Billionaire investor Bill Ackman of Pershing Square Capital Management is one of the best smart money folks to follow closely, not just because he’s got an impressive track record of gains, but because he’s taken a liking to some Canadian businesses over the years. Undoubtedly, two standout TSX stocks in the Bill Ackman portfolio are noteworthy as we head into the year’s end. In this piece, we’ll examine the two Canadian stocks that I believe are rich in value this September.
Undoubtedly, just because Bill Ackman owns shares of a firm doesn’t mean you should follow him in without putting in your own due diligence. At the end of the day, there’s no excuse for not putting in all the homework before buying shares of a firm. While Ackman is focused on discovering value, his Canadian holdings, I believe, are worth a second look, especially since it’s quite rare for Canadian names to get as much love from the big hedge funds south of the border.
Though Ackman has a rich history as an activist investor (who buys a big stake while pushing for change at the upper levels), Pershing Square seems to be content with a more passive role as an investor. Thus far, Ackman’s non-activist investment approach has paid rich dividends, especially when it comes to his Canadian holdings. As we head into year’s end, I think these quiet Canadian Bill Ackman stocks could be worth nibbling into, whether you’re seeking value or dividend growth.
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Restaurant Brands International
Ackman has held onto shares of fast-food firm Restaurant Brands International (TSX:QSR) for many years now. And while the quick-serve restaurant play has not been the best performer in the Pershing Square portfolio, the firm has continued to pay (and grow) its dividend. Currently hovering around 4% after plunging by more than 23% from all-time highs, I find QSR stock to be one of the deeper value bets within the Ackman portfolio. Indeed, Tim Hortons came up short on the front of profits in the latest quarter, thanks in part to heftier expenses.
With new menu items such as the Protein Latte, which should appeal to protein-hungry Millennials, and other efforts to turn the tide, I certainly wouldn’t sleep on the legendary Canadian chain’s weakness.
Combined with the global growth potential of Burger King, Popeyes Louisiana Kitchen, and Firehouse Subs, and QSR stock looks oversold and severely undervalued at 11.1 times forward price to earnings (P/E). You’re getting four powerful brands for a really low price. Perhaps there’s a reason why Ackman’s sticking with QSR despite posting a mere 19% in the last five years.
Brookfield Corp.
Brookfield Corp. (TSX:BN) has been powering strong gains of late, now up 97% in two years. Indeed, the legendary Canadian alternative asset manager still looks to have room to run as it moves on from its first-half dip.
Now close to all-time highs, I wouldn’t hesitate to follow Ackman by picking up a few shares, especially as the real asset heavyweight looks to keep pursuing opportunities within the space. Indeed, some analysts view Brookfield as a capital compounder, and it’s not hard to see why.
At 13.5 times forward P/E, BN shares also look way too cheap to ignore at these levels. As Brookfield looks to pursue more artificial intelligence (AI) projects, perhaps Wall Street may still underestimate the cash cow at a pivotal moment in the generative AI uprising.
