We've Got the Scoop: Billionaire Bill Ackman Unveils Latest Investment, Makes a Strong Case for Buying the Stocks
On February 7th, notable investor Bill Ackman took to X (formerly Twitter) to announce his hedge fund, Pershing Square Capital Management, had acquired shares of Uber Technologies. This is an uncommon move, as institutions typically reveal their quarterly stock transactions via the Form 13F.
Sitting comfortably in Pershing Square's portfolio, Uber now holds 30.3 million shares. The fund typically focuses on a limited number of companies, and Ackman's past investments in Uber, even during its private stages, show his confidence in Uber's potential.
Bill Ackman took to social media platform X (formerly Twitter) to reveal his firm's newest stock position. This is quite unusual, as investors typically need to wait until institutional investors publish a
Why is Ackman betting on Uber?
Form 13F following the end of a quarter to see which stocks they recently bought and sold.
Value investing is one of Ackman's investment strategies. In a recent post, he highlighted Uber as a stock still obtainable at a substantial discount to its intrinsic value. As of now, Uber shares are trading around $75. However, realizing a stock's true value often surpasses merely looking at its price.
Uber Technologies
Let's delve into some financial metrics to understand Uber's worth and examine why this could be an excellent investment opportunity.
UBER
Uber is a bargain worth grabbing
invested in Uber during a venture round many years ago when the company was still private.
The diagrams below demonstrate Uber's free-cash-flow changes and P/E and P/FCF multiples. The multiples' lines begin when Uber began consistently generating profits, as the purple markers don't extend as far back in certain periods.
UBER Free Cash Flow (Quarterly) data by YCharts
value stocks. He shared this sentiment on social media, writing that Uber stock "can still be purchased at a massive discount to its intrinsic value."
It's intriguing that Uber's free cash flow has significantly grown while its P/E and P/FCF multiples have contracted. This occurrence is unusual because, as a corporation evolves and increases profits, one would expect its valuation multiples to swell.
intrinsic value of the business.
This inconsistency could be due to the uncertainty surrounding autonomous driving, a key factor in Uber's value proposition. On one hand, advocate-investors argue that self-driving vehicles could benefit Uber by lowering costs by replacing human drivers with automated cars. On the other, they also see potential competitors like Alphabet's Waymo and Tesla's Robotaxi division posing obstacles to Uber's success through their innovative projects in autonomous technology.
Regardless, Uber's substantial underlying worth, solid financial performance, and valuable growth potential make it an attractive investment opportunity that could return significant returns. The uncertainty surrounding autonomous driving might have led to the compression of Uber's valuation multiples. However, in the long term, Uber's ability to monetize this technology or form strategic partnerships could translate into substantial profits for shareholders.
UBER Free Cash Flow (Quarterly) data by
Ackman's investment in Uber demonstrates his ability to identify undervalued, well-managed businesses. In my opinion, Uber is a compelling investment with strong growth prospects, and now could be the perfect time to join him in this venture.
YCharts
- Ackman's Pershing Square Capital Management recently invested in Uber Technologies, acquiring 30.3 million shares, as revealed through his social media post on X (formerly Twitter).
- Bill Ackman's strategy often involves investing in value stocks, and he recently highlighted Uber as a stock with a substantial discount to its intrinsic value.
- The Form 13F, which institutions use to disclose their quarterly stock transactions, does not show Pershing Square's acquisition of Uber shares due to Ackman's uncommon announcement on social media.
- Ackman's bet on Uber could yield significant returns, given the company's substantial underlying worth, solid financial performance, and growth potential, despite the uncertainty surrounding autonomous driving.