Key Points
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Ackman added to his top stock earlier this year when the market balked at its capital spending plans.
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Another top holding looks undervalued relative to earnings growth from two major catalysts.
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Ackman’s newest addition to Pershing Square’s portfolio is already a top holding.
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Bill Ackman is one of the most followed investment managers in the world — and with good reason. As the manager of Pershing Square‘s (NYSE: PS) assets, he’s led the hedge fund to produce a compound annual return of nearly 16% since 2004, handily outperforming the S&P 500 in that time.
What also makes Ackman attractive is that he holds a highly concentrated portfolio of stocks, and he’s more than willing to discuss his thoughts on each of Pershing Square’s investments. While Ackman hasn’t disclosed the exact holdings of his new fund, Pershing Square USA, disclosures for assets held by the Pershing Square Capital Management fund and Pershing Square itself include 13 different positions.
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Moreover, about 42% of the invested assets under management is held in just three stocks, all of which warrant a closer look. Let’s dive in.
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1. Amazon (15.3% of assets)
Ackman first bought shares of Amazon (NASDAQ: AMZN) in April 2025 amid the tariff-fueled sell-off in stocks. He added to the position earlier this year when the company announced plans to spend as much as $200 billion on capital expenditures (capex), mostly on AI infrastructure. Ackman made it clear that he sees Amazon and other hyperscalers’ increased spending as a sign of strength. In a letter to shareholders earlier this year, he wrote:
When a business you own, managed by a management team you trust, announces a large increase in capital spending due to increased demand for its products or services, you should be applauding rather than booing,” he wrote in his letter to shareholders earlier this year.
Indeed, Amazon is seeing accelerating revenue growth for its cloud computing business, Amazon Web Services (AWS), in line with its increased capex budget. An even bigger step up in spending this year should push revenue growth higher in 2027 and beyond.
Meanwhile, Amazon’s core retail business is seeing improved profitability. That’s in large part thanks to optimizing its logistics network over the past few years after a couple of years of rapidly building out capacity. These improvements have improved shipping speeds while reducing costs. Lower shipping costs per unit, combined with Prime subscription growth and strong advertising revenue, have led to record operating margins for the business in recent quarters.
Shares of Amazon have climbed since the first-quarter sell-off, but a recent pullback may give investors another opportunity to buy. At a price-to-earnings (P/E) ratio of 28, the stock trades well below its historic average. Ackman believes Amazon can grow earnings per share (EPS) roughly 20% per year over the medium term.
2. Brookfield (14.9%)
Brookfield (NYSE: BN) is a leading alternative asset manager focused on capitalizing on long-term growth trends. Ackman established a position in the stock in 2024, quickly making it one of the fund’s largest holdings. Ackman initially purchased shares when the market discounted its invested asset base through its subsidiary, Brookfield Asset Management.
Brookfield Asset Management is set to start paying its parent company substantial carried interest over the next few years. Carried interest is the performance income generated by BAM when its funds exceed return targets. However, management won’t pay out carried interest to shareholders until after returning all invested capital and delivering its preferred return, resulting in deferrals of carried interest.
Brookfield collected just $4 billion in carried interest in the 10 years between 2015 and 2024. It expects to collect $25 billion between 2025 and 2034.
The insurance business, Brookfield Wealth Solutions, is also a major source of growth. Brookfield spun off the insurance business in 2021, but it’s now looking to simplify its operations and reabsorb the growing business. That would make it easier to operate the investment-led insurance operation, closely tying Wealth Solution’s float to Brookfield’s ability to deploy capital. Insurance assets are growing quickly thanks to good investments and acquisitions.
Management said it expected earnings from the insurance business to double within five years at its investor day last year. Brookfield showed signs of accelerating growth in Q1. Distributable earnings before realizations, a measure of the cash profits generated by the business, climbed 7% last quarter after coming in flat in Q4. That number should continue climbing as carried interest and insurance assets grow throughout the year.
At just 17 times trailing distributable earnings, the stock still looks undervalued relative to its potential growth. Ackman sees the company growing its earnings 25% this year.
3. Microsoft (12.2%)
Microsoft (NASDAQ: MSFT) is the newest addition to Ackman’s portfolio. He started buying shares in February after the tech titan reported Q2 earnings results that disappointed many investors. The biggest reason for the sell-off was slower-than-expected growth in its cloud computing business, Azure, given management’s massive capex. But Ackman saw that move as short-sighted and took the opportunity to buy shares.
Digging under the hood at those disappointing results revealed Microsoft is still capacity-constrained despite its heavy investments in compute. That remained the case in Q3 as it balanced using compute for internal development and selling as much as possible to third parties. It traded near-term results for the chance to strengthen its core software business, Microsoft 365. The good news is that management expects Azure revenue to accelerate in the back half of the year.
The software business continues to perform exceptionally well considering its scale. Microsoft says it has 450 million enterprise customers for the productivity suite. Still, revenue climbed 19% year over year last quarter for the commercial software package, driven by growing adoption of AI services. The consumer version is growing even faster, up 33% year over year.
Meanwhile, Azure revenue growth has remained steady, compared to the last few quarters, at around 40%. Its backlog climbed to $627 billion (including Microsoft 365 contracts), providing confidence in the return on investment on its capex going forward. Despite the recent strength of the software business, it appears to have been caught up in the secular sell-off in software-as-a-service (SaaS) stocks.
Combined with a further sell-off in AI stocks since the start of June, investors can pick up Microsoft shares for around the same price Ackman bought them in February.
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Adam Levy has positions in Amazon and Microsoft. The Motley Fool has positions in and recommends Amazon, Brookfield Asset Management, Brookfield Corporation, Brookfield Wealth Solutions, and Microsoft. The Motley Fool has a disclosure policy.
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