Revenues for the latest reported year rose by over 17%. The company has no long term debt. 18% of the float is short.

Another pure play is Remark Holdings (MARK), markets its AI-based products and services under the Remark AI brand in the United States; and under the KanKan brand in China. The stock has a market cap of $228 million. Revenues for the latest reported year rose by over 100%. The short percent of float is 12%.

Maybe one of these days, AI will come up with a way of beating the stock market.

Disclosure: Author owns AAPL, AMZN at the time the article was written.

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Who Owns the One Letter Domain Names?

by Fred Fuld III

Domain names have become a hot investment over the last 20 years, with several selling for over a million dollars. In case you are not familiar with them, domain names are, in very simple terms, the website address. For example apple.com, facebook.com, and google.com are all domain names. The most common ones end in .com but some end in .net, .org. .biz, .co, and other top level domains.

Did you ever wonder who owns a.com, b.com, or c.com. There are only twenty six letter domains that are even possible, but getting those one letter domains is even more difficult to get than one letter stock ticker symbols.

To start with, the dot com letters ‘a’ through ‘p’, ‘r’ through ‘w’, and the letter ‘y’ are all controlled by the Internet Assigned Numbers Authority, also known as the IANA, the organization which oversees the allocation of IP addresses and domain names.

In case you were wondering about the zero dot com through 9.com domains, they are controlled by the Internet Assigned Numbers Authority.

Some companies were lucky enough to register one letter dot com domains before December 1, 1993 (or buy them from someone who registered them by that date), as the Internet Assigned Numbers Authority put a restriction on single character domains at that time.

But there are still a few that are owned by companies.

a.co is owned by Amazon (AMZN).

g.co is owned by Google (GOOG)

s.co is owned by Snapchat (SNAP)

o.co and o.info are both owned by Overstock.com (OSTK).

0.co (that’s a zero dot co) is owned by Overstock.com (OSTK).

0.info (that’s a zero dot info) is also owned by Overstock.com (OSTK).

q.com is being used by Quantum Fiber.

t.co is owned by Twitter (TWTR).

x.com has been owned by x.commerce, which was developed by eBay (EBAY). Current ownership shows up as being private.

x.co has been owned by GoDaddy to be used as a URL shortener..

y.co is owned by XBN Ltd., formerly YCO Group, a luxury yacht company, which is a subsidiary of Fifty Four Four Ltd..

z.com used to be owned by Nissan North America Inc., which is owned by Nissan Motor (NSANY), which trades on NASDAQ. It is now owned by GMO Internet, Inc. (GMOYF), a Japan based Internet services company which trades on the Tokyo exchange and the US OTC Market.

i.net is owned by Future Media Architects, a privately held company based in the British Virgin Islands.

c.tv, h.tv, k.tv, l.tv, o.tv, q.tv, s.tv, t.tv, w.tv, y.tv, and z.tv are also owned by Future Media Architects.

d.tv has been owned by Worldwide Media, Inc. publisher of TheDomains.com.

u.tv is owned by ITV plc (ITVPY), a British media company. The company trades on the London Stock Exchange and the US OTC Market.

Want to know what companies have one letter stock ticker symbols? Here they are:

Agilent Technologies Inc. (A)

Barnes Group Inc. (B)

Citigroup, Inc. (C) formerly the symbol for Chrysler

Dominion Energy, Inc. (D)

Eni SpA (E)

Ford Motor Co. (F)

Genpact Ltd. (G) formerly the symbol for Gillette

Hyatt Hotels (H)

Jacobs Engineering (J)

Kellogg Company (K)

Loews Corporation (L)

Macy’s, Inc. (M)

Realty Income Corp. (O)

Ryder System, Inc. (R)

SentinelOne (S) formerly the symbol for Sprint Nextel Corp. and formerly the symbol for Sears Roebuck

AT&T, Inc. (T)

Unity Software (U)

Visa, Inc. (V)

Wayfair (W)

United States Steel Corp. (X)

Alleghany Corp. (Y)

Zillow (Z) formerly the symbol for Woolworth, now known as Foot Locker (FL)

Online Meeting & Video Conferencing Stocks that Should Benefit from the Corona Virus

by Fred Fuld III

Businesses across the country have been changing their travel policies. Over the last several years, many companies with diverse geographical footprints have moved towards video conferencing instead of meetings in person, in order to save on travel, hotel, and car rental costs.

