Bill Ackman's Portfolio Shift: Divesting Underperformers, Doubling Down on Tech and Infrastructure Leaders

Strategic Realignment at Pershing Square

Billionaire investor Bill Ackman has long built his reputation on patient capital and deep conviction investing. His hedge fund, Pershing Square Capital Management, typically maintains a concentrated portfolio of just a dozen or so high-conviction positions, seeking turnaround opportunities and undervalued assets. However, even the most disciplined investors must occasionally reassess when market conditions and company fundamentals shift dramatically.

In a significant portfolio restructuring, Pershing Square has exited two major holdings that failed to deliver expected results throughout 2025, allowing the fund to refocus capital on its most promising opportunities heading into 2026.

The Restaurant Giant’s Stumble: Chipotle’s Margin Collapse

After nearly a decade of patient stewardship, Bill Ackman’s fund finally liquidated its remaining stake in Chipotle Mexican Grill (CMG) this quarter. The initial thesis looked compelling when Pershing Square established its position in 2016, betting the company could recover from E. coli contamination crises that had devastated its reputation and sales.

For years, the investment thesis appeared vindicated. Under CEO Brian Niccol, Chipotle delivered impressive comparable store sales averaging 9% annually from late 2023 through 2024—a remarkable turnaround that justified holding the position. Yet 2025 exposed cracks in the foundation. Comparable sales declined during the first half of the year, and third-quarter momentum proved anemic at just 0.3% growth. Management’s guidance for Q4 painted an even darker picture, forecasting mid-single-digit comparable sales declines.

The real pain point emerged on the margin side. With comparable sales weakening, management lacks pricing power to offset years of rising food costs. The result has been substantial margin compression—operating margins contracted 800 basis points through September to just 16.9%. While the stock’s current valuation of approximately 25x forward earnings appears historically reasonable by traditional metrics, Pershing Square’s analysts lacked conviction that Chipotle could reignite growth momentum needed to justify continued ownership.

Nike’s Slow-Motion Turnaround: When Headwinds Prove Too Strong

Bill Ackman also took a calculated bet on athletic apparel giant Nike (NKE) last year, seeing promise in the appointment of veteran executive Elliott Hill to orchestrate a comprehensive turnaround. The fund’s confidence ran so deep that it converted stock holdings into deep in-the-money call options, essentially doubling down while freeing capital for redeployment elsewhere.

That conviction evaporated this quarter. Pershing Square exited the options contracts entirely, accepting a 30% loss on the position accumulated over roughly eighteen months. The decision reflects growing skepticism about Nike’s ability to restore historical profit margins that made the brand a Wall Street favorite before the pandemic.

Nike’s core problem mirrors a familiar pattern across manufacturing-dependent companies: profitability faces multiple simultaneous headwinds. The Trump administration’s tariff implementation threatens to crush margins despite management’s optimistic assertions about cost mitigation. Additionally, intensifying competition within athletic wear limits pricing power indefinitely. The turnaround progress itself has been disappointing—fiscal 2025 revenues fell 10%, and EBIT margins shrank dramatically from 12.7% to 8.2%.

Management projects margin recovery in fiscal 2026, but significant ambiguity surrounds long-term run rates. The difference between achieving 10% margins versus 13-14% margins could dramatically impact shareholder value. With this uncertainty, Pershing Square concluded the risk-reward no longer justified capital allocation to Nike.

Concentrated Conviction: Where Bill Ackman’s Capital Flows

The exits from Chipotle and Nike have compressed Pershing Square’s portfolio into even greater concentration. Two holdings now dominate the equity allocation: Alphabet (GOOGL/GOOG) and Brookfield (BN).

Alphabet’s Unfolding AI Dominance

Bill Ackman’s fund maintained its Alphabet position throughout 2025 despite the stock’s considerable appreciation. The conviction appears justified given recent catalysts and structural advantages. An antitrust ruling delivered substantially more lenient remedies than the market had feared, removing a significant overhang. Coupled with robust earnings and accelerating cloud computing adoption, shares climbed significantly.

Alphabet operates as a leading provider of AI services spanning both software infrastructure and custom hardware solutions. The company’s recently released Gemini 3.0 foundation model demonstrated exceptional performance against industry benchmarks, while uptake of proprietary AI accelerators has accelerated. More importantly, Alphabet systematically integrates these large language models into its core search engine, advertising apparatus, and YouTube ecosystem, creating multiple revenue acceleration pathways.

Despite these developments and earnings multiples expanding into the upper 20s, the stock retains compelling value. Google’s search revenue continues growing despite theoretical threats from AI chatbots, while the cloud computing division exhibits powerful operating leverage as it scales. This momentum should sustain well into 2026 and beyond.

Brookfield’s Infrastructure Yield Play

Brookfield (BN) represents the fund’s other major conviction holding. The investment thesis centers on forthcoming capital deployment and fee generation opportunities. Subsidiary Brookfield Asset Management plans launching several large investment funds in 2026, which should attract substantial capital commitments from global institutional investors.

The real earnings driver emerges through carried interest recognition. Management projects generating $6 billion in carried interest over the next three years—a dramatic acceleration compared to just $4 billion accumulated over the previous decade. As newly launched funds mature, carried interest generation should accelerate further. Management’s guidance targeting 25% compound annual earnings growth over five years reflects confidence in this capital-intensive business model.

At approximately 15x forward earnings, Brookfield appears substantially undervalued relative to growth prospects. Pershing Square’s confidence remains so high that Alphabet and Brookfield combined represent roughly 40% of remaining equity portfolio weight—an unusual concentration that underscores Bill Ackman’s conviction these two holdings should drive outsized returns through 2026 and beyond.