Billionaire investor Bill Ackman has been climbing the ranks of best investors to watch for much of the 21st century. Like most hedge funds, his returns have been volatile. For instance, Pershing Square Holdings, which is managed by Ackman's fund Pershing Square Capital Management, only returned 10.2% in 2024, significantly trailing the broader market.
However, Pershing has returned nearly 173% over the last five years, more than double the broader market. Pershing typically invests in eight to 12 core holdings at a time, and its philosophy is to invest in stocks with limited downside that can generate recurring cash flow and long-term shareholder value. Here are the best Bill Ackman stocks to invest in right now with $1,000.
Looking for a high-growth, high-margin stock? Buy Chipotle
Ackman has long had a love affair with the casual Mexican burrito quick-service restaurant Chipotle (CMG -2.29%), having purchased the stock in 2016. It's one of Pershing's largest positions, making up 13% of holdings at the end of the third quarter. Ackman loves Chipotle because it offers quick and fresh food at a reasonable price, and the stock has served him quite well since around the time he first purchased it.
Chipotle is a high-margin business. In the third quarter, the company generated an operating margin of 25.5%, which is down from the 26.3% operating margin in the third quarter of 2023. The company has experienced some pressure due to higher food costs and slowing sales, but in his mid-year 2024 update, Ackman said he was excited about new company initiatives to simplify operations. Chipotle is rolling out new equipment at many of its restaurants, like its dual-sided grill, which can cook meat in half the time of its current plancha grill.
Chipotle also continues to be a growth story. The company is expected to have opened 285 to 315 stores in 2024 and is projected to do more than that this year. By 2030, management hopes to nearly double its existing locations from 3,600 to 7,000. Ackman also wrote in his update that international expansion beyond Canada "remains a largely untapped opportunity" and that a financially healthier consumer may also prove bullish for Chipotle this year.
A big turnaround for Nike?
Ackman initiated a new position in the iconic sportswear company Nike (NKE 3.29%) in 2024, which now makes up 11% of Pershing's portfolio. Nike's stock has struggled immensely in recent years.
Nike's struggles stem from economic challenges but also from a perceived lack of innovation among their footwear and apparel and increasing competition from other luxury brands like LuluLemon and Hoka.
The company recently brought longtime Nike veteran Elliot Hill out of retirement, a move investors are optimistic about. Hill seems energized and plans to refocus the company on product innovation, branding based on athletes, and strengthening its relationship with its wholesale partners.
The proof will, of course, be in the pudding, and Nike has yet to show any meaningful progress in its turnaround. In its most recent quarter, Nike saw year-over-year revenue, profits, and margins decline. However, most analysts think Hill is taking the right steps even if the journey could prove longer than some would like.
Ackman hasn't yet told the public what is driving his new holding in Nike, but I think it may be Pershing's philosophy about predictability and limited downside. Ackman may have caught a falling knife that, over time, has very little chance of losing money, given the brand, resources, and new management.
