Ackman – Earlybirds Invest

Bill Ackman likes to keep his hedge fund, Pershing Square Capital, invested in just a few high-conviction companies. Indeed, it’s hard to generate market-beating returns if your investments are spread so thin your portfolio looks pretty similar to the overall stock market. But Ackman and his team hold stock in just 10 publicly traded companies.

Ackman is willing to deploy billions of dollars at once to accumulate shares in his highest-conviction bets, and he likes to hold those stocks for a long time. As such, Pershing Square’s monthly investor updates and quarterly disclosures with the SEC can be a great source of investing ideas. And Ackman’s three best ideas right now account for more than half of Pershing Square’s publicly traded portfolio.

Here are Ackman’s top three holdings.

A pie chart printed on a piece of paper.

Image source: Getty Images.

1. Uber (19.7% of portfolio)

Ackman accumulated 30.3 million shares of Uber (UBER 1.65%) at the start of 2025 before announcing the new position on X in early February. Pershing Square’s first-quarter 13-F filing revealed it was, in fact, Pershing Square’s largest position.

That position has only gotten bigger as Uber stock has climbed about 55% since the start of the year, reaching a new all-time high. A large part of that rally came after Ackman announced Pershing Square’s position.

But the long-term prospects look good for Uber, too. While some see autonomous vehicles as a threat to Uber’s ride-sharing business, it could turn out to be an opportunity for the company. That’s because Uber has, by far, the largest customer base for taxi services. It counted 170 million total monthly active users as of the end of the first quarter. And its market share is growing thanks to the network effect and giving users more ways to use its service.

That’s an incredible asset that most companies building autonomous vehicles would love to tap into. Alphabet‘s Waymo, the leading self-driving car company, has already inked several deals with Uber to operate in multiple cities.

In the meantime, Uber is executing on its financial goals. Gross bookings increased 14% last quarter. With improved operating leverage, the company managed to grow earnings before interest, taxes, depreciation, and amortization (EBITDA) 35%. With limited cash expenditures, it managed to produce 66% growth in free cash flow (converting over 100% of EBITDA).

Despite the strong run-up in price, shares of Uber look fairly valued at an enterprise value less than 23 times forward EBITDA estimates as of this writing. Considering management expects EBITDA growth above 30% over the next couple of years, that’s a very attractive price.

2. Brookfield (18.4%)

Ackman has built a position in Canadian alternative asset manager Brookfield (BN 2.58%)over the last four quarters. On top of asset management, the company operates businesses across several segments, including real estate, renewable power facilities, and infrastructure. Those cash-flowing businesses give it capital to invest in additional operating businesses.

Brookfield Wealth Solutions, its insurance business, provides additional capital via float for management to invest. That’s a strategy Warren Buffett used to grow Berkshire Hathaway, and one Ackman has expressed interest in himself.

Overall, Brookfield has grown distributable earnings per share at an average rate of 19% per year over the past five years. There’s no reason to expect that rate to slow significantly over the next few years, as management uses its considerable cash flows from asset management, insurance, and its operating businesses to buy profitable assets while returning additional cash to shareholders through buybacks. Management is targeting $6.33 in earnings per share by 2029, a 16% compound annual growth rate. It grew 30% in the first quarter.

Despite the strong growth expectations, the stock trades for just 19 times trailing earnings per share. That’s well below comparable comparable companies and appears to undervalue the growth potential of the business.

3. Howard Hughes Holdings (13.3%)

After a deal to acquire an increased stake in Howard Hughes (HHH -0.12%) through Pershing Square in May, Ackman now serves (once again) as executive chairman for the company’s board. Ackman put up $900 million of Pershing Square’s cash in exchange for 9 million shares of the stock, giving it a 46.9% economic stake in the company and 40% control of the vote.

The bigger part of the deal is that Ackman is able to take Howard Hughes and transform its existing real estate operations into a diversified holding company a la Berkshire Hathaway. Ackman has said one of his first moves will be to buy or build an insurance business.

In the meantime, Howard Hughes’ core business looks undervalued. Management estimated the net asset value of its master planned communities, condos, and operating assets (minus its corporate debt) at about $5.8 billion per share at the end of last year. The $900 million cash infusion from Pershing Square’s investment will bring its net asset value even higher, but the company’s total market cap sits at just $4 billion as of this writing.

Howard Hughes generates strong operating cash flow through the sale of its plots to homebuilders and rental income from its commercial and multifamily buildings. Since it controls the entire acreage of its master planned communities, it’s able to build just enough to meet demand for office buildings and multifamily housing, ensuring strong returns on capital spending. The rest of its cash can go toward new investments, especially now as a diversified holding company.

