Billionaire Bill Ackman is hunting for bargains for his FTSE 100 trust

Pershing Square is a FTSE 100 investment trust that offers exposure to the successful stock-picking strategies of Bill Ackman’s New York-based hedge fund. This makes it a very rare Footsie stock.

Outspoken billionaire Ackman went viral recently after telling younger men to use the line âMay I meet you?â to initiate conversations with women. This spawned a digital avalanche of memes (many not as polite as the question itself).

While the quality of Ackman’s dating advice is up for debate, his investing record certainly isn’t. You don’t build a net worth of $9.3bn without skill.

For example, his big bet on Alphabet stock made throughout the first half of 2023 has paid off handsomely. Shares of the AI tech giant have rocketed 130% in the past two years. Other timely purchases include Uber in January and Amazon in April.

This outperformance is reflected in the Pershing Square share price, which is up nearly 400% since the start of 2019.

Therefore, it was interesting to see Ackman talking to Fox Business last week. Asked whether he’s got his eye on anything for 2026, he said it’s currently a very good market for stock-pickers.

We’re seeing some very high-quality businesses showing up at very attractive prices…We’ll absolutely be putting money to work… We’ve actually got approaching 15% cash, and we’re looking at a number of very interesting things. Bill Ackman.

What might this star hedge fund manager have his eye on?

Putting money to work

Ackman is known for buying high-quality, cash-rich compounders with strong brands — usually businesses that are temporarily out of favour.

One that I think might fit the bill right now is Meta Platforms (NASDAQ:META). As the parent of Facebook, Instagram and WhatsApp, it’s obviously a high-quality business that owns rock-solid brands. It has some of the highest cash flows on the planet.

Moreover, the share price is down 20% since August, putting the stock on a forward price-to-earnings (P/E) ratio of 21. That makes it the cheapest stock in the ‘Magnificent Seven’, at least on this metric.

Eye-watering sums

Of course, I could be totally wrong, and it’s worth noting that Ackman has previously criticised the divisive nature of social media algorithms. So he might want nothing to do with a social media giant that has 3.54bn daily active users globally.

Moreover, Meta is investing massive sums building out AI infrastructure. In Q3, free cash flow fell 32% year on year to $10.6bn. In fact, the sums are so eye-watering that Meta has turned to debt to fund its spending plans. Again, this might put Pershing off the stock.

Another potential stock

A second option might be Salesforce, the enterprise software leader that also generates tonnes of cash. The stock’s down 31% year to date because investors are worried about the company’s competitive position in the AI age.

While there’s some risk here, as a world of AI agents might mean less software licences, Salesforce moved quickly to build the first enterprise AI agent platform in late 2024. By July, it had already signed over 12,500 deals.

The stock’s forward P/E is just 18, which might be enough to tempt Ackman. Personally, I think both Meta and Salesforce are worth considering right now, especially if the billionaire investor starts scooping either up.

The post Billionaire Bill Ackman is hunting for bargains for his FTSE 100 trust appeared first on The Motley Fool UK.

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Ben McPoland has positions in Pershing Square and Uber Technologies. The Motley Fool UK has recommended Alphabet, Amazon, Meta Platforms, and Uber Technologies. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.