Did you know that hedge fund kingpin Bill Ackman owns several Canadian stocks?
It’s not something that’s talked about much on Wall Street, but it’s true.
At the time of this writing, Ackman had three TSX stocks in his portfolio, one of them being his second-largest holding. His longest-standing Canadian holding, Canadian Pacific Kansas City Railway, is no longer among the bigger ones in his portfolio, as Ackman has sold many of his shares. His other two Canadian positions are very much worth talking about.
In this article, I’ll explore the two Canadian stocks that Bill Ackman holds in his portfolio today and speculate as to his reasons for owning them.
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Brookfield
Brookfield Corp (TSX: BN) is a Canadian financial conglomerate involved in asset management, insurance, private equity, real estate, renewable energy and infrastructure. It is currently the second-biggest position in the Pershing Square Holdings portfolio that Bill Ackman manages.
What does Bill Ackman see in Brookfield?
There are many things that Ackman’s company, Pershing Square, has published about Brookfield. The company’s managers seem to think that Brookfield shares do not reflect the full value of the company’s publicly traded subsidiaries — Brookfield’s stakes in these collectively are worth more than Brookfield’s market cap. Brookfield has very little corporate-level debt, so its stock does appear to trade at a discount to its sum of the parts (SOTP) value. As value investors, Pershing Square find that aspect of BN stock appealing.
Many investors other than Bill Ackman and Pershing Square have invested in Brookfield stock on the basis of its SOTP discount. I bought the stock back in 2023 when it was clearly trading at such a discount. Today, with BN stock having more than doubled from the lows, it’s harder to say that a meaningful discount still exists.
For Ackman, the gradually diminishing discount is probably not an issue. Pershing Square’s Brookfield thesis, in addition to having a valuation component, also has an earnings component. Specifically, the company’s managers think that Brookfield Asset Management’s large amounts of unused committed capital will eventually be invested and start generating fee-related earnings for Brookfield. That could drive considerable price appreciation once the market recognizes the value being added.
Restaurant Brands International
Restaurant Brands International (TSX: QSR) is a Canadian fast-food restaurant company that started off as three separate companies: Burger King, Tim Hortons and Popeyes Louisiana Kitchen. Tim Hortons and Burger King merged in 2014, resulting in the creation of Restaurant Brands International as an entity. Later, the entity took over Popeyes, resulting in the formation of one of the world’s biggest fast food companies.
What does Ackman like about Restaurant Brands International?
Part of it might be in the name: the company owns quality brands. Tim Hortons is Canada’s number one coffee shop chain, while Burger King is often thought of as the second-place burger chain after McDonald’s. Popeyes has its devoted fanbase as well.
Another thing Ackman might like about QSR is its growth. The company grew its revenue at 21.8% in the trailing 12-month period, and Popeyes currently has plans for global expansion in the future.
Last but not least, Ackman might like that QSR trades at fairly sensible multiples: about 20 times earnings at today’s price. That’s cheaper than the S&P 500, and QSR is certainly no slouch on growth. So, there is a lot for Ackman — or any investor — to like about QSR.
