What stocks does Bill Ekman recommend to investors?
After the US Federal Reserve’s firm course to fight inflation recently at its Jackson Hole meeting, many investors have become confident that despite the suffering that will fall on the market, such a plan should definitely work. So thinks, in particular, the manager of the hedge fund Pershing Square Capital (NYSE:SQ), billionaire Bill Ekman, who expects inflation in the country to fall by at least half by next year, writes Yahoo.
In the meantime, Ekman offered investors some tried-and-true tips for coping with harsh conditions. “Ultimately, if you own a large business, you will be able to get through this difficult time. Our biggest fear was inflation, and so I wanted the Fed to raise rates as soon as possible.”
There are 2 stocks that make up the majority of Pershing’s $7.46 billion portfolio to look out for in this regard, as these are obviously quality stocks that are also trusted by Wall Street analysts with a “strong buy recommended” rating.
1. Howard Hughes Corporation (NYSE:HHC) is a real estate company that developed the so-called Master Planned Communities (MPC) scheme. HHC manages all parts of this scheme, from strategic development to management of commercial leased assets through 3 main business segments: the overall business model with embedded financial and timing logic (MPC), strategic development and operational assets. Using a synergistic strategy, HHC is able to control cash flow, which contributes to continuous value creation, as a result, this business strategy works even in difficult macroeconomic conditions of rising inflation and recession.
HHC’s second-quarter net income reached $21.6 million, representing $0.42 per diluted share compared to net income of $4.8 million and $0.09 per diluted share in the same quarter a year ago, and revenue was also higher expectations — increased by about 30% compared to last year to $ 276.71 million, which is higher than analysts’ forecast of $ 203.7 million.
The Ekman Pershing Fund owns a 26.5% stake in HHC, or 13,620,164 shares worth $862.56 million at current price. The consensus for HHC shares is about 52% annual growth, with an average target of $96.
2. Lowe’s (NYSE:LOW) is the oldest chain of Lowe’s home improvement stores in the United States, operating since 1921, which has grown into one of the world’s largest retailers of this type of product.
At the beginning of this year, under the auspices of the company there were 1,971 stores of household goods and household goods. However, this year, in contrast to the pandemic period, short-term demand for home goods in some segments has decreased, as the surge in diseases, and therefore self-isolation at home, is a thing of the past, and shoppers are now spending more money on activities outside the home.
The decline in consumer demand was reflected in the company’s quarterly results, with revenue down 0.3% year-on-year to $27.48 billion, $680 million less than expected. But earnings per share rose 9.8% year on year to $4.67, beating analysts’ expectations of $4.58.
Ekman has not yet made any changes to his position on the company’s shares. Pershing owns 10,207,306 shares worth about $1.97 billion, representing nearly 24% of the fund’s portfolio.
The consensus forecast is for an average price target of $241.35, indicating that the stock could rise 23% for the year.