Bill Ackman, founder and CEO of Pershing Square Capital Management, has achieved long-term returns that exceed broader market performance. His hedge fund's portfolio reveals three significant holdings.
Amazon represents 8.73% of the fund's portfolio as of the third quarter. The company operates in e-commerce, cloud computing, artificial intelligence, and digital advertising. Amazon's e-commerce division generates revenue through direct sales and third-party seller fees. The company is employing industrial robots to reduce fulfillment costs, aiming to lower expenses and increase profits over the next decade. Amazon CEO Andy Jassy stated two years ago that 85% of IT spending remains on-premises, indicating room for growth in cloud services. The company has attracted over 200 million Prime members through its focus on customer needs.
Alphabet constitutes 10.52% of the portfolio. The company maintains dominance in search engines despite the emergence of AI chatbots. Alphabet introduced AI overviews and AI mode on its search platform, which the company says is driving query growth. Its digital advertising business thrives through Google and YouTube. Alphabet's cloud division is growing rapidly, with a backlog of $155 billion at the end of the third quarter, representing a 46% quarter-over-quarter increase. The company also develops autonomous vehicles through its Waymo subsidiary.
Uber Technologies is the largest holding at 20.25% of the portfolio. The ride-hailing company reported strong third-quarter results with significant growth in trips and monthly active platform customers. Uber benefits from network effects that create an economic moat. Demographic trends show younger Americans obtaining driver's licenses later and driving less than previous generations, potentially expanding Uber's customer base. The company estimates only about 10% of adults in its top 10 countries use its platform monthly, suggesting substantial growth potential.
The Motley Fool Stock Advisor analyst team recently identified 10 stocks they consider better investments than Amazon. Their recommendations have historically generated substantial returns, such as Netflix and Nvidia investments from 2004 and 2005 that would have grown to $474,847 and $1,146,655 respectively from $1,000 investments. Stock Advisor's total average return is 958%, compared to 196% for the S&P 500.