Ackman’s best ideas still look attractive at today’s prices.

Bill Ackman likes to keep his hedge fund, Pershing Square Capital, invested in just a few high-conviction companies. Indeed, it’s hard to generate market-beating returns if your investments are spread so thin your portfolio looks pretty similar to the overall stock market. But Ackman and his team hold stock in just 10 publicly traded companies.

Ackman is willing to deploy billions of dollars at once to accumulate shares in his highest-conviction bets, and he likes to hold those stocks for a long time. As such, Pershing Square’s monthly investor updates and quarterly disclosures with the SEC can be a great source of investing ideas. And Ackman’s three best ideas right now account for more than half of Pershing Square’s publicly traded portfolio.

Here are Ackman’s top three holdings.

Image source: Getty Images.

1. Uber (19.7% of portfolio)

Ackman accumulated 30.3 million shares of Uber (UBER 1.65%) at the start of 2025 before announcing the new position on X in early February. Pershing Square’s first-quarter 13-F filing revealed it was, in fact, Pershing Square’s largest position.

That position has only gotten bigger as Uber stock has climbed about 55% since the start of the year, reaching a new all-time high. A large part of that rally came after Ackman announced Pershing Square’s position.

But the long-term prospects look good for Uber, too. While some see autonomous vehicles as a threat to Uber’s ride-sharing business, it could turn out to be an opportunity for the company. That’s because Uber has, by far, the largest customer base for taxi services. It counted 170 million total monthly active users as of the end of the first quarter. And its market share is growing thanks to the network effect and giving users more ways to use its service.

That’s an incredible asset that most companies building autonomous vehicles would love to tap into. Alphabet‘s Waymo, the leading self-driving car company, has already inked several deals with Uber to operate in multiple cities.

In the meantime, Uber is executing on its financial goals. Gross bookings increased 14% last quarter. With improved operating leverage, the company managed to grow earnings before interest, taxes, depreciation, and amortization (EBITDA) 35%. With limited cash expenditures, it managed to produce 66% growth in free cash flow (converting over 100% of EBITDA).

Despite the strong run-up in price, shares of Uber look fairly valued at an enterprise value less than 23 times forward EBITDA estimates as of this writing. Considering management expects EBITDA growth above 30% over the next couple of years, that’s a very attractive price.

2. Brookfield (18.4%)

Ackman has built a position in Canadian alternative asset manager Brookfield (BN 2.58%)over the last four quarters. On top of asset management, the company operates businesses across several segments, including real estate, renewable power facilities, and infrastructure. Those cash-flowing businesses give it capital to invest in additional operating businesses.

Brookfield Wealth Solutions, its insurance business, provides additional capital via float for management to invest. That’s a strategy Warren Buffett used to grow Berkshire Hathaway, and one Ackman has expressed interest in himself.

Overall, Brookfield has grown distributable earnings per share at an average rate of 19% per year over the past five years. There’s no reason to expect that rate to slow significantly over the next few years, as management uses its considerable cash flows from asset management, insurance, and its operating businesses to buy profitable assets while returning additional cash to shareholders through buybacks. Management is targeting $6.33 in earnings per share by 2029, a 16% compound annual growth rate. It grew 30% in the first quarter.

Despite the strong growth expectations, the stock trades for just 19 times trailing earnings per share. That’s well below comparable comparable companies and appears to undervalue the growth potential of the business.

3. Howard Hughes Holdings (13.3%)

After a deal to acquire an increased stake in Howard Hughes (HHH -0.12%) through Pershing Square in May, Ackman now serves (once again) as executive chairman for the company’s board. Ackman put up $900 million of Pershing Square’s cash in exchange for 9 million shares of the stock, giving it a 46.9% economic stake in the company and 40% control of the vote.

The bigger part of the deal is that Ackman is able to take Howard Hughes and transform its existing real estate operations into a diversified holding company a la Berkshire Hathaway. Ackman has said one of his first moves will be to buy or build an insurance business.

