Reuters / Richard Brian
- Bill Ackman's Pershing Square took a big hit to its stock portfolio during the coronavirus sell-off.
- The billionaire's hedge fund saw its stakes in Hilton, Burger King-parent Restaurant Brands, Lowe's, and Berkshire Hathaway tumble in value by upwards of 20% last quarter.
- Ackman took advantage of the share-price declines to boost Pershing's holdings in all four companies and reinvest $720 million in Starbucks.
- Pershing's stakes in Lowe's, Starbucks, and Berkshire Hathaway are worth more now than in December.
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Billionaire Bill Ackman's favorite stocks were pummeled by the novel coronavirus sell-off. The Pershing Square chief considered liquidating his portfolio, but ultimately decided to double down, according to the hedge fund's latest annual report.
The pandemic hammered the value of Pershing Square's handful of equity holdings last quarter. For example, Hilton stock dropped 38%, Burger King-parent Restaurant Brands tumbled 37%, Lowe's slumped 28%, and Berkshire Hathaway slid 20%.
Ackman was able to offset those declines with a $2.6 billion return from his coronavirus hedges. He used most of that windfall to capitalize on depressed stock prices and buy more shares in portfolio companies.
Pershing raised its stake in Lowe's by 46%, Berkshire Hathaway by 39%, Hilton by 34%, and Restaurant Brands by 26%. It also snapped up about $720 million worth of Starbucks shares after exiting its position in the coffee chain in January. Moreover, Ackman only disclosed one sale in the report: the reduction of Pershing's Chipotle investment by a third in February.
The upshot of Pershing's buying spree is that its stakes in Lowe's, Starbucks, and Berkshire Hathaway are worth more now than they were in December. Its investments in Restaurant Brands and Hilton also look far healthier than they would otherwise. However, it remains to be seen whether Ackman's aggressive strategy will pay off over time.
Here's a chart showing how the value of seven of Pershing's key investments changed between December 31 and April 7:
Pershing Square
