Andrew Carnegie is credited with saying, “The way to get rich is to put all your eggs in one basket and watch the basket.”
Bill Ackman has amassed a net worth of more than $9 billion by following a modified version of the strategy. All of the assets in his hedge fund Pershing Square Capital Management are currently invested in just eight stocks, two of which are different share classes for the same company.
Despite a small number of stocks, Ackman has several big winners this year. Here are the billionaire hedge fund manager’s best-performing stocks in 2024 so far.
1. Chipotle Mexican Grill
Chipotle Mexican Grill (NYSE: CMG) ranks among Ackman’s top stocks of the year. Shares of the restaurant chain operator are up nearly 34% year-to-date after soaring 65% in 2023.
Ackman reduced Pershing Square’s position in Chipotle by 9.8% in the first quarter. However, the stake remained the hedge fund’s largest at the end of the quarter, representing more than 20% of Pershing Square’s total portfolio.
One of the key factors behind Chipotle’s strong performance so far in 2024 is the company’s solid growth. The company said its first-quarter revenue jumped 14% from a year earlier to $2.7 billion, and its adjusted earnings per share jumped 27% to $13.37.
Chipotle also generated excitement in March by announcing a 50-for-1 stock split. The company executed the big split after the market closes on June 25, 2024.
2. Alphabet
Google’s parent company Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) is slightly behind Chipotle as Ackman’s second-best performer so far in 2024. Shares of the tech giant have jumped 31% this year.
Pershing Square owns Alphabet’s Class A and Class C shares. As of the end of the first quarter, they represented 6.1% and 13.3%, respectively, of the hedge fund’s total portfolio.
The rise of generative artificial intelligence has given Alphabet’s Google Cloud business a boost. In the first quarter, the unit’s revenue rose more than 28% to $9.6 billion.
The bulk of Alphabet’s revenue, however, comes from its other businesses, primarily Google Search and YouTube. Those businesses also continue to perform well, with total revenue from Google services up nearly 14% year over year in the first quarter to $70.4 billion.
3. Hilton Worldwide Holdings
Ackman’s No. 3 stock for 2024, with less than six months to go, could be surprising. Hotel Operator Stocks Hilton Worldwide Holdings (NYSE:HLT) are up 18% since the beginning of the year.
Technically, Hilton was Pershing Square’s second-largest holding at the end of the first quarter. However, with Alphabet’s Class A and Class C shares combined, it would be the hedge fund’s third-largest holding.
Hilton’s first-quarter revenue rose 12 percent from a year earlier to $2.3 billion. Profit jumped nearly 29 percent to $265 million, or $1.04 per diluted share.
Are they still purchases?
I would be reluctant to buy Chipotle after the stock’s impressive run. Shares of the Mexican restaurant chain are trading at an extremely high forward price-to-earnings ratio of 56.8. That high level is hard to justify given Chipotle’s growth.
Hilton Worldwide Holdings also appears to be a bit expensive. Its forward earnings multiple is 30.3. Again, I don’t think Hilton’s growth prospects justify such a valuation.
That leaves Alphabet. It’s not cheap either, with shares trading at 24.3 times forward earnings. Some investors might worry that artificial intelligence (AI) poses an existential threat to the company’s search business.
However, Ackman said last year that Alphabet “will be a dominant player in AI for the very, very long term.” I agree with his view. I like the opportunities presented by Google Cloud and the Waymo self-driving car technology business. Of Ackman’s three biggest winners in 2024 so far, Alphabet is the best choice for long-term investors, in my opinion.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Keith Speights holds positions at Alphabet. The Motley Fool holds positions at and recommends Alphabet and Chipotle Mexican Grill. The Motley Fool has a disclosure policy.
Billionaire Bill Ackman’s Top-Performing Stocks of 2024: Are They Still Worth Buying? was originally published by The Motley Fool