Now companies are stepping up their online meetings for the health and safety of their employees, due to the outbreak of the Coronavirus, also known as COVID-19.

There are several companies that will benefit from this massive change in how company employees interact with other employees, vendors, customers, suppliers, and others.

One example is Cisco Systems (CSCO), the large hardware and software network company. The company owns the web conferencing applications WebEx and Jabber. However, these divisions are only a small part of Cisco’s business. In the last month, the stock has dropped by over 22%. It trades at 13.5 times trailing earnings, and pays a dividend yield of 3.9%.

In terms of the purer plays, there are a couple stocks to choose from. LogMeIn (LOGM) is a collaboration service company that owns the popular GoToMeeting product, along with Join.me. However, the company has agreed to be acquired for $4.3 billion by the private equity companies Francisco Partners and Evergreen Coast Capital Corp., with the closing taking place sometime this year.

Then there is Zoom Video Communications (ZM), the remote conferencing company which offers its Zoom conferencing product. The company is generating earnings but has a nosebleed high forward price to earnings ratio of 256.

Other companies in this industry are similar to Cisco, in that the video conferencing makes up a small portion of their business. These include Alphabet’s (GOOG) (GOOGL) Google Hangouts, Microsoft’s (MSFT) Skype and Teams, Adobe (ADBE) Connect, and RingCentral (RNG).

Let’s hope the Coronavirus is eliminated quickly. But in the meantime, at least we have a way of communicating with each other without meeting in person.

Disclosure: Author owns MSFT.

Is Now the Time to Invest in Discounted CEFs?

by Fred Fuld III

Do you realize that it is possible to buy stocks at a discount to their current trading prices? Here is how.

You can invest in closed end funds, also known as CEFs, that are trading at a discount to Net Asset Value, also known as NAV. The NAV is similar to the book value of stocks. In other words the NAV is calculated by adding up the value of all the stocks in the portfolio, and dividing that amount by the number of outstanding shares.

A closed end fund is similar to a regular mutual fund except that they trade throughout the day while the market is open and the trading price of the CEFs can fluctuate way above or way below the NAV. In addition, the number of shares is fixed. There are many closed end funds that are trading at a discount of over 10% of their net asset value. Many investors invest in these discounted CEFs in the hopes that the gap between NAV and price per share will eventually narrow.

One example is RMR Real Estate Income (RIF) managed by RMR Advisors. The fund is trading at a 16.3% discount to net asset value and based on their latest stockholdings, owns Prologis (PLD) and Sun Communities (SUI). The expense ratio is a high 3.08%.

If you are concerned about real estate stocks, another deeply discounted Dividend and Income Fund (DNI),managed by Bexil Advisors, which is trading at a 16% discount to NAV. The fund’s stockholdings include Comcast (CMCSA), AutoZone (AZO), Intel (INTC) and Amgen (AMGN). The fund’s expense ratio is 2.12% and pays a generous dividend yield of about 7.5%.

Another example is Central Securities (CET) which trades at a discount to NAV of 15.2%. It has a yield of 4.1%. The fund’s stockholdings include Intel (INTC), Citigroup (C), and Alphabet / Google (GOOG) (GOOGL). Investors should be aware that over 22% of the portfolio’s assets are invested in The Plymouth Rock Company, which is not publicly traded. Also, over 3% of the portfolio in invest in treasury bills. The fund’s expense ratio is a reasonable 0.67%.

However, there are several risks with investing in discounted CEFs. First, the gap may exist for a long time, and can even widen. Second, the gap could theoretically narrow but the stocks in the portfolio could drop, so the fund would drop in price also. Third, is that many CEFs hold illiquid, private, or non-trading stocks, and the NAV is based on how the company valuates those shares, which may be a much higher value than what they could get if they tried to liquidate those stocks. Plus, some funds may own real estate or mortgages, which are very hard to value.

