Bill Ackman's Pershing Square Q1 Shake-Up: Home Retailer Dumped, Hot Restaurant Stake Trimmed And A 'Magnificent 7' Holding Juggled

Hedge-fund manager Bill Ackman‘s Pershing Square Holdings, Ltd. (OTC:PSHZF) shed shares of a home improvement retailer and reduced its stake in a fast-casual diner, while maintaining most of its other holdings, according to a 13F report filed with the SEC on Wednesday.

Patience Wearing Thin? Pershing Square divested all 1.25 million shares it held in Lowe’s Companies, Inc. (NYSE:LOW) by the end of the fourth quarter, valued at $277.19 million at the time. Retailers are navigating a challenging economic landscape as cautious consumers withhold discretionary spending.

Lowe’s competitor, Home Depot, Inc. (NYSE:HD), recently reported first-quarter revenue slightly below estimates, with earnings per share meeting expectations. The company also hinted at ongoing softness in larger consumer discretionary projects. Lowe’s is set to announce its quarterly results on May 21.

Appetite Waning? Ackman’s firm also reduced its holdings in Chipotle Mexican Grill, Inc. (NYSE:CMG). While the number of Chipotle shares decreased by 9.8%, the value of the holding increased by 14.6%. This partial sale could indicate profit-taking amid the stock’s robust performance, which has outpaced the broader market, rising nearly 39% this year.

Coincidentally, Ram Ahluwalia, founder of Lumida Wealth, an investment advisor specializing in alternative investments and digital assets, suggested in late April that Chipotle’s stock may have surpassed its fundamentals. He noted that the stock’s momentum could be waning, signaling it might be a “good time to take profits.”

Chipotle recently reported strong quarterly results and is awaiting shareholder approval for a 50-for-1 stock split approved by the board in March.

Interestingly, Pershing Square left its stake in Chipotle’s competitor, Restaurant Brands International Inc. (NYSE:QSR), unchanged.

Following Pershing Square’s disclosure, Ahluwalia observed that Chipotle experienced a decline on Wednesday despite the market’s record rally. He remarked, “Retail investors are providing the exit liquidity (chasing momentum) — and that's a bad idea The smart money is out of this name.”

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Alphabet Tinkering: Pershing Square made adjustments to its holdings in Alphabet, Inc. (NASDAQ:GOOGL) (NASDAQ:GOOG) by selling some Class C shares and acquiring more Class A shares. Despite the tinkering, the total number of Alphabet shares remained unchanged, while their combined value increased by 8%, reflecting first-quarter gains of a similar magnitude for both classes of stocks.

Alphabet’s Class C shares (trading under the ticker GOOG) lack voting rights, while Class A shares (GOOGL) confer voting rights to investors.

Here’s how Pershing Square’s Portfolio looks now:

All of Pershing Square’s holdings except real-estate development and management company Howard Hughes saw book profits in the first quarter. Lowe’s stock, which the firm divested from, gained approximately 15% in the first quarter.

The SPDR S&P 500 ETF Trust (NYSE: SPY), an exchange-traded fund tracking the S&P 500 Index, posted gains of 10.34% for the first quarter and 11.81% year-to-date. OTC-listed Pershing Square closed Wednesday’s session at $51.70, up 0.39%, according to Benzinga Pro data.

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Photo by Center for Jewish History, NYC via Wikimedia Commons