Bill Ackman Invests $2.2B Into These 2 Stocks

Billionaire investor Bill Ackman is renowned for his value-driven, long-term investment strategy, buying stocks he believes are undervalued and holding them until their prices reflect their true potential.

His hedge fund, Pershing Square, recently added two significant investments: Nike and Brookfield Corporation. Ackman poured an estimated $2.2 billion into these stocks during the third quarter of 2024. Here's why these two companies caught his attention.

Nike: A Global Brand in Transition

Ackman began building his position in Nike in the second quarter of 2024 with an initial $275 million investment. After the company’s fiscal Q4 results and fiscal 2025 outlook disappointed investors in late June, Ackman significantly increased his stake, adding 13.2 million shares worth over $1 billion in the third quarter.

Challenges and Opportunities

Nike has faced recent struggles, particularly with its direct-to-consumer (DTC) strategy. The transition from wholesale distribution to selling through its stores and website led to short-term revenue declines, with fiscal Q1 2025 sales falling 10% year-over-year. However, there are encouraging signs:

• Improved Margins: Gross margin improved by 1.2 percentage points due to cost-cutting and strategic pricing.
• Strong Brand and Pricing Power: Nike remains a globally recognized brand with robust pricing power.
• Growth Potential in China: China presents significant opportunities for long-term expansion.

At its current price-to-sales ratio of 2.3—near a 10-year low—Nike appears undervalued, making it a compelling choice for long-term investors like Ackman.

Brookfield Corporation: Unlocking Value

Ackman made an even larger bet on Brookfield Corporation, investing approximately $285 million in the second quarter and an additional $1.2 billion in the third quarter. This move made Brookfield the largest position in Pershing Square’s portfolio.

A Diverse Powerhouse

Brookfield operates across multiple sectors, including infrastructure, renewable energy, insurance, and real estate. The company spun off its asset management division last year but retains a 75% ownership stake, which continues to generate substantial cash flow.

Future Growth

Brookfield’s management projects 20%-plus annual growth in free cash flow over the next five years, amounting to $47 billion. Of this, $36 billion is earmarked for reinvestment, with the rest allocated to share buybacks and dividends. Currently trading at 15 times distributable earnings, Brookfield’s management believes its fair valuation should be 23 times earnings, with a potential price of $176 per share by 2029. This projection implies an annual return of over 25% for investors.

Ackman’s Confidence

Ackman’s investment in Nike and Brookfield underscores his belief in their long-term growth potential. For Nike, it’s about capitalizing on a world-class brand that’s navigating a short-term transition. For Brookfield, it’s leveraging a proven track record of value creation and robust growth projections.

Both companies align with Ackman’s investment philosophy of finding undervalued opportunities and holding them for long-term gains. While risks remain, Ackman’s confidence in these stocks reflects their potential to deliver substantial returns in the years to come.