Bill Ackman: Activist Trio

10/09/2015 8:00 am EST


Marshall Hargrave

Contributing Editor, Wyatt Investment Research

Billionaire Bill Ackman, the founder of the Pershing Square Capital hedge fund, is bullish on stocks, including his best three stocks, notes Marshall Hargrave in Daily Profit.

Most know Bill Ackman for his vocal assertions that Herbalife (HLF) is a pyramid scheme. However, he's generally a longer-term investor.

Ackman recently said, "We're principally a long-only fund. We own concentrated positions in companies. We own them for years." With that in mind, here are his three best stocks to own today.

Mondelez (MDLZ)

Ackman announced a $5 billion position in Mondelez. The snack foods company also has fellow activist investor Nelson Peltz involved.

Peltz's Trian Partners has been trying to get Mondelez to merge with the PepsiCo (PEP) snack business for a couple years.

Nonetheless, Ackman feels there are a couple of ways to win here. One, is that the company could remain a standalone business and cuts costs. Another way to win is if Mondelez becomes a takeover target.

One potential suitor could be Kraft Heinz (KHC), where Warren Buffett just orchestrated a Kraft and Heinz merger.

Mondelez has had its missteps with investing heavily in emerging markets. However, it has since reined in spending and has a $3.5 billion restructuring plan in place that's expected to save $1.5 billion in annual costs starting in 2018.

Canadian Pacific (CP)

Ackman has been an activist investor at Canadian Pacific since 2011. Since that time, the stock has gained an annualized 23%.

Ackman has noted that Canadian Pacific is stronger and more profitable than just a couple years ago. Over the years, Canadian Pacific has actively been cutting costs and reconfiguring its network.

But the shares are down 25% year-to-date due to a decline in oil-related shipments. In truth, it has less exposure to the declining oil prices than other rails. About two-thirds of its revenues are generated from more steady products like grain, fertilizer, intermodal, and met coal.

Restaurant Brands International (QSR)

Ackman became an activist at Restaurant Brands (at the time Burger King) in mid-2012, when he helped bring the company public.

The merger of Burger King and Tim Hortons last year, which formed Restaurant Brands, created the third-largest quick-service restaurant company in the world.

With the addition of Tim Hortons, Burger King gains a stronghold in Canada. Tim Hortons owns over 85% of the market share for the Canadian donut and coffee quick-service segment.

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