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Bill Ackman's Top 5 Picks: JCP, GGP, FO, CL, KFT

May 25, 2011 | About:
Charles Cliff

Charles Cliff

1 followers
William Ackman is currently the major investor in Pershing Square Capitol Management LP, as well as its founder. Ackman first founded hedge fund group Gotham Partners LP, and then formed Pershing Square in November 2003. Ackman graduated from with an MBA form Harvard Business school in 1992.

Bill Ackman is an activist investor, buying common stocks of public companies and pushing for changes so the market can realize the values of the companies. In keeping with this philosophy, Ackman focuses on a small number of key companies. He often reorganizes corporate structure, selling current assets, and redirecting company policy. Ackman has recently focused on Borders Group and J.C. Penney (JCP). Ackman buys stocks trading at a discount and sells when the companies reach their appraised value. Ackman primarily focuses on real estate and development companies.

Ackman has recently made several bullish bets on the real estate market. He recently commented: “I think the only thing missing is confidence. All you need is a relatively small turn.” Ackman also demonstrated a lack of confidence in gold as a valuable asset, which differentiates him many other Gurus: "I’ve never believed that gold is an investment asset. Would you rather have faith in that, or McDonald's, which has 32,000 stores?” Ackman’s philosophy has brought him remarkable success recently, especially his investments in J.C. Penney and General Growth Properties (GGP).

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Top Five Holdings in 2010 Ticker Percent Composition Number of Shares
Penney Company JCP 19.3 34,919,071
General Growth Properties GGP 18.53 69,965,786
Fortune Brands Inc FO 17.18 16,668,636
Citigroup Inc CL 11.86 146,514,287
Kraft Foods Inc. KFT 10.5 19,470,089


Penney Company (JCP)

J.C. Penney Company Inc. is a holding company whose principal operating subsidiary is J.C. Penney Corporation Inc. The company is a retailer, operating 1,108 J.C. Penney department stores in 49 states and Puerto Rico. Its business consists of selling merchandise and services to consumers through its department stores and direct channels. J.C. Penney sells family apparel and footwear, accessories, fine and fashion jewelry, beauty products through Sephora inside J.C. Penney and home furnishings. In addition, its department stores provide services, such as styling salon, optical, portrait photography and custom decorating.

Their shares trade around $36.89, with a P/E ratio of 23.29 and an EPS of $1.58. In the last quarter of 2010, J.C. Penney had revenue of $5.7 billion and a net income of $400 million. J.C. Penney’s market cap is around $8.5 billion. Ackman greatly values his holdings in J.C. Penney “because of its inexpensive valuation, strong brand name and assets, and well-deserved reputation for overseas sourcing, high quality systems, and large in-house brands.”

General Growth Products (GGP)

General Growth Properties Inc. is a self-managed real estate investment trust. The company has ownership interest in, or management responsibility for, over 200 regional shopping malls in 43 states, as well as ownership in master-planned communities and commercial office buildings. General Growth Properties’ business is focused in two main areas: retail and other, which includes the operation, development and management of retail and other rental property, primarily shopping centers; and master planned communities, which includes the development and sale of land, primarily in large-scale, long-term community development projects.

Their shares trade around $16.03, with an EPS of $0.30. In the last quarter of 2010, General Growth Properties had revenue of $689 million and a net income of $112 million. General Growth Properties’ market cap is around $5.1 billion. Ackman recently made a presentation regarding his plans for General Growth Properties.

Fortune Brands Inc. (FO)

Fortune Brands Inc. is a holding company with operating companies engaged in the manufacture and sale products, such as distilled spirits, home and security products, and golf products. Fortune Brands operates in three segments: spirits, home & security and golf. Spirits products consist of distilled spirits, which includes bourbon, whiskey, tequila and cognac. Home & security products consist of branded products used for residential home repair, remodeling, new construction, security, and storage. Golf products principally include balls, clubs and shoes.

Their shares trade around $63.14, with a P/E ratio of 20 and an EPS of $3.21. In the last quarter of 2010, Fortune Brands had revenue of $1.7 billion and a net income of $113 million. Fortune Brands’ market cap is around $9.61 billion. Recently Fortune Brands announced its intention to split into three subsidiary companies, dividing its interests in liquor, golf accessories and home and security. “Fortune Brands said Wednesday it will focus on its spirits business which generates annual revenue of $2.5 billion,” reports the Sun-Times. This announcement comes only 11 months after Bill Ackman became Fortune Brands’ largest shareholder.

Citigroup (C)

Citigroup is a New York-based financial services holding company. Citigroup Inc. has the world's largest financial services network. As of Dec. 31, 2009, Citigroup had approximately 200 million customer accounts and did business in more than 140 countries. Citigroup operates through two primary business segments: Citicorp and Citi Holdings.

Their shares trade around $41.49, with a P/E ratio of 13.37 and an EPS of $3.10. In the third quarter of 2010, Citi reported net income of $2.2 billion, marking its third consecutive quarterly operating profit. Third-quarter net income was down $529 million or 20% from the second quarter. Citigroup's market cap is around $142.68 billion. Gurufocus rated Citi with the business predictability rank of 1-star.

Kraft Foods Inc. (KFT)

Kraft Foods Inc. manufactures and markets packaged food products, including snacks, beverages, cheese, convenient meals and various packaged grocery products. It sells the products to consumers in approximately 160 countries. The company operates three segments: Kraft Foods North America, Kraft Foods Europe and Kraft Foods Developing Markets.

Their shares trade around $31.77, with a P/E ratio of 22.38 and an EPS of $1.42. In the last quarter of 2010, Kraft Foods had revenue of $13.3 billion and a net income of $540 million. Kraft's market cap is around $53.99 billion.

To check the complete list of Top Growth Companies of Bill Ackman, please go to http://www.gurufocus.com/holdings.php?GuruName=Bill+Ackman&tab=growth

Also check out the Undervalued Stocks, Top Growth Companies, and High Yield stocks of Bill Ackman.

Rating: 3.8/5 (5 votes)

Comments

BorisTehBlade
BorisTehBlade - 3 years ago
Hi -

Thanks for posting this. In addition, I believe Ackman also pitched FDO at the Ira Sohn conference this week. (Not sure what percentage of his portfolio he has in it though.)

Boris

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