Billionaire investor Bill Ackman, through his hedge fund Pershing Square Capital Management, has committed a substantial 21% of his $13.7 billion portfolio to Uber Technologies. This high-conviction bet underscores Ackman’s core investment philosophy of identifying dominant, free cash flow-generative businesses with strong network effects and capable management, signaling a long-term belief in Uber’s continued growth and profitability.
In the world of high-stakes finance, few names command as much attention as Bill Ackman, the founder and CEO of Pershing Square Capital Management. Known for his activist investing approach and concentrated portfolio strategy, Ackman’s latest move has put Uber Technologies (NYSE: UBER) squarely in the spotlight as his hedge fund’s largest holding. As of June 30, a whopping 21% of Pershing Square’s $13.7 billion portfolio is allocated to the ride-sharing and food delivery giant, a testament to Ackman’s deep belief in the company’s long-term potential, as reported by The Motley Fool.
This significant stake in Uber isn’t just another investment; it’s a profound reflection of Ackman’s disciplined investment philosophy, honed over two decades since Pershing Square’s founding in 2003. His strategy emphasizes buying attractively priced shares in what he and his team identify as high-quality companies, holding these positions for several years, and often working with management to enhance performance.
Understanding Ackman’s Investment ‘Commandments’
Ackman’s investment approach, though often characterized by aggressive contrarian moves like short-selling, shares fundamental similarities with value investors such as Warren Buffett. He operates on a set of clear “commandments” that guide his selection of companies. These principles ensure he focuses on businesses with enduring competitive advantages and predictable financial performance, minimizing speculative risk for long-term gains.
His three core investment tenets include:
- Simple, Predictable, Free Cash Flow Generative, Dominant Business: Ackman seeks companies that are easy to understand, operate in stable environments, and consistently generate significant free cash flow. They must hold a dominant position within their industry, ensuring pricing power and a strong competitive moat.
- High Return on Capital, Strong Balance Sheet, Limited Need for Outside Funding: The ideal investment is self-sustaining, capable of funding its own growth and expansion without heavy reliance on debt or external capital. This indicates a robust business model where demand for products or services naturally drives profitability.
- Limited Exposure to Uncontrollable Risks, Excellent Management, and Good Governance: Ackman prefers businesses that are not overly susceptible to external, uncontrollable variables. Furthermore, he places immense value on strong leadership and governance, believing that capable management teams are crucial for navigating challenges and maximizing shareholder value.
Uber: A Perfect Fit for the Philosophy
Given these strict criteria, Uber’s ascent to the top of Pershing Square’s portfolio makes strategic sense. Uber operates as a powerful marketplace, effectively connecting a fragmented base of riders and hungry consumers with drivers and restaurants. This aggregation creates a potent network effect, where the platform becomes increasingly valuable as more users (both supply and demand) join, solidifying its competitive moat.
Ackman has publicly praised CEO Dara Khosrowshahi for successfully transforming Uber into a profitable entity that consistently generates free cash flow. The inherent scalability of Uber’s business model means that each additional ride or delivery contributes to higher margins, a key factor in its improved bottom-line performance. In the second quarter ended June 30, Uber’s operating income reached $1.5 billion, marking an impressive 82% year-over-year increase.
Management’s outlook for 2024 to 2027 projects adjusted EBITDA compound annual growth in the high 30s to 40%, a forecast that aligns with Pershing Square’s own investment thesis. With 180 million monthly active users and double-digit annual revenue growth, Uber demonstrates the characteristics of a dominant, cash-generating business with strong management, perfectly aligning with Ackman’s commandments.
The Evolution of Pershing Square’s Portfolio
Ackman’s recent portfolio adjustments highlight a consistent focus on consumer-facing businesses and technology, even as specific holdings change. Looking back to 2019, Pershing Square posted a stellar 58.1% return, fueled by bets on companies like Chipotle Mexican Grill, Restaurant Brands International, Hilton Worldwide Holdings, and Lowe’s. Even a significant stake in Warren Buffett’s Berkshire Hathaway contributed to its outperformance that year, as detailed in a Business Insider report.
By March 31, 2025, while companies like Chipotle and Restaurant Brands International remained, new additions like Uber Technologies, Alphabet Class A, and Brookfield Corporation diversified the portfolio. Notable changes included selling out of Nike and reducing positions in Alphabet Class C and Chipotle, while adding Hertz Global. This dynamic, yet focused, approach is evident in the detailed filings, such as those found on the SEC EDGAR database for Pershing Square.
The overall portfolio value, reported at $11.93 billion as of March 31, 2025, with an impressive 3-year annualized return of 22.38%, underscores Pershing Square’s ability to identify and capitalize on long-term trends and robust business models. Ackman’s knack for strategic timing was famously demonstrated by his $27 million hedge against the 2020 stock market crash, which generated $2.6 billion in less than a month, showcasing his keen understanding of market dynamics.
What This Means for the Everyday Investor
While most individual investors lack the capital or influence of a billionaire hedge fund manager, Ackman’s “commandments” offer valuable lessons. His strategy of focusing on dominant, easy-to-understand, cash-generating businesses with strong management and limited external risks is highly applicable to personal portfolios. By prioritizing quality over speculation, investors can reduce the risk of significant losses and set themselves up for consistent, long-term gains.
For those considering an investment in Uber, even after its strong performance with shares climbing 57% in 2025 (as of October 14), its forward price-to-earnings ratio of 23.2 suggests it remains reasonably priced compared to the S&P 500 index. Ackman’s substantial bet indicates confidence that the company’s scalable model and network effect will continue to drive earnings growth in the years ahead.
Ultimately, Ackman’s concentrated position in Uber is a powerful signal. It reflects a meticulous analysis of a company that, in his view, embodies the ideal characteristics for a long-term, high-conviction investment. For the fan community at onlytrustedinfo.com, this move serves as a compelling case study in applying rigorous value investing principles to a high-growth technology company.
