Big-name value investors are few and far between today, but Bill Ackman, founder of hedge fund Pershing Square Holdings (PSHZF 1.50%), remains near the top of the list. As such, those who practice the art and science of value investing would do well to pay attention to his big portfolio moves. After all, Ackman tends to take large, concentrated positions, indicating a high level of conviction.
At its recent investor presentation, Ackman revealed Pershing had exited its longtime position in Chipotle Mexican Grill (CMG 3.81%), using those proceeds to allocate roughly 10% of its portfolio to this brand-name AI stock.
NASDAQ: META
Key Data Points
Pershing buys Meta Platforms, expanding deeper into the tech sector
On Wednesday, during Pershing's annual investor presentation, Ackman revealed a roughly $2 billion stake in Meta Platforms (META 2.52%), taken last quarter, amounting to nearly 10% of Pershing's Fund.
It's no surprise that Ackman invested in the social media giant. After all, Ackman also invested in Meta's digital ad peer Alphabet (GOOG 1.69%) (GOOGL 1.66%) three years ago, which has more than tripled since then.
Pershing accumulated its stake in Meta following Meta's third-quarter earnings report in late October, which was followed by a big sell-off in the stock. On that earnings release, Meta also gave a preliminary spending outlook for 2026 that hinted at much higher AI investments, saying its capital expenditures would be "notably larger" this year and grow at a "significantly faster percentage rate" than 2025.
While Meta also reported accelerating revenue growth at the time, its spending plans spooked investors, triggering a severe sell-off. Meta stock fell from roughly $750 per share before earnings to below $600 in the immediate aftermath. The stock has since recovered to the high $600s after a strong fourth quarter report, and Pershing revealed that its cost basis in the stock is around $625 per share.
The "best business to own" according to Buffett
This earnings season, investors have continued to be skittish about the massive amount of AI-related infrastructure spending announced by other Magnificent Seven stocks besides Meta. It's a fair concern; after all, those huge spending plans will likely eat up all the free cash flow of these companies, forcing even the most financially stable of the large tech giants to take on debt.
And while the payoff may look uncertain right now, it's also possible all that spending will create tremendous value. After all, Warren Buffett once said, "The best business to own is one that over an extended period can employ large amounts of incremental capital at very high rates of return."
Why Meta is in a great position
One of the main attributes Ackman likes about Meta is that even if the company's huge investments don't result in artificial general intelligence or any dramatically successful new business lines, Meta's core social media properties will still benefit. In the Pershing presentation, Ackman made the point that the, "overbuilding risk [is] mitigated by the core business's ability to grow into and absorb excess capacity."
This is because Meta has demonstrated the ability to use AI to increase engagement and grow usage on its core Facebook and Instagram platforms. Beyond engagement, AI can also help advertisers create ads and target users with high precision. Greater ad effectiveness enables Meta to charge ever-increasing prices per ad, further accelerating revenue growth.
The benefits of Meta's AI investment have been evident over the past year, as Meta's revenue accelerated from 16% growth in Q1 to 26% in Q3. While the fourth quarter's growth slightly decelerated to 24%, that quarter also lapped last year's presidential election, when political ad spending was elevated relative to 2025.
Given the success of its past AI spending, it stands to reason that Meta could see even greater revenue and profit acceleration with its higher levels of investment.
Image source: Getty Images.
Meta is cheap, and even cheaper without Reality Labs
Although Meta has a unique advantage over most other businesses, the stock is still not expensive. In fact Meta trades at only 21.8 times 2026 earnings estimates, about in line with the S&P 500 Index. However, if one strips out Meta's billions of spending on the Metaverse, which Ackman rightly points out could be pulled back or canceled at management's discretion without affecting near-term results, then the multiple on the "core" business is only 18 times earnings.
It is somewhat incredible that Meta's social media platforms, which have over 3.5 billion daily active users and significant network effects, are trading at a discount to the overall market. And yet, that does appear to be the case.
A core holding of most portfolios
Meta is really the only large tech company outside of the cloud computing infrastructure companies with the financial means to invest in AI infrastructure.
While investors are growing uneasy about all that spending, each of these companies could also dial back those investments if AI algorithms hit a scaling limit. However, if these massive investments create a wide moat, then the upside could be tremendous.
In short, Ackman's Meta investment isn't particularly novel, but it does looks smart.