Sometimes activist shareholders buy up a large amount of shares of heavily discounted CEFs and force the liquidation of those CEFs, in order to realize the net asset value. Before investing in any of these, check out the web site of the CEFs to see what stocks they own, and how many are invested in illiquid shares.

Hopefully, you can find bargains with a closed end fund.

Disclosure: Author did not own any of the above at the time the article was written.

How to Live Forever & the Stocks that will Benefit

Do you want to live forever? Many billionaires want to, or at least want to support the research into improving and extending the lives of people. Paul Allen, co-founder of Microsoft (MSFT) created the Allen Institute for Cell Science with $100 million, to develop treatments for diseases related to aging. Unfortunately, he passed away last year from septic shock caused by cancer.

Adam Neumann, the CEO of WeWork, has invested in the anti-aging company Life Biosciences. Peter Thiel, co-founder of PayPal (PYPL), has donated money to the SENS Research Foundation, a longevity organization. Google (GOOG) (GOOGL) co-founder Sergey Brin has donated to the Michael J. Fox Foundation and to the Parkinson’s Institute.

There are many companies involved in longevity through several different approaches, including medical devices, biotechnology, pharmaceuticals, and senior care facilities.

One company that fits into this category is Edwards Lifesciences (EW), a California based company involved in the production of products to treat heart disease. This $44.7 billion market cap company trades at 44 times trailing earnings and 35 times forward earnings. Earnings for the latest reported year were up 23.7% over the previous year.

Boston Scientific (BSX), a $60 billion market cap company, makes and markets an extensive array of cardiology products. The sock has a trailing price-to-earnings ratio of 43 and a forward PE ratio of 24.

Vertex Pharmaceuticals Incorporated (VRTX) developer and markets treatments for cystic fibrosis. The stock trades at 21 times earnings.

Terumo Corporation (TRUMY), based in Japan, makes and markets numerous medical products, primarily for transfusion and cardiothoracic surgery. The stock has a PE ratio of 13.

All of the above, plus many other longevity related stocks make up the portfolio of the Global X Longevity Thematic ETF (LNGR), which has a portfolio of anti-aging stocks. It pays a small yield of 0.85%.

Hopefully some of these stocks will make your portfolio last a long time.

Disclosure: Author didn’t own any of the above at the time the article was written.

Are You Watching the Streaming Video Stocks?

by Fred Fuld III

Could you have imagined 15 years ago that you would have the ability to watch almost any movie or TV show whenever you want, as many times as you want, and could pause it and replay parts of it, without having to insert a disc into a player, would you have believed it?

Most major films and television programs can now be watched on your smart TV, you computer, your laptop, and even your phone. Several companies are benefiting from this major trend, providing investors with stocks that they should keep an eye on.

Amazon’s (AMZN) Prime Video is an Internet video on demand service that offers television shows and films for rent or purchase and Prime Video, a group of Amazon Studios original content and licensed acquisitions including Bosch, The Man in the High Castle, Sneaky Pete, and The Marvelous Mrs. Maisel. Amazon trades at 64 times forward earnings, and revenues for the latest reported quarter jumped by almost 20% year-over-year.

Netflix (NFLX) is the biggest pure play in this arena, having around 140 million subscribers. The company also has extensive original programming including stand-up comedy specials. The stock trades at 88 times forward earnings. Sales for the latest quarter went up by over 27%.

Streaming video is a small but growing piece of Disney (DIS) which owns 60% of Hulu, in addition to its own streaming services. Like Netflix and Amazon, Hulu has its own original content. Disney has a very reasonable forward price to earnings ratio of 16, and even pays a dividend of 1.53%.

Of course, video streaming is a small part of a lot of large companies, such as Apple (AAPL), Facebook (FB), and YouTube, owned by Alphabet (GOOG) (GOOGL), better known as Google.

Let’s watch and see which company will be the best performer.

Disclosure: Author owns AMZN, AAPL, and DIS.

Invest Like a Billionaire

Did you know that ten out of the top twelve American billionaires made their money from a stock? The Forbes 400 Magazine was published about a month ago, which listed the wealthiest people in the United States.

It is interesting to note that most of the wealthiest achievements are from publicly traded companies. Maybe you can piggyback on some of these billionaires and their stocks.

Here is a list of the top dozen wealthy people with stock connections.

Jeff Bezos – Amazon (AMZN)
Bill Gates – Microsoft (MSFT)
Warren Buffett – Berkshire Hathaway (BRKA) (BRKB)
Mark Zuckerberg – Facebook (FB)
Larry Ellison – Oracle (ORCL)
Larry Page – Google (GOOG) (GOOGL)
Sergey Brin – Google (GOOG) (GOOGL)
Jim Walton – Walmart (WMT)
Alice Walton – Walmart (WMT)
S. Robson Walton – Walmart (WMT)
Steve Ballmer – Microsoft (MSFT)
Phil Knight – Nike (NKE)

The Yummies are Causing the All-Time Stock Market Highs

Many have wondered why the stock market continues to make all-time highs, almost every day. This exceptional rise may be due to the Yummies, the Young Upwardly Mobile Millennials. Yes, the Millennials, also known as Generation Y. Many traits have been ascribed to this generation, but you don’t ever hear the members referred to as being invetor-oriented.

So let’s look at the facts. Legg Mason Global Asset Management, the 20th largest asset manager in the world, produced the 2017 Global Investment Survey, and the Summary of U.S. Results are very enlightening.

For example, did you know that Millennials invest more in non-cash investments than the Generation X or the Baby Boomers? As a matter of fact, 77% of Yummies apply their funds toward these assets, versus 75% for Gen x and 69% for Baby Boomers.

Let’s look at some definitions before continuing. Legg mason consideres Millennials to be between the ages of 18 and 35, Gen X at age 36 to 52, with Baby Boomers ranging from 53 to 71 years old.

Some other interesting factoids about the Yummies. They invest three times as much as Boomers in non-traditional investments. Plus, a far greater percentage of Yummies put their money into investment real estate than the Baby Boomers.

But what is most amazing is the fact that 11% of the Yummies invest in gold and precious metals versus only 7% of the Gen Xers and a measly 2% for the Baby Boomers.

When the respondents were asked which investment categories they believe offer the best opportunities over the next 12 months, 46% of the Yummies said domestic stocks, with Gen X and Boomers closely agreeing, both at 42%. International stocks came in second as an investment opportunity in the opinion of the Millennials.

Finally, 87% of Yummies have saivings, investments, or both but only 81% of Boomers have these assets, and just 75% of Millennials.

Many wonder why the FAANG stocks, Facebook (FB), Apple (AAPL), Amazon (AMZN), Netflix (NFLX), and Google (GOOG), continue to rise. So now you know. If you are wondering who is driving up the price of stocks and cryptocurrency, you need look no further than the Yummies.

by Fred Fuld III

Disclosure: Author owns AAPL and AMZN.

The Companies that will Benefit the Most from the New Tax Law

The new tax law has passed and is waiting for the signature of the president. This change will provide a huge economic benefit for many corporations, especially for those that keep money overseas, due to the repatriation tax holiday.

Although there will be benefits to having plants and facilities in other countries, it is expected that most companies will prefer to have most of their operations in the United States. Many U.S. citizens are now starting to benefit from the corporate tax cut such as the AT&T (T) $1,000 bonus for all employees.

From an investor standpoint, the fundamentals for certain companies should improve dramatically which should help the stock price. Here are some of the corporations with the biggest cash holdings overseas.

Apple (AAPL) ~ $215 billion to $252 billion depending on what source you use and what day of the month it is

Microsoft (MSFT) ~ $128 billion

Cisco (CSCO) ~ $68 billion

Oracle (ORCL) ~ $48 billion to $54 billion

Alphabet / Google (GOOG) ~ $32 billion

Johnson & Johnson (JNJ) ~ $41 billion

Amgen (AMGN) ~ $36 billion

Watch the performance of these stocks during the new year. Speaking of new year, Happy New Year!!!