Billionaire Bill Ackman Has 12% of His Pershing Square Portfolio Invested in 1 Stock That's Down 17% in 2025: Time to Buy?

Core Viewpoint - Bill Ackman, a prominent investor, focuses on concentrated investments in high-quality businesses, with his hedge fund, Pershing Square Capital Management, having a strong track record over the past two decades [1] Company Overview - As of December 31, Pershing Square held 11 positions, with one company representing 12% of the fund, making it the third-largest holding despite Ackman selling shares over several quarters [2] - Chipotle Mexican Grill (CMG) has shown significant stock performance, with shares increasing by 183% over the past five years, although they have declined by 17% in 2025 [2][8] Financial Performance - Chipotle has consistently generated positive free cash flow (FCF), reporting a cumulative FCF of $3.6 billion from 2021 to 2024, which has been partly used for share buybacks [3] - The company maintains a strong balance sheet, with more current assets than liabilities and no debt, allowing it to earn interest income rather than incur interest expenses [4] Competitive Position - Ackman values high barriers to entry in the restaurant industry, noting that while competition is fierce, replicating Chipotle's success is extremely challenging [5] Investment Strategy - Ackman sold approximately 17 million shares of Chipotle in 2024, likely due to high valuation rather than company quality, as the stock traded at an average forward P/E ratio of 51.2 [6][7] - Despite the sales, Pershing Square retained a significant position in Chipotle, indicating continued bullish sentiment, especially with the stock down 27% from its all-time high [8] Market Conditions - Chipotle experienced a 0.4% decline in same-store sales in Q1, attributed to weaker consumer spending, though the leadership remains optimistic about the company's long-term potential [9] - The stock is currently trading at a more reasonable forward P/E ratio of 41.3, suggesting a potential opportunity for investors to consider dollar-cost averaging into Chipotle shares [10]