Billionaire investor Bill Ackman has made major moves by investing in Nike and Brookfield via his hedge fund, Pershing Square. During the second and third quarters of the calendar year, Ackman acquired 13.2 million shares of Nike, which involved an expenditure exceeding $1 billion. This decision followed a disappointing announcement regarding Nike’s fiscal 2024 fourth-quarter earnings and outlook for fiscal 2025 in June 2024.
Even with setbacks, Nike managed to enhance its gross margin, expecting further improvements in both gross and operating margins in the long run. Ackman is optimistic about Nike’s robust brand, potential growth in the Chinese market, and its capacity for premium pricing. In the third quarter, Brookfield—a multifaceted company managing interests across numerous sectors—garnered around $1.2 billion in new investment from Pershing Square.
Ackman’s faith in Brookfield is rooted in its impressive track record and bold growth strategies. The company anticipates considerable free cash flow growth, intending to allocate this capital towards additional investments, share buybacks, and dividends.
Ackman’s Significant Stake in Brookfield
Brookfield’s leadership posits that the stock is priced below its true value and foresees considerable appreciation over the next five years. Ackman’s investment tactics are centered on identifying undervalued equities with significant growth potential and maintaining them until their market price reflects their actual worth. Both Nike and Brookfield are aligned for substantial long-term growth, making them appealing components of Pershing Square’s investment portfolio.
Notable hedge fund managers, including Daniel Loeb from Third Point Capital, have also recognized Brookfield Corporation’s value and prospects for future growth. Over the last decade, Brookfield has provided remarkable returns and aims to sustain this momentum by evolving with market changes, particularly in sectors like energy transition and data centers. Management projects a 20% annual growth in earnings per share over the next five years, with an expected total of $47 billion in free cash flow throughout this timeframe.
Currently trading at $57.67, Brookfield estimates its intrinsic value at $84 per share and projects a rise to $176 per share by 2029. While investments always carry risks, Brookfield’s solid historical performance enhances the credibility of its targets, positioning it as an enticing investment for many.
