Introduction to the Transaction
On April 25, 2024, Pershing Square Capital Management, led by Bill Ackman (Trades, Portfolio), made a significant addition to its investment in Restaurant Brands International Inc (QSR, Financial). The firm acquired an additional 3,942,553 shares, which marked a 16.89% increase in their holdings. This transaction had a 2.7% impact on the portfolio, bringing the total share count to 27,290,688. With a trade price of $73.07, the position in QSR now represents 18.66% of Pershing Square's portfolio and 8.50% of the company's outstanding shares.
Profile of Bill Ackman (Trades, Portfolio)
William Ackman, the co-investment manager for hedge-fund group Gotham Partners LP, established Pershing Square Capital Management in November 2003 with a starting capital of $54 million from three investors. Ackman's roots are in the real estate sector, working for his father before venturing into Gotham. As an activist investor, Ackman's strategy involves purchasing undervalued stocks and advocating for changes to unlock their true market value. Pershing Square's equity stands at $10.4 billion, with a portfolio concentrated in Consumer Cyclical and Communication Services sectors. The firm's top holdings include Alphabet Inc (GOOG, Financial), Chipotle Mexican Grill Inc (CMG, Financial), Howard Hughes Holdings Inc (HHH, Financial), Hilton Worldwide Holdings Inc (HLT, Financial), and Restaurant Brands International Inc (QSR, Financial).
Overview of Restaurant Brands International Inc
Restaurant Brands International, with a market cap of $23.37 billion, is a global powerhouse in the restaurant industry. Since its IPO on December 10, 2014, the company has seen a 123.89% increase in its stock price. QSR operates well-known brands such as Burger King, Tim Hortons, Popeyes Louisiana Kitchen, and Firehouse Subs, with a total of over 31,000 restaurants worldwide. Despite a year-to-date price decline of 3.93%, the company's stock is currently trading at $73.84, slightly above the trade price, and is deemed "Fairly Valued" with a GF Value of $80.66.
Analysis of the Trade's Significance
The recent acquisition by Pershing Square is a testament to Ackman's confidence in QSR's potential. The trade price of $73.07 is closely aligned with the current stock price of $73.84, indicating that Ackman's firm capitalized on a perceived fair valuation. The position size and percentage reflect a substantial commitment to QSR, suggesting that Pershing Square sees a strong future for the company within its portfolio.
Financial Health and Performance Metrics of QSR
Restaurant Brands International boasts a robust Profitability Rank of 8/10 and a Growth Rank of 8/10, indicating solid financial health and promising growth prospects. The company's GF Score of 87/100 suggests a high potential for outperformance. However, its Financial Strength is less impressive, with a Balance Sheet Rank of 4/10, and a Cash to Debt ratio of 0.08, ranking it 272nd in the industry.
Market Position and Competitive Landscape
QSR's industry standing is solidified by its diverse brand portfolio and international presence. The company's competitive advantages are reflected in its strong Return on Equity (ROE) of 43.30% and Return on Assets (ROA) of 5.16%. These figures place QSR at the 40th and 106th positions, respectively, within the restaurant sector, showcasing its ability to generate profits and effectively utilize its assets.
Other Notable Investors in QSR
Aside from Pershing Square, other notable investors include Prem Watsa (Trades, Portfolio), indicating a shared belief in QSR's value proposition among seasoned investors. Pershing Square remains the largest guru shareholder, with a commanding 8.50% share of the company.
Conclusion
The recent trade by Bill Ackman (Trades, Portfolio)'s firm is a strategic move that aligns with their investment philosophy of identifying undervalued opportunities. The firm's increased stake in Restaurant Brands International Inc reflects a conviction in the company's future growth and profitability. For value investors, this transaction underscores the importance of thorough analysis and the potential benefits of an activist approach to investing.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