The new structure does come with some drawbacks, though. Howard Hughes will have to pay Pershing Square $3.75 million every quarter on top of a 0.375% incentive fee for increasing the value of the business above inflation. That said, Howard Hughes opens the door for average investors to put their money to work directly with Ackman and gain access to private deals he might make instead of following along with Pershing Square’s public moves. And with the stock trading below management’s estimate for net asset value, it may be a good opportunity for investors.

Uber values the autonomous opportunity at $1 trillion

Uber serves over 171 million people every month across its ride-hailing, food delivery, and commercial freight services. The company accepted a record $162.7 billion in gross bookings during 2024 across all three segments — a figure that represents the full amount customers paid for every ride, food order, and commercial delivery.

Uber’s drivers earned a record $72.5 billion in 2024, which was the single largest piece of the $162.7 billion in gross bookings. After deducting driver costs and the money paid to restaurants for food orders, Uber was left with just $43.9 billion in revenue.

Therefore, if Uber could eliminate the enormous cost of its drivers, its revenue would organically soar because it would keep more of its gross bookings. That’s why the company is actively pursuing autonomous driving solutions, not only for its ride-hailing service but also for its food delivery and freight businesses.

Of course, some of the driver costs would be replaced by fees payable to the autonomous vehicle companies operating within its network, so Uber can’t eliminate that expense entirely. However, self-driving cars can operate 24 hours per day, seven days per week, with few ongoing expenses, so they will still be significantly better from a financial perspective.

Uber could also buy a fleet of autonomous vehicles and operate them itself, which means it could pocket the entire gross booking from every ride-hailing trip. Tesla is expected to sell its Cybercab robotaxi for around $30,000, which might be an attractive option. However, it would involve a big change to Uber’s business model, because it has always relied on drivers to supply their own cars (and as things currently stand, it will rely on its partners to supply autonomous vehicles).

Nevertheless, Uber CEO Dara Khosrowshahi thinks autonomy presents a staggering $1 trillion opportunity for the company in the U.S. alone.

Partnerships with autonomous titans like Waymo and Nvidia

Khosrowshahi says Uber is spending an enormous amount of organizational energy executing on its autonomous strategy, even though it might be a few years before self-driving cars are widely available. The company has inked partnerships with over a dozen companies developing autonomous solutions, including Alphabet’s Waymo, WeRide, Motional, Serve Robotics, and even Nvidia.

Waymo is ahead of the pack right now because it’s already completing over 150,000 paid autonomous trips every week across Phoenix, San Francisco, and Los Angeles (many of which are through Uber). Later this month, Uber customers in Austin will be able to hail an autonomous Waymo, and the partnership will expand into Atlanta later in 2025.

Uber is also working with Serve Robotics to launch over 2,000 autonomous food delivery robots this year, which will operate exclusively on Uber Eats in parts of California and Texas. During the fourth quarter of 2024, Uber started offering autonomous food delivery in Austin and Dallas through a different partner called Avride.

Then, there is the interesting deal that Uber signed with Nvidia in January. Since Uber facilitated over 12 billion trips last year, it has mountains of useful data that could be used to train the artificial intelligence models underpinning most autonomous software. The company wants to use Nvidia’s Cosmos platform and DGX Cloud to process that data and help its autonomous partners accelerate their journey to commercialization.

The faster autonomous vehicles are widely deployed, the faster Uber can unlock the significant cost savings I talked about earlier. Plus — and this is just speculation on my part — Uber could possibly unlock a new revenue stream by charging its partners for the use of its valuable data.

Ackman and Pershing Square could enjoy significant upside in Uber’s stock

After deducting operating expenses like marketing and research and development from Uber’s $43.9 billion in 2024 revenue, the company was left with a net income (profit) of $9.8 billion, which translated to $4.56 in earnings per share (EPS). That places Uber stock at a price-to-earnings (P/E) ratio of 16.3, which is a whopping 51% discount to the P/E ratio of the Nasdaq-100 technology index (33.6).

Uber stock is remarkably cheap from that perspective, so it’s easy to see why Ackman thinks it’s a bargain right now. However, the company benefited from one-off tax benefits worth $5.7 billion in 2024, so its actual earnings were much lower in reality. In fact, according to Wall Street’s consensus forecast (provided by Yahoo), Uber’s EPS could shrink by 46% this year to $2.44 as those benefits disappear.

That places Uber stock at a forward P/E ratio of 30.5, but that’s still quite attractive. If we assume the P/E ratio of the Nasdaq-100 remains constant, the stock would have to climb by 10% in 2025 just to trade in line with its big-tech peers. Plus, Wall Street is forecasting 36% EPS growth for Uber in 2026, which is likely to drive even further upside in the stock in the medium term.

However, for the reasons I highlighted earlier, autonomous driving might be the best reason to own Uber stock for the long term. If it truly does become a $1 trillion tailwind as Khosrowshahi expects, the stock is likely very undervalued right now.