Bill Ackman's Bold Portfolio Shift: Why Pershing Square Abandoned Two Major Bets in 2025

The Ackman Investment Philosophy and Recent Course Corrections

When Bill Ackman manages capital through Pershing Square Capital Management, the focus is typically on identifying undervalued opportunities and holding them through extended recovery periods. The billionaire hedge fund manager has built a reputation for taking contrarian positions and having the conviction to stay invested long-term. However, even the most seasoned investors must occasionally acknowledge when their thesis no longer holds merit.

This year proved to be a turning point for several of Pershing Square’s major holdings. The fund has taken decisive action to exit two significant positions—moves that signal a fundamental reassessment of their long-term prospects. Meanwhile, the portfolio’s core holdings in other sectors continue to demonstrate why they remain top conviction plays heading into 2026.

The Chipotle Exit: When Recovery Expectations Fall Short

Pershing Square’s near-decade commitment to Chipotle (NYSE: CMG) came to an end recently when the hedge fund liquidated its remaining shares in the popular restaurant chain. The investment story began in 2016, when Ackman’s team identified an opportunity following food safety crises that had shaken investor confidence. The thesis was straightforward: the company’s operational and brand strength would enable a recovery, and comparable store sales would rebound to historical norms.

For several years, this narrative seemed validated. Under CEO Brian Niccol’s leadership, Chipotle posted impressive 9% average comparable store sales growth through 2024, suggesting the turnaround had succeeded. The stock rewarded patient capital accordingly.

However, 2025 revealed cracks in this growth story. Restaurant traffic weakened considerably in the first half of the year, and while Q3 showed marginal improvement with 0.3% comparable sales growth, management’s guidance for Q4 anticipated mid-single-digit declines. The margin picture deteriorated alongside sales performance—operating margins compressed by 800 basis points through the first nine months to reach 16.9%.

With declining comparable sales and limited pricing power to offset rising food costs, the company found itself in a margin squeeze. The stock currently trades at roughly 25 times forward earnings, which appears historically reasonable on a multiple basis. Yet Pershing Square’s analysts lacked confidence that Chipotle could reignite the growth momentum necessary to justify continued holding. Sometimes valuation alone isn’t sufficient when the underlying business narrative shifts unfavorably.

The Nike Turnaround: When Margin Recovery Gets Complicated

Nike (NYSE: NKE) represented a different type of opportunity when Pershing Square initiated its position. The athletic apparel giant had stumbled through a period of inconsistent leadership and strategic missteps, creating an opening for a well-timed contrarian investment. When Elliott Hill, a veteran executive with deep Nike experience, took the helm in late 2024, Ackman’s team saw validation for their turnaround thesis.

In fact, Pershing Square doubled down on conviction by pivoting from traditional stock ownership into deep in-the-money call options. This move provided additional financial flexibility while maintaining upside exposure. Yet by early 2026, the fund had unwound these options positions entirely, realizing a 30% loss on roughly eighteen months of investment.

What changed? The margin recovery picture became increasingly murky. Nike faced a fiscal 2025 where revenues declined 10% and earnings before interest and taxes (EBIT) margin collapsed from 12.7% to 8.2%. While management has signaled margin expansion in fiscal 2026, the underlying sales trajectory remains negative and forward visibility remains constrained.

Hill’s turnaround strategy emphasizes brand strength and innovation—historically the foundations of Nike’s high-margin business model. Yet external headwinds have complicated execution. The tariff environment implemented under new U.S. trade policy poses significant cost pressures that management may struggle to offset entirely. Additionally, competitive intensity in athletic wear has increased materially, adding structural margin pressure beyond management’s direct control.

Management has guided toward double-digit margins as a target, but as Pershing Square’s analysts noted, there’s a substantial difference between a 10% margin and the 13-14% margins the business enjoyed historically. This uncertainty gap proved sufficient reason to exit rather than wait for additional clarity.

Concentration Among Conviction Holdings: Alphabet and Brookfield

With both Chipotle and Nike positions closed, Pershing Square’s equity portfolio has become more concentrated among its highest-conviction ideas. The two largest holdings are now Alphabet (NASDAQ: GOOGL, GOOG) and Brookfield (NYSE: BN, TSX: BN), collectively representing roughly 40% of the fund’s remaining equity exposure.

Alphabet’s Artificial Intelligence Advantage

Alphabet has emerged as a particular beneficiary of recent developments. A lenient antitrust ruling provided significant relief to regulatory concerns, while the company simultaneously delivered robust earnings performance. The search and advertising giant’s cloud computing division has demonstrated impressive operating leverage as it scales at accelerating rates.

On the artificial intelligence front, Alphabet maintains a formidable competitive position. Its recently released Gemini 3.0 foundation model has performed exceptionally well against industry benchmarks. Custom AI accelerators are seeing increasing adoption, and the company is successfully integrating large language models into core search, advertising, and YouTube platforms. Notably, revenue growth has continued despite predictions that AI chatbots would cannibalize search traffic—a risk that appears overblown in retrospect.

The cloud computing business particularly benefits from network effects as it scales. This momentum is expected to persist well into 2026, even as the stock’s forward earnings multiple has expanded into the mid-to-upper 20s range.

Brookfield’s Carried Interest Acceleration

Brookfield represents a different but equally compelling investment case centered on capital management dynamics. Subsidiary Brookfield Asset Management is launching substantial new funds in 2026, positioning the parent company to capture significant carried interest as these vehicles generate returns over time.

Management has guided for $6 billion in carried interest generation over the coming three years—a dramatic acceleration from just $4 billion across the entire prior decade. This acceleration reflects both the scale of capital being deployed and the positive performance environment for alternative assets. Additionally, the company has projected 25% compound annual distributable earnings growth across the next five-year period.

At a current valuation approximating 15 times forward earnings expectations, Brookfield appears significantly undervalued relative to these growth prospects. Pershing Square’s continued confidence in both holdings explains their outsized portfolio weighting.

The Takeaway for Individual Investors

Bill Ackman’s willingness to exit positions when conditions change demonstrates an important principle: even successful long-term investors must periodically reassess and reallocate capital. The exits from Chipotle and Nike, combined with concentrated bets on Alphabet and Brookfield, reflect a portfolio optimizing around the most attractive opportunities available in the current environment. For individual investors, the lesson extends beyond simply following Ackman’s moves—it involves cultivating the discipline to question your own investment theses and adapt when circumstances warrant it.