Bill Ackman, a billionaire investor, has made significant investments in Nike and Brookfield through his hedge fund, Pershing Square. In the second and third quarters of the calendar year, Ackman bought 13.2 million shares of Nike, spending over $1 billion. This move came after Nike’s fiscal 2024 fourth-quarter earnings and fiscal 2025 outlook disappointed the market in June 2024.
Despite facing challenges, Nike’s gross margin improved, and the company expects growth in both gross margin and operating margin over time. Ackman believes in Nike’s strong brand, growth opportunities in China, and premium pricing ability. Brookfield, a diverse company managing businesses across various sectors, received an influx of about $1.2 billion from Pershing Square in the third quarter.
Ackman’s confidence in Brookfield stems from its strong track record and ambitious growth plans. The company projects substantial free cash flow growth and aims to utilize this cash for further investments, repurchases, and dividends.
Ackman invests heavily in Brookfield
Brookfield’s management believes that the stock is currently undervalued and anticipates significant appreciation over the next five years. Ackman’s investments reflect his strategy of identifying undervalued stocks with strong growth potential and holding them until their market value aligns with their intrinsic value. Both Nike and Brookfield are positioned for long-term growth, making them compelling additions to Pershing Square’s portfolio.
Other top hedge fund managers, like Daniel Loeb of Third Point Capital, have also invested in Brookfield Corporation, seeing its value and potential for future growth. Brookfield has delivered exceptional returns over the past decade and aims to continue this trend by adapting to the changing world and investing in areas such as the energy transition and data centers. The company’s management expects to grow earnings per share by 20% annually over the next five years and generate a total of $47 billion in free cash flow during this period.
While shares currently trade at $57.67, Brookfield believes they have an intrinsic value of $84 per share today and could reach $176 per share by 2029. Although there are no guarantees, Brookfield’s excellent track record lends credibility to its goals, making it an attractive investment opportunity for investors.
