Noted hedge fund manager Bill Ackman has been under the media spotlight in recent months, most prominently for his ongoing saga with fellow investor Carl Icahn over the fate of Herbalife and for his departure from his ill fated bet on J.C. Penney.

Gone relatively unnoticed, however, was the investment he and his firm Pershing Square made in materials giant Air Products & Chemicals (NYSE:APD). Long revered as a stalwart among dividend payers, Air Products is now receiving attention for its growth potential. Is Ackman right to jump into Air Products? And, should retail investors follow suit?

Bill Ackman's big bet
In all, Ackman and Pershing Square purchased over 10 million shares of the industrial gas producer, which quickly caught the ire of management.

In response to Ackman's investment, Air Products interestingly used a poison pill defense. Should Ackman acquire a 10% position, the company intends to dilute his ownership stake. All told, Pershing Square holds a 9.8% stake, and is now Air Products' largest shareholder.

Ackman has so far kept a tight lid on his exact intentions, but it's obvious he feels the company is undervalued and has attractive growth opportunities. The question for Fools is, what's the basis for his bullishness?

Where will growth come from?
At first glance, it's not hard to understand Ackman's case. Air Products is a model of consistency that has rewarded its shareholders for many years. The company consistently performs in good economies and bad, as evidenced by the fact that is has raised its dividend for 31 years in a row.

At the same time, it's difficult to imagine how much more growth can be squeezed out a slow-and-steady type like Air Products. Typically, reliable, unexciting dividend payers don't garner the attention of hedge fund managers.

Air Products expects 2013 to be another year of modest growth. Diluted EPS is expected to be at least $5.47 per share, which would represent growth of just a half of one percent.

The lack of eye-popping growth is evident throughout the specialty gas industry. Competitors Airgas (NYSE:ARG) and Praxair (NYSE:PX) are performing admirably, but not exactly growing at a rapid clip.

Airgas increased full-year 2012 sales by 4% and diluted earnings per share by 9%. However, the company struggled in its fiscal first-quarter, reporting flat sales and diluted EPS.

Meanwhile, Praxair brought in $3 billion in sales in its fiscal second quarter, representing 7% year-over-year growth. Diluted EPS, meanwhile, rose just 5% from the year-ago second quarter.

But perhaps, a shrewd move after all
Interestingly, Air Products is also the world's largest producer of helium. And, what many investors may not know is that the world is currently grappling with a serious helium shortage.

Believe it or not, helium is integral to many functions of society and is completely irreplaceable. Helium is an important input across many industries, used in such functions as MRI scans, computer chips, and even military uses, like missile guidance.

Meanwhile, in all-too-typical fashion, Congress has failed to address the looming helium crisis. And, due to the 1996 Helium Privatization Act, the government will soon effectively be pushed out of the helium business altogether.

The looming helium shortage is already having a dramatic effect on prices.  According to the U.S. Government Accountability Office, prices for refined helium provided to end users soared from $40 per thousand cubic feet in 2000 to $160 in 2012.

My sneaking suspicion is that Ackman is essentially placing a bet on the global helium shortage. Dwindling supply and continued strong demand are likely to mean much higher prices going forward, which would be a boon for private-sector producers like Air Products.

As a result, Foolish investors may want to consider adding Air Products to their portfolios.


Robert Ciura has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.