Key Highlights
- Pershing Square Capital’s recent 13-F disclosure reveals three major additions: Netflix, Visa, and Mastercard, bringing total holdings to 14 stocks
- Netflix stock has declined 32% year-over-year, with current P/E of 26 compared to historical five-year average of 36
- Since its 2004 inception, Ackman’s fund has posted 16% annualized returns, outperforming the broader market’s 11% average
- Both Visa and Mastercard show P/E multiples of approximately 33, hovering at or beneath their five-year historical averages
- Digital currencies pose emerging competitive risks to traditional payment processors like Visa and Mastercard
In a significant portfolio reshuffling, Bill Ackman—the billionaire investor who leads Pershing Square Capital Management—has disclosed three notable acquisitions in his firm’s most recent 13-F regulatory filing. The activist investor added streaming giant Netflix alongside payment processing powerhouses Visa and Mastercard to his famously concentrated 14-stock investment portfolio.
Since its January 2004 launch, Pershing Square has achieved remarkable cumulative net returns totaling 2,644%. This translates to approximately 16% in annualized gains, significantly surpassing the stock market’s 11% average performance during the identical timeframe.
The fund’s top holdings currently feature Uber valued at $2.5 billion, Microsoft at $2.3 billion, and Amazon at $2.0 billion. Among the new additions, Netflix represents a $934 million position, while both Visa and Mastercard each account for roughly $1.1 billion in market value.
Ackman’s investment philosophy centers on identifying undervalued companies and maintaining extended holding periods. This value-oriented, patient approach appears to inform his rationale for these three fresh portfolio entries.
Netflix: A 32% Decline Creates Value Opportunity?
The streaming platform’s shares have experienced approximately 32% depreciation over the trailing twelve months. Netflix currently commands a P/E multiple of 26, substantially lower than its five-year historical average of 36.
Data from GuruFocus indicates Netflix achieves a GF Score of 90 out of 100, earning maximum ratings in both profitability and growth categories. The platform’s calculated intrinsic value stands at $101.08, while recent trading activity occurred near $79.84, implying the stock potentially trades at a 21% markdown to fair value.
The entertainment company boasts a global subscriber base exceeding 300 million and continues pursuing international expansion opportunities. Management has introduced advertising-supported subscription options as an additional revenue generation strategy.
While fundamental metrics appear robust, the stock registers a momentum score of merely 2 out of 10, indicating near-term headwinds. Corporate insiders have also executed over $49 million in stock sales during the most recent three-month period.
Visa and Mastercard: Established Leaders Facing Emerging Challenges
Visa currently trades at a P/E multiple of 33, approximating its five-year historical average of 32. The payment processor’s shares have appreciated 17% year-over-year and have delivered average annual returns approaching 22% across fifteen years.
Mastercard similarly commands a P/E ratio of 33, modestly beneath its five-year average of 37. The company’s long-term performance mirrors Visa’s with 22% average annual returns over fifteen years, though recent performance shows just 1.6% appreciation over the past year.
These two corporations handle the overwhelming majority of worldwide electronic payment transactions and are positioned as long-term beneficiaries of the ongoing digitization of financial commerce.
Cryptocurrency represents an identified competitive threat to both payment networks. Additionally, regulatory authorities may intensify oversight given the duopolistic market position these two companies maintain within the payments ecosystem.
According to Forbes, Ackman’s personal net worth has recently climbed to $8.9 billion.
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