At The Motley Fool, we understand that it often pays to zig when Wall Street zags, but that doesn't mean that we don't pay attention to what leading fund managers are buying and selling. And funds that aren't always in lockstep with the broader market can be a particularly valuable source of insight.

Every quarter, fund managers overseeing more than $100 million must disclose their quarter-end holdings publicly by filing Securities and Exchange Commission Form 13-F. The form lists all U.S.-traded securities the manager held at the end of the quarter. Although the form doesn't disclose the manager's short positions or the manager's intra-quarter trades, it can shine a bright light on his or her "long" stock bets. To help us make use of 13-F data, we turned to Motley Fool partner AlphaClone, a research and investment-management firm that tracks hedge fund public disclosures and develops investment strategies based on them.

Q3 2011 update
Bill Ackman founded Pershing Square Capital Management in 2003. An investor with roots in real estate, Ackman is an activist, often advocating strongly for big changes at companies in which he has invested heavily. Soon after Ackman invested in the Fortune Brands conglomerate, for example, the company began looking to spin off various divisions -- which it has now done, breaking up into the alcohol-focused Beam (NYSE: BEAM) and Fortune Brands Home & Security (NYSE: FBHS).

The total market value of Pershing Square Capital Management's disclosed equity holdings as of Sept. 30, 2011 -- the latest quarter for which data is available -- was $6.0 billion. The company's 10 largest positions and associated changes in number of shares held as of Sept. 30, 2011, were:

J.C. Penney (NYSE: JCP) -- unchanged
General Growth Properties (NYSE: GGP) -- unchanged
Beam -- increased 21.3%
Kraft Foods (NYSE: KFT) -- increased 13.3%
Citigroup (NYSE: C) -- increased 11.1%
Family Dollar (NYSE: FDO) -- increased 2.7%
Lowe's (NYSE: LOW) -- new position
Canadian Pacific (NYSE: CP) -- new position
Howard Hughes (NYSE: HHC) -- unchanged
Alexander & Baldwin (NYSE: ALEX) – unchanged

During the quarter, Pershing Square Capital Management sold out of Greenlight Capital Re (Nasdaq: GLRE) entirely.

Selected Q3 2011 commentary
Pershing Square Capital Management has a big focus on consumer stocks, with financials and industrials rounding out the portfolio. Just about all of the company's holdings sank in value during the tough quarter, although Family Dollar and Kraft suffered only minimal losses.

Retail REIT General Growth Properties has emerged from bankruptcy protection with restructured debt, but it's not immune to the current tough environment for real estate. It dropped 27% during the quarter. Unlike many post-bankruptcy companies, it might end up faring well. The company has a two-star rating (out of five stars) in Motley Fool CAPS.

New bets
New additions to the fold were Lowe's and Canadian Pacific. Lowe's is carrying a low valuation, but it's also struggling in this tough housing market, as it plans to shut down some stores. Patient investors will receive a dividend payout of about 2.3% while they wait for a market turnaround. Canadian Pacific is one of several railroad companies with attractive numbers -- and it owns nearly 15,000 miles of rail, as well. Some speculate that Ackman may be planning to agitate for change within the company. Lowe's has a four-star rating at Motley Fool CAPS, while Canadian Pacific also rates four stars.

We should never blindly copy any investor's moves, no matter how talented the investor. But it can be useful to keep an eye on what smart folks are doing. 13-F forms can be great places to find intriguing candidates for our portfolios.

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