If a fund manager has more than $100 million in assets, they have to file a Form 13F with the Securities and Exchange Commission (SEC) disclosing what their end-of-quarter holdings are. This gives investors the chance to look into what stocks billionaires are investing in, which can be a great place to source ideas. The latest round of 13-Fs just became available, and there were some interesting moves.
One billionaire I follow is Bill Ackman, as he has had a successful investing career that makes his activity worth following. During the fourth quarter, he took a massive stake in Meta Platforms (META 2.52%). Before this quarter, he owned zero shares. Now, he owns 2.67 million -- worth nearly $2 billion. This makes up over 11% of Pershing Square's portfolio, so this is no small position.
Why did Ackman buy Meta? I think it's because of its strong track record of success and cheap stock price.
Image source: Getty Images.
The market has a love-hate relationship with Meta Platforms
Meta Platforms has cycles where it goes in and out of favor with the market. About five years ago, the market was impressed with Meta's social media platforms, like Facebook and Instagram, and the stock was valued appropriately. Then, the company changed its name from Facebook to Meta Platforms to signal its heavy investment into the metaverse -- something that never really caught on. During these years, the market had a strong disdain for Meta's stock, and it traded at a dirt cheap valuation.
Eventually, Meta cut back on its metaverse spending and became more profitable, and once again, the stock rallied and became loved by the market. Now, we're entering back into downturn territory because the market is concerned about how much money Meta is spending on data centers to power its AI aspirations. This can be seen in its price-to-earnings ratio, as well as its operating P/E ratio.
META PE Ratio data by YCharts
While 27 times trailing earnings may not necessarily seem cheap, when you look at how much growth Meta is expecting in 2026, it becomes clearer. Meta trades for a fairly cheap 21.3 times forward earnings. That's enough to make it cheaper than the S&P 500, which trades for 21.9 times forward earnings.
Meta also has the lowest forward earnings ratio of any company in the "Magnificent Seven," which includes nearly all of the big players in tech. With pricing like that, it's no wonder that more valued, focused investors are taking an interest in Meta's stock. The market may not love it now, but Ackman and his team at Pershing Square are betting that that won't last.
Meta has delivered impressive results recently
With Meta's stock down around 20% from its all-time high, you'd think it was posting poor quarterly results, but that's far from the case. In Q4, Meta's revenue rose 24% year over year to $59.9 billion. While its operating margin declined year over year, it still posted a healthy 41% margin. This caused its diluted earnings per share (EPS) to rise around 11% for the quarter, which is still a market-beating pace.
NASDAQ: META
Key Data Points
For 2026, Meta told investors to expect between $115 billion and $135 billion in capital expenditures, mostly going toward AI data centers. That's a huge number that the market is struggling to cope with, and it is a large reason why the stock is down.
An investment in Meta now is a bet that Meta's AI spending is only temporary and will provide meaningful cash flows sometime down the road. Even if it fails to pay off, Meta can revert to its impressive cash-flow-generating state at any time by stopping spending on data centers for AI. I doubt this will happen due to the allure of generative AI, but I still think that Meta can be a solid investment pick if you're patient.
Ackman is known to be a long-term investor, so this move makes sense for him as well.
