Bill Ackman and his Pershing Square funds may be down, but they aren't out. Since Ackman is one of the most outspoken hedge fund managers and activist investors, Pershing Square's 13F filings are closely followed for insight into which stocks the billionaire investor is buying and selling on behalf of its clients.

Recent SEC filings show that Bill Ackman has been doing more buying than selling in Automatic Data Processing (NASDAQ:ADP), Howard Hughes (NYSE:HHC), Mondelez (NASDAQ:MDLZ), Air Products & Chemicals (NYSE:APD), and Restaurant Brands (NYSE:QSR).

It's payday

Pershing Square's interest in ADP sets the stage for what could be a long and ugly activist campaign. The Ackman-owned hedge fund manager outlined in a regulatory filing that it effectively controls or has exposure to 36.8 million shares of ADP, effectively making it an 8.3% owner of the company.

With a large economic stake, Pershing Square wants representation on ADP's board of directors. The hedge fund management company nominated three people for election to ADP's board, including Bill Ackman himself.

For its part, ADP doesn't seem too eager to open up the floor to walk-on candidates. The company responded to Bill Ackman in a letter deriding the hedge fund's poor performance, writing, "Since Carlos Rodriguez became CEO nearly six years ago, ADP's total shareholder return of 202% is well in excess of the S&P 500 TSR of 128% -- and is many multiples of Pershing's TSR of 29%."

Rodriguez has since appeared on CNBC, where he called Ackman both a "used car salesman" and a "spoiled brat" for asking for more time to nominate directors for election to ADP's board. On Aug. 21, ADP rejected Ackman's board nominations. Shareholders should be ready for an ugly battle in their mailboxes, as both sides will likely send multiple proxies to lay the case for why shareholders should support their nominations.

Ackman faces an uphill battle at ADP. After all, the business trades at nearly 27 times earnings, a premium valuation to the average S&P 500 component, which trades at 23 times earnings. Boasting returns on equity in excess of 40% in the past year (and in excess of 20% in every single one of the last 10 years), ADP is exceptionally profitable.

Of course, Ackman's argument is that ADP's performance could be better. ADP's pre-tax margin has flatlined at roughly 20%. Ackman laid the case that ADP could earn as much as $8.70 per share in 2022, up from $3.70 in 2017, of which the majority of the increase ($3.15) would come from margin expansion. 

Coins in a jar viewed from above.

Image source: Getty Images.

Ackman Construction Inc.

Pershing Square's 13F shows it owns more of real estate developer Howard Hughes Corporation, but it is more of a technicality than an increased position. Although the stake appeared to increase this quarter based on Pershing Square's 13F, it doesn't appear as though there was a fundamental change in Pershing's holdings.

An SC 13D/A filing shows that Pershing Square owns roughly 1.1 million more shares of Howard Hughes Corporation. That's because it swapped warrants, which weren't reported in previous 13Fs, for common stock, which is reported in Pershing's 13F.

Ackman pitched Howard Hughes at a hedge fund conference earlier this year. Since Ackman is the largest owner of the company and the chairman of the board of directors, I suppose it's not all that surprising that he likes what he sees in a company where he has a first-hand view. (It's a little weird to pitch a company where you act as the chairman of the board, don't you think?)

Ackman's cookie jars

Pershing Square dipped into the Mondelez cookie jar again in the second quarter, slashing its common stock holdings by 5.4 million shares. The 13F filing shows it held approximately 14.5 million shares at the end of the second quarter.

Mondelez has largely been dead money for Bill Ackman's Pershing Square funds. The Oreo maker first appeared in the firm's third-quarter 2015 13F, after which Mondelez shares have gone up and down, but mostly to the right.

Pershing has written favorably about Mondelez even while it continues to dump shares of the company. In a letter to clients of its closed-end fund earlier this year, Pershing Square wrote the following:

Mondelez is one of the few large-cap packaged food companies that is demonstrating both margin expansion and top-line organic growth. Given Mondelez's innovation pipeline and market share opportunities, we expect organic sales growth to improve in the second half of the year. Over the long term, we believe that Mondelez's categories and geographic footprint give it a significant competitive advantage, especially in the emerging markets where Mondelez's large market shares and robust routes to market should drive accelerated growth.

Mondelez isn't the only cookie-jar stock in Pershing Square's portfolio. The fund manager sold out entirely of its Air Products & Chemicals holdings this quarter after laying out a lukewarm thesis for the company's stock earlier this year. In a letter, Pershing Square pointed out that the company's prospects largely rest on its ability and willingness to return capital to shareholders if it can't find attractive investment opportunities.

Pershing suggested Air Products & Chemicals could generate $8 billion of cash that it could distribute to investors over the next three years, roughly equal to one-fourth of its market cap. But Ackman won't be checking his mailbox for big dividends or tender offers for his funds' shares. Pershing sold out of every last share it owned during the second quarter.

Cashing in on burgers and coffee

In July, rumors swirled that Pershing Square hired an investment bank to help it offload 10 million shares of Restaurant Brands, a holding company for Burger King and Tim Horton's.

Because of the timing of the rumored sale (July 12), the 13F is of little help given it only shows Pershing Square's holdings as of June 30. That said, a recent SC 13G/A filing confirms the story, reflecting that Pershing Square owns 29.15 million shares, down from 39.15 million shares at the end of the second quarter.

Restaurant Brands has been a winner in an industry filled with losers. The holding company for Burger King and Tim Horton's is up approximately 31% this year, easily outpacing the zero return of one restaurant-focused exchange-traded fund. Given the company's outsize return and the fact it is the second-largest Pershing position after ADP, cashing in may be a matter of managing the fund's position sizes.

Jordan Wathen has no position in any of the stocks mentioned. The Motley Fool recommends Automatic Data Processing and Howard Hughes. The Motley Fool has a disclosure policy.