Bill Ackman has made many brilliant investing moves over time, including getting in on Chipotle Mexican Grill before revenue and the stock price took off. The founder and chief executive officer of Pershing Square Capital Management has seen that holding soar more than 300% since his purchase through today.
The billionaire is known for his investments in consumer-related stocks and aims to accompany his favorites over the long term. This, along with Ackman's activist investor moves and willingness to buck the trend, have helped him become one of the world's most successful hedge fund managers. And this has pushed Pershing Square Holdings, managed by Pershing Square Capital Management, to outperform the S&P 500 this year -- and double Ackman's wealth to more than $9 billion, according to Forbes.
So it's no surprise that investors are interested in learning about Ackman's latest moves -- and potentially following some of them. In the second quarter, the billionaire added a new position to his portfolio at Pershing Square Capital Management. This consumer and tech company has seen its stock climb more than 700% over the past decade, and importantly, it's already scored a $123 billion win in the high-growth market of artificial intelligence (AI). Let's check out this latest Ackman purchase.
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Ackman's 13F securities
At Pershing Square Capital Management, the billionaire oversees more than $13 billion in 13F securities -- these are positions and/or moves that must be reported on a quarterly basis to the Securities and Exchange Commission. Managers of more than $100 million in U.S. equities must file this form four times a year.
In the quarter, Ackman didn't make many moves. His primary ones were selling his position in railway Canadian Pacific Kansas City Limited and increasing his holding of Alphabet class A shares by about 20%. And his biggest was the purchase of the following stock market giant:
Ackman opened a new position in Amazon (AMZN -1.20%), buying 5,823,316 shares of the company. This represents about 9% of his portfolio and places Amazon within his top five holdings.
The move offers Ackman a bet on e-commerce, since Amazon is a leader in this area, and a significant investment in AI. Amazon uses AI to improve its e-commerce business, from fulfillment center operations to delivery, and this helps the company lower its costs. Amazon hasn't stopped there, though. The company's biggest AI success story may be in its Amazon Web Services (AWS) unit.
This cloud computing giant -- it's the global leader -- offers a wide range of AI products and services to its customers, and this has helped AWS reach a $123 billion annual revenue run rate. So, while some companies are still in the investing stages when it comes to AI, Amazon already is benefiting from this technology.
A trillion-dollar opportunity
And considering the forecasts for AI market growth -- today's billion-dollar market is expected to reach into the trillions by the early 2030s -- this movement may be far from over. So, AWS' AI revenue growth might just be getting started. It's also important to remember that as the leading cloud company, AWS has a significant potential audience for its AI offerings -- many customers may opt for AWS, a company they're already working with, rather than switching to another for AI products and services.
Beyond the AI growth story, Amazon also likely has impressed Ackman with its long track record of earnings gains -- and a couple of years ago when inflation weighed on earnings, the company revamped its cost structure, a move that brought it from a loss to a profit in a year and continues to drive earnings higher. These cost structure changes should work to Amazon's advantage in the quarters to come too, in both strong and weaker economic environments.
Now, you may be wondering whether you should follow Bill Ackman and pile into Amazon shares. Today, the stock trades for 34 times forward earnings estimates, down from more than 42 times late last year. I consider this a bargain for a company that's leading in the growth areas of e-commerce and cloud computing -- and already has posted a win in the hot field of AI. And with more growth to come over the long term in these three areas, it's a great idea to take inspiration from Ackman and get in on Amazon shares.
