Core Viewpoint - Bill Ackman's Pershing Square Capital Management has a strong focus on individual stock analysis and has generated significant returns, with a notable investment in Restaurant Brands International (QSR) which provides reliable passive income through dividends [1][2]. Company Overview - Pershing Square Capital Management owned 10 stocks at the end of Q2, focusing on thorough bottom-up analysis [2]. - QSR has been part of Pershing's portfolio since its IPO in 2012 and owns popular fast-food chains like Burger King, Tim Horton's, and Popeye's [4]. Financial Performance - Over the past five years, QSR's stock has only increased by about 13%, facing challenges such as competition, supply chain issues, and inflation [5]. - QSR has a high debt level of approximately $13.4 billion and a debt-to-equity ratio exceeding 4 as of the end of Q2 [5]. Business Model and Strategy - Ackman and his team favor QSR for its "high-quality, capital-light" franchise model, which generates royalties from leading fast-food brands [6]. - Burger King International reported over 4% same-store sales growth year-over-year, outperforming McDonald's [6]. - QSR is revamping its U.S. business and plans to invest $500 million into the Carrols Restaurant Group to modernize over 600 restaurants before refranchising [7]. Dividend and Cash Flow - QSR offers a high dividend yield of approximately 3.90%, with $544 million paid in dividends in the first half of the year, translating to an annual run rate of about $1.09 billion [9][10]. - Over the past 12 months, QSR generated free cash flow of $1.35 billion, providing a buffer for dividend payments [10]. - Despite net income of $484 million in the first half of the year being below dividends paid, management remains optimistic about future food price cycles [10][11]. Investment Position - As of the end of Q2, Pershing's stake in QSR was valued at $1.52 billion, yielding approximately $59.5 million in dividends annually based on the 3.90% yield [12].

Group 1: Amazon - Amazon has developed a strong artificial intelligence (AI) business within its Amazon Web Services (AWS) division, presenting a significant growth opportunity [5] - The company reported a 13% year-over-year sales increase in the second quarter, with AWS growing nearly 18% and e-commerce sales up 11% [6] - Amazon's operating income rose from $14.7 billion to $19.2 billion year-over-year, exceeding management's guidance, and its current P/E ratio of 34 is less than half its five-year average of 76, indicating a potentially attractive valuation [7] - Billionaire investors, including Bill Ackman, have significantly increased their holdings in Amazon, with Ackman purchasing 5,823,316 shares worth $1.2 billion [8] Group 2: Restaurant Brands International - Restaurant Brands International operates four major fast-food chains: Burger King, Tim Hortons, Popeye's, and Firehouse Subs, with over 32,000 stores globally [10] - The franchise model allows for low capital expenditures and