Bill Ackman Just Disclosed 6 New Positions, and 4 of Them Are Financial Stocks. Here's What He's Betting On.

Star investor Bill Ackman of Pershing Square Capital Management (NYSE:PS) is well known for being highly selective with his company’s investments. Pershing’s equity portfolio is always considerably smaller than those of many peer investment managers. So Ackman and his team make news whenever they buy into, or sell out of, a single stock.

Headlines were made, then, when Pershing Square revealed, concurrently with its second-quarter earnings report, that it had taken positions in six new stocks. Four of those half-dozen were top names in the financial industry. Here’s the reasoning behind the move, and a glance at the quartet.

Image source: Getty Images.

Financial firepower

To cut quickly to the chase, the four were payment card titans Visa (NYSE:V) and Mastercard (NYSE:MA), data and analysis specialist S&P Global (NYSE:SPGI), and securities market operator and associated services provider Intercontinental Exchange (NYSE:ICE).

(For the curious, the remaining two fresh, non-financial stock buys were Netflix (NASDAQ:NFLX) and pharmaceutical and medical device company Alcon (NYSE:ALC)).

One admirable thing about Ackman is that he’s eloquent and hardly mysterious about what appeals to him and his company about certain stocks. In the shareholder letter accompanying the second-quarter report, the Pershing Square founder and CEO went into admirable detail regarding what he likes about the six newcomers.

Let’s focus on the financials. With Mastercard and Visa, Ackman was drawn to what he describes as “capital-light toll takers.” That’s because both card giants are what’s known in that business as “open-loop” operators, in that they only facilitate transactions on their networks; other entities, mainly banks, are the businesses actually extending the credit (or are the source of the utilized funds, in the case of debit cards).

Mastercard and Visa, then, take on no risk themselves and instead act as middlemen, earning small fees from every transaction. Since many people around the world hold cards branded by one or both companies, their volumes are considerable.

Ackman also effectively wrote that the pair is a good hedge against inflation, should it remain an issue in the economy. Again, the two are volume-based businesses, so higher consumer prices mean they earn higher fees. Finally, he said that their value-added services, such as fraud detection and authentication solutions, are, well, adding considerable value to their operations.

Turning to S&P Global, this one’s a bit of a cheat — Pershing Square actually owned it previously, back in the good old days of 2017. Regardless, Ackman waxed enthusiastic about the company’s three dominant businesses — ratings, indexes, and Platts. Respectively, S&P Global earns revenue from credit ratings, its famous family of securities market gauges (including the benchmark S&P 500 index), and Platts’ solid position as a price reporting agency for the commodities and energy markets.

Rounding out the quartet, we have Intercontinental Exchange (Pershing Square admitted this stock was actually purchased just after the end of the second quarter). The company is dominant in futures and options exchanges, particularly with its gold-standard ICE Brent Futures contract, which is widely used for crude oil trading worldwide. The company doesn’t just rest on these laurels; it also has a pair of high-margin businesses in the smaller but important fixed income and data services, and mortgage technology segments.

Like the other three stocks, Intercontinental Exchange is inflation-resistant. Even if prices continue to rise, investors will still trade instruments like crude oil contracts and stock options. And they’ll require the data that supports such investment decisions.

A closely-watched quartet

It’s interesting that in the letter, Ackman took pains to write that Pershing Square has tracked each of the four stocks for quite a long time (decades, in the case of S&P Global). Every one of the quartet has posted growth, at times very robust, for years. Taking Mastercard as an example, the already-huge company managed to nearly double annual revenue (to almost $33 billion) from 2021 to 2025.

I don’t always agree with Ackman’s takes or his enthusiasm for certain stocks. In this instance, though, I believe he’s picked four long-term winners, and Pershing Square will do very well with them in its portfolio.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Mastercard, Netflix, S&P Global, and Visa. The Motley Fool recommends Intercontinental Exchange. The Motley Fool has a disclosure policy.