"Baby Buffett" with big gains sells $1 billion Berkshire stake

On the heels of an enormously profitable bet against the markets ahead of the March COVID-19 sell-off, Bill Ackman sold his hedge fund company's entire stake in Berkshire Hathaway, worth roughly $1 billion. 

The stock, which accounted for almost 11% of Pershing Square Capital Management's portfolio at the end of March, was purchased just months earlier.

Ackman, a long-time Buffett fan who was labeled "Baby Buffett" on a Forbes cover in 2015, told investors this week he will be able to get a better return with the money than he would by keeping it in Berkshire. 

So far this year, Ackman's funds are up between 22% and 27%.

Echoing a long-standing Buffett lament, Ackman said, "The one advantage we have over Berkshire is just relative scale. Berkshire has the problem, if you will, of deploying $130 billion of capital, whereas, by virtue of our much smaller size … we can be much more nimble."

He wants to "take advantage of that nimbleness, (and) preserve some extra liquidity in the event that prices get more attractive again."

That $130 billion is a reference to Berkshire's enormous cash holdings (actually around $137 billion) that have contributed to holding back its stock price amid historically low interest rates. (See "Berkshire Stock Watch" below.)

Buffett said at this month's annual meeting that while he's prepared to make a big investment, "We have not done anything, because we don’t see anything that attractive to do."

Ackman, on the other hand, has been very active. Before the COVID-19 pandemic hit the U.S., he made a $27 million hedge that turned into $2.6 billion as stock prices tumbled in March.

He used the proceeds to buy more shares of stocks already in his portfolio, at lower prices, that he thinks will do well after the pandemic, including Agilent Technologies (up 23% since March 31), Hilton Worldwide (up 16%), Restaurant Brands (up 36%), Starbucks (up 19%), and Lowe's (up 52%).

Ackman called his firm's purchase of Lowe's "the bargain of a lifetime."

Ryan Israel, a Pershing Square partner, complimented the "high-quality" nature of Berkshire's operating companies, and said, "We continue to think Berkshire will be a strong investment over the longer term."

But now "there may be more than typical opportunities for us to see very high-returning investments."

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BERKSHIRE STOCK WATCH

BERKSHIRE'S TOP STOCK HOLDINGS 

Berkshire's top stock holdings by market value, based on today's closing prices. The number of shares held is as of March 31, 2020, as disclosed in the company's May 15 13F SEC filing, except for U.S. Bancorp, which is as of May 12, 2020.

The full list of holdings and current market values is available from CNBC.com's Berkshire Hathaway Portfolio Tracker.

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-- Alex Crippen, Editor, Warren Buffett Watch