Need to Know: Why hedge-fund manager Bill Ackman says he dumped Berkshire Hathaway but held on to these winners

This post was originally published on this site

Get ready for a busy Thursday. China lawmakers approved the Hong Kong national security law, which could trigger some promised White House retaliation, while technology stocks are pointing lower as investors monitor a White House/Twitter spat, and another jobless claims number is headed our way. Otherwise the direction is up.

We’ve got a meaty call of the day from Pershing Square Capital Management hedge-fund manager Bill Ackman, who told investors on a call on Wednesday that he is dumping shares in Warren Buffett’s Berkshire Hathaway BRK.A, +3.02% BRK.B, +3.01%.

While Buffett is always the main attraction in a room, Ackman said they “still like what we own,” and offers up plenty of ideas for investors who have “differentiated between companies that are survivors [of the pandemic] that in some cases will benefit from a competitive standpoint” due to the virus.

Ackman said they bought more stock in life sciences and equipment group Agilent A, +0.05%. And they upped a stake of Restaurant Brands International QSR, +2.13% QSR, +2.13%, owner of Tim Hortons, Burger King and Popeye’s, by more than 50%. Pershing Square said as budget-conscious consumers trade down due to the pandemic, they’ll head to cheaper eateries like those.

Pershing is sticking to burrito group Chipotle CMG, -2.65% for its “fortress balance sheet” and zero debt. Their stake in home-improvement retailer Lowe’s LOW, +3.57% also rose by just over 50% and Pershing likes that as a longer-term beneficiary from the pandemic. Hilton HLT, +1.78% got some high praise, though investors will need to be patient, for its “resilient business model,” and the fact the company is working hard on technology, such as keyless rooms to bring back its clients.

Then there is Starbucks SBUX, +1.08%, where Pershing completely rebuilt a stake. The coffee giant has seen a huge COVID-19 hit, but will “weather the current storm and emerge even stronger.” Pershing also bought more real-estate development company Howard Hughes HHC, +6.80%, which will face some tough times due to the crisis. On the upside, people still value homeownership now, said Ackman.

The market

Nasdaq COMP, +0.77% futures are down, while Dow YM00, +0.61% and S&P SPX, +1.48% futures are rising. European stocks SXXP, +1.15% are higher. Hong Kong’s Hang Seng HSI, -0.72% fell on China tensions. Oil prices CL.1, +0.06% are down after data showed a supply rise.

The chart

This Goldman Sachs chart shows the recovering, but bumpy trajectory for China consumer activity — includes hotels, movie, theater, retail sales, airline seat miles — post pandemic, versus the U.S., where it is obviously deeply depressed. Is China the shape of things to come?

Goldman Sachs Global Investment Research

The buzz

Another 2.12 million Americans are expected to have filed unemployment benefits in data due later, while we’ll also get an update to first-quarter gross domestic product, durable goods orders and pending home sales.

Earnings are ahead from retailers Dollar General DG, +3.79% and Dollar Tree DLTR, +2.73%, with Costco COST, +0.39% and Nordstrom JWN, +16.83% due after the bell, alongside Salesforce.

Twitter TWTR, -2.76% and Facebook FB, -1.31% shares are down in premarket, as the market waits to see what kind of executive order is coming from President Donald Trump linked to a spat with Twitter, which has started fact-checking him. Weighing on that, Facebook Chief Executive Mark Zuckerberg says companies shouldn’t be acting as truth police. Twitter Chief Executive Jack Dorsey responded that pointing out incorrect information “does not make us an arbiter of truth.”

The tweet

Another man was shot dead amid protests and riots in Minnesota over the death of George Floyd at the hands of police.

Random reads

Americans may be unwittingly throwing away government stimulus checks.

Bird-watching man involved in Central Park altercation over a dog opens up.

Study says up to 80% of COVID-19 infections are asymptomatic.

Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. Be sure to check the Need to Know item. The emailed version will be sent out at about 7:30 a.m. Eastern.

Follow MarketWatch on Twitter, Instagram, Facebook.

Add Comment