Legendary investor Bill Ackman disclosed no new stock purchases in the third quarter, instead showing a decreased position in shares of Magnificent Seven stock Alphabet Inc (NASDAQ:GOOG)(NASDAQ:GOOGL). With Alphabet hitting new all-time highs since the end of the third quarter, Ackman missed out on millions in potential profits.
Ackman Cuts Alphabet Stake
In the third quarter, Ackman decreased the stake for Alphabet Class A (GOOGL) shares in the Pershing Square Capital Management portfolio, lowering its exposure to the Magnificent Seven stock.
The fund reduced its exposure to Alphabet Class A shares by 10%, lowering its stake from 5,362,980 to 4,843,973. The fund also held 6,324,031 Alphabet Class C shares at the end of the third quarter.
Ackman's fund took no new stakes in the third quarter and, in addition to lowering its Alphabet stake, the only other disclosed moves were lowering share count in three positions by less than 1%.
The move may have caught investors by surprise as Ackman's fund previously increased its exposure to the stock by 21% in the second quarter and unveiled a new stake in Amazon.com Inc, another Magnificent Seven stock.
Alphabet Class A shares closed the third quarter (Sept. 30) at $243.10. Since then, the stock has risen by over 20%, trading at $292.41 at the time of writing.
This means that Ackman missed out on potential profits of $25,592,235.17 for the 519,007 GOOGL shares that were sold in the third quarter based on today's price.
It's unknown exactly when Ackman sold the Alphabet shares or at what price, but with the stock hitting all-time highs since the close of the third quarter, Ackman missed out on higher prices in the fourth quarter.
Ackman's Alphabet Bet Remains Big
Before investors feel bad for Ackman and Pershing Square Capital Management missing out on $25 million in profits, they should look at the fund's prominent position in the Magnificent Seven stock.
At the end of the third quarter, Pershing Square Capital Management owned 6,324,031 GOOG shares and 4,843,973 GOOGL shares.
Those positions have soared in value since the close of the third quarter. Based on current prices, here's how much those positions are up:
GOOG: $1,849,209,904.71, up $311,837,968.61 since the end of the third quarter
GOOGL: $1,416,426,144.93, up $238,856,308.63 since the end of the third quarter
Taken together, the positions in the two classes of Alphabet stock are up $550,694,277.24 since the end of the third quarter.
Alphabet Class C and Class A shares were the fourth and seventh-largest positions in Ackman's hedge fund at the end of the third quarter and have likely risen in the rankings since then.
Ackman may have sold part of his Alphabet shares early, but his big bet on the company is still paying off for him and investors in the hedge fund.
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