In the meantime, Howard Hughes’ core business looks undervalued. Management estimated the net asset value of its master planned communities, condos, and operating assets (minus its corporate debt) at about $5.8 billion per share at the end of last year. The $900 million cash infusion from Pershing Square’s investment will bring its net asset value even higher, but the company’s total market cap sits at just $4 billion as of this writing.

Howard Hughes generates strong operating cash flow through the sale of its plots to homebuilders and rental income from its commercial and multifamily buildings. Since it controls the entire acreage of its master planned communities, it’s able to build just enough to meet demand for office buildings and multifamily housing, ensuring strong returns on capital spending. The rest of its cash can go toward new investments, especially now as a diversified holding company.

The new structure does come with some drawbacks, though. Howard Hughes will have to pay Pershing Square $3.75 million every quarter on top of a 0.375% incentive fee for increasing the value of the business above inflation. That said, Howard Hughes opens the door for average investors to put their money to work directly with Ackman and gain access to private deals he might make instead of following along with Pershing Square’s public moves. And with the stock trading below management’s estimate for net asset value, it may be a good opportunity for investors.

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• President Donald Trump has long wanted to reprivatize Fannie Mae and Freddie Mac, which have been under government control ever since they needed a $191 billion bailout during the Global Financial Crisis. For Wharton finance and real estate professor Susan Wachter, heavy regulation of utilities and insurance carriers is the best model for the mortgage giants.

No members of the Fortune 500 saw their shares surge last year like Fannie Mae and Freddie Mac did. Hedge funds who bought nearly worthless stakes in the mortgage giants after the Global Financial Crisis could stand to make billions if President Donald Trump fulfills his goal to take both firms public.

Several experts, meanwhile, remain focused on how to free Fannie and Freddie from government control without repeating the mistakes that helped lead to the 2008 meltdown.

Uncle Sam bailed out both government-sponsored enterprises, which provide crucial liquidity to housing markets, when both teetered on the brink of insolvency. After being delisted from the New York Stock Exchange in 2010, their shares continued to trade over the counter.

Billionaire hedge fund owners Bill Ackman and John Paulson are among those who snapped them up, betting the U.S. government would eventually make good on its pledge to reprivatize both agencies. With Trump raising the issue on his social media platform last month, it hasn’t gone unnoticed that both men have backed the president.

“The subtext of the media stories is that [Fannie and Freddie] shareholders, which include many supporters of [Trump], are looking for a gift from the President,” Ackman wrote in a lengthy post on X last week. “Nothing could be further from the truth.”

Paulson did not respond to a request for comment.  

A ‘utility model’ for Fannie and Freddie

Ackman, the CEO of hedge fund Pershing Square, has said ending government conservatorship could reward taxpayers while maintaining widespread home availability and affordability.

A host of thorny issues need to be sorted out before executing what would be the largest public offerings in history, many experts warn. Those debates aside, however, there’s an even weightier question about how the biggest players in American mortgage markets should operate as private companies.

For Susan Wachter, a professor of real estate and finance at the University of Pennsylvania’s Wharton School, the heavily regulated model for utilities—where state agencies decide how much companies can charge consumers—has proven its worth. She also sees parallels to the insurance industry, where regulators oversee rates to protect customers while also preventing risk from being underpriced. 

“It helps insure against another bailout,” she told Fortune, “and it helps maintain profits in the long run.”

Fannie and Freddie support 70% of America’s mortgage market, according to the National Association of Realtors, by purchasing mortgages from lenders and packaging them into mortgage-backed securities, freeing up originators to make more loans. They also guarantee payment on those securities if borrowers default, charging a premium for providing that insurance.

There are many explanations floated for why the housing bubble spelled doom for Fannie and Freddie’s balance sheets. The main problem, Wachter said, is that when housing prices tanked by about 20% in 2008, many of the loans Fannie and Freddie insured were “underwater,” meaning the value of the homes securing those packaged loans had fallen below the amount borrowers owed.

As they competed for business, Fannie and Freddie had not collected adequate fees to compensate for taking on this risk, Wachter said.

“If these entities go private without oversight, there is a risk of a race to the bottom,” she said.

Both institutions also got into trouble by buying large amounts of riskier, private-label mortgage-backed securities to hold as investments. They financed these purchases with cheap debt accessible thanks to the so-called “implicit guarantee,” or the belief among investors—which ultimately proved correct—that the government wouldn’t let the enterprises fail.

In short, Fannie and Freddie both juiced profits by “chasing yield,” becoming what many commentators called the world’s largest hedge funds helped by what was, in effect, a government subsidy. Taxpayers paid the price when these bets on risky assets collapsed.  

A path forward

Wachter believes reforms instituted under conservatorship have made Fannie and Freddie much more resilient while remaining relatively effective at encouraging middle-class homeownership.

The early days of the COVID-19 pandemic provided a major test, she said, when a massive spike in unemployment briefly sparked fears of another mortgage market collapse.

“Fannie and Freddie could go on, continue to lend,” said Wachter, co-director of the Penn Institute for Urban Research, “even as it offered forbearance to borrowers.”

Both enterprises remain central to a fixture of the American dream: the 30-year, fixed-rate, prepayable mortgage. Of course, some question whether continuing to favor that New Deal-era invention is still worth the cost.

Last month, Trump said the U.S. government “will keep its implicit GUARANTEES,” though what he exactly meant remains unclear. Continuing to federally back Fannie and Freddie as private firms would spark fears about a repeat of 2008. Put them completely on their own, however, and mortgage rates likely go higher as investors demand compensation for taking on more risk when buying both enterprises’ packaged loans.

“But I think what that debate misses is that if you keep the government backing to these giants, you are going to restrict [the] private market and private competition,” Amit Seru, a professor of finance at the Stanford Graduate School of Business, told Fortune. “And that means giving up on lots of innovative products.”

For example, the U.S. housing market’s pandemic boom eventually stalled, partially due to what has been dubbed the “lock-in effect.” Existing homeowners who bought before mortgage rates skyrocketed in 2022, when the Federal Reserve dramatically hiked borrowing costs to fight inflation, have been reluctant to sell and take out a new mortgage at a higher rate. 

In many European countries, Seru noted, that’s less of a problem thanks to products that allow people to sell their house, buy a new one, and take their existing mortgage with them. That’s typically not possible in the U.S., he said, because Fannie and Freddie’s dominance means originators can’t stray too far from the industry standard.

“No one can compete with the government,” said Seru, a senior fellow at the Hoover Institution, a conservative-leaning think tank.

Ackman, meanwhile, sees Fannie and Freddie remaining at the core of the American mortgage market. To facilitate a public offering, Ackman has suggested the Treasury cancel its roughly $350 billion worth of senior preferred shares, meaning it would forgive its right to repayment and dividends. That would remove a massive liability from the enterprises’ balance sheets, making them much more attractive to private investors. 

But the government wouldn’t get wiped out. Separate from the preferred shares, it also has warrants that give it the right to buy nearly four-fifths of Fannie and Freddie’s common stock at one-thousandth of a cent, or $0.00001, per share. Fannie stock currently trades at about $9, and Freddie is around $7.

If Washington cancelled its entire senior preferred stake, the value of the warrants would increase by roughly $280 billion.

That would be the most lucrative outcome for Ackman, who alternatively could see the value of his common stock diluted to almost zero if Fannie and Freddie go public without the Treasury cancelling most of its senior stake.

“[Fannie and Freddie] shareholders don’t have their hands out,” Ackman wrote in his social media post last week. “The opposite is the case. Hundreds of billions of dollars of funds that belonged to [Fannie and Freddie] were unilaterally taken by the government years ago, and the companies never received credit for these payments.”

The U.S. government has collected at least $301 billion in profits from Fannie and Freddie, earning nearly 60% on the $191 billion it paid to bail the mortgage giants out in 2008. Ackman says his plan could pave the way for a similarly sized payday for Uncle Sam in a much shorter window.

Wachter and Seru don’t necessarily disagree. Still, they ultimately see the government’s senior preferred shares as a sideshow compared to bigger questions about what Fannie and Freddie should look like as private enterprises.

“There is a lot at stake here,” Seru said, “which I think goes well beyond Ackman’s investments.”

This story was originally featured on Fortune.com

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