### Billionaire Bill Ackman Invests $2.2 Billion in Nike and Brookfield

Renowned investor Bill Ackman has recently made significant moves in the stock market through his hedge fund, Pershing Square, by establishing two new major stock positions. Over the past two quarters, Ackman has invested approximately $2.2 billion in Nike and Brookfield, betting on their long-term potential despite current challenges.

Ackman initially invested about $275 million in Nike during the second quarter but significantly increased his stake in the third quarter, adding 13.2 million shares and bringing the total investment to over $1 billion. This surge in investment came in response to disappointing earnings results and a somber outlook for fiscal 2025, which discouraged the market in late June 2024.

Nike’s recent struggles stem from its shift towards direct-to-consumer sales, a strategy that led to a near-term dip in revenue as wholesale distribution channels were cut off. Revenue fell 10% year over year in Nike’s fiscal 2025 first quarter, and management forecasts a slow recovery due to economic uncertainties. However, Nike has managed to improve its gross margin by 1.2 percentage points, thanks to better inventory management and strategic pricing. Ackman believes that once Nike stabilizes its sales, it will be well-positioned for growth, especially given its strong brand and potential in the Chinese market.

In addition to Nike, Ackman has also placed a substantial bet on Brookfield, an investment firm known for its diverse portfolio and consistent returns. In the second quarter, Ackman invested about $285 billion in Brookfield and added roughly $1.2 billion more in the third quarter. This makes Brookfield the largest position in Pershing Square’s portfolio.

Brookfield, which maintains a 75% stake in its spun-off asset management business, operates across various sectors, including infrastructure, renewable energy, business services, and real estate. The company has a solid track record, with an average annual return of 18% for its shareholders over the last three decades. The management anticipates a 20%-plus annual growth in free cash flow over the next five years, potentially generating $47 billion, of which $36 billion is expected to be reinvested.

Currently, Brookfield shares trade at about 15 times distributable earnings, but management believes the fair value should be a multiple of 23, indicating a potential discount for investors. The projected growth could give the stock a fair value of $176 per share by 2029, translating to an average annual return of over 25% over the next five years, based on current prices.

Ackman’s confident investments in both Nike and Brookfield suggest he sees robust long-term growth potential in these companies, despite their current challenges.