Billionaire Bill Ackman has invested nearly 20% of his Pershing Square portfolio in these 'Magnificent Seven' stocks

729416edd94d2d38320a94a3a69d5f06

Warren Buffett has had a profound impact on the investing landscape, thanks in large part to his long-standing success. His principles and perspectives have shaped the industry and will continue to do so.

Bill Ackman, billionaire hedge fund manager of Pershing Square Capital Management, is one such professional who follows the philosophies of the Oracle of Omaha. He employs a value-oriented, focused investment strategy, identifying great companies to own for the long term.

The average investor might want to pay attention to this portfolio manager's moves, thanks to Ackman's impressive track record since founding Pershing Square in 2004. In fact, there's one company that owns nearly 19% of its $10 billion in assets takes into account.

I'm talking about Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL). Read on to find out what Bill Ackman appreciates about this company. Investors considering buying the shares can then look at things with fresh eyes.

Alphabet is a fantastic company

Alphabet has been in Pershing Square's portfolio for about a year, but that has not prevented it from becoming such a sizeable holding company. In his company's June 2023 investor letter, Ackman described Google as “one of the largest companies in the world.” I tend to agree with this statement.

Let's start with Google Search, the company's crown jewel segment that controls 91% of the global search market. In addition to its monopoly position, the country also has extremely high barriers to entry that make it virtually impossible for a newcomer to successfully launch a competitive product. And given its sheer size, Search benefits from powerful network effects.

YouTube is another Alphabet service that has network effects. The video streaming platform and search engine have made this company a digital advertising powerhouse.

Ackman is confident that spending will continue to shift from offline methods to digitally native methods. And this creates a tailwind that will allow Alphabet to grow its turnover in the long term.

The transition from on-premise IT spending to off-premises has made Google Cloud the third largest cloud services provider in the industry. This segment achieved 25% revenue growth in 2023 and is now consistently profitable from an operating income perspective.

We can't ignore Alphabet's impeccable finances. The billionaire hedge fund manager was delighted with the company's strong position balance, which contains $111 billion in cash, cash equivalents and marketable securities, compared to just $13 billion in debt. And by generating so much free cash flow, Alphabet can buy back large amounts of stock.

Focused on artificial intelligence

Ackman added Alphabet to the Pershing Square portfolio in the first quarter of 2023. At the time, there was great concern that the company would fall behind in the future. artificial intelligence (AI) wars. In retrospect, these concerns were exaggerated. There is perhaps no company better positioned than Alphabet to harness the power of this technology.

Alphabet has been using AI and machine learning within Search since 2001. And AI is already a key tool within other popular products such as Maps, Gmail and YouTube, with plans to introduce even more features to better serve users.

The management team has a huge advantage because the company has virtually unlimited financial resources, as well as top technology talent and know-how, to be at the forefront of the AI ​​revolution. In 2016, CEO Sundar Pichai changed Alphabet's strategy to be AI-first.

What about Alphabet's valuation?

Alphabet shares traded at a forward price-earnings ratio (P/E) ratio of just 16 when Ackman first started buying the stock. That seemed like a smart use of capital. Over the past year, shares are up 49% (as of April 23).

Still, I think the valuation is attractive at the moment. With a price-to-earnings ratio of 23.2, Alphabet still seems like a buying opportunity that can't hurt.

Should you invest €1,000 in Alphabet now?

Before you buy shares in Alphabet, consider the following:

The Motley Fool stock advisor The analyst team has just identified what they think is the 10 best stocks for investors to buy now… and Alphabet wasn't one of them. The ten stocks that survived the cut could deliver monster returns in the coming years.

Think about when Nvidia made this list on April 15, 2005… if you had $1,000 invested at the time of our recommendation, you would have $537,557!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including portfolio building guidance, regular analyst updates, and two new stock picks per month. The Stock Advisor is on duty more than quadrupled the return of the S&P 500 since 2002*.

View the 10 stocks »

*Stock Advisor returns April 22, 2024

Suzanne Frey, a director at Alphabet, is a member of The Motley Fool's board of directors. Neil Patel and his clients have no positions in the stocks mentioned. The Motley Fool holds positions in and recommends Alphabet. The Motley Fool has one disclosure policy.

Billionaire Bill Ackman has invested nearly 20% of his Pershing Square portfolio in these 'Magnificent Seven' stocks was originally published by The Motley Fool

Related Posts

  • Finance
  • May 15, 2024
  • 13 views
  • 3 minutes Read
Here are the top ten picks for the Mormon church's $55 billion stock portfolio

Getty Images The investment arm of the Mormon church disclosed some of its assets in a 13F filing on Wednesday. The church has built a portfolio of individual stocks worth…

  • Finance
  • May 15, 2024
  • 17 views
  • 4 minutes Read
Florida lawmakers are proposing to change the tax code to provide premium relief for homeowners

Florida lawmakers are proposing to change the tax code to provide premium relief for homeowners Florida Congressman Byron Donalds is working with his colleague Senator Rick Scott on a bill…

Leave a Reply

Your email address will not be published. Required fields are marked *

You Missed

A newly authenticated Caravaggio painting goes on display in Spain: NPR

  • May 28, 2024
A newly authenticated Caravaggio painting goes on display in Spain: NPR

Best non-gamstop casinos in 2024

  • May 28, 2024
Best non-gamstop casinos in 2024

California Catholic High School Stops Student's MAGA-Style Patriotic Speech (Video) | The Gateway expert

  • May 28, 2024
California Catholic High School Stops Student's MAGA-Style Patriotic Speech (Video) |  The Gateway expert

Air Force vets reveal how a top-secret base left them sick with tumors

  • May 28, 2024
Air Force vets reveal how a top-secret base left them sick with tumors

On other hockey worlds, European support for the Russian ban continues to hold

  • May 28, 2024
On other hockey worlds, European support for the Russian ban continues to hold

Aileen Cannon may be getting the boot after rejecting Trump gag order request

  • May 28, 2024
Aileen Cannon may be getting the boot after rejecting Trump gag order request

The search for the perfect artificial eye, through the ages

  • May 28, 2024
The search for the perfect artificial eye, through the ages

Jimmy Butler and Lionel Messi Appear in the Latest Trailer for 'Bad Boys: Ride or Die' Starring Will Smith and Martin Lawrence

  • May 28, 2024
Jimmy Butler and Lionel Messi Appear in the Latest Trailer for 'Bad Boys: Ride or Die' Starring Will Smith and Martin Lawrence

OpenAI CEO Sam Altman pledges to donate most of his wealth to improving the 'scaffolding of society'

  • May 28, 2024
OpenAI CEO Sam Altman pledges to donate most of his wealth to improving the 'scaffolding of society'

Mayorkas says some migrants are “trying to game” the US asylum system.

  • May 28, 2024
Mayorkas says some migrants are “trying to game” the US asylum system.

Is NFL's golf van het inhuren van universiteitscoaches als coördinatoren een anomalie of een nieuwe norm?

  • May 28, 2024
Is NFL's golf van het inhuren van universiteitscoaches als coördinatoren een anomalie of een nieuwe norm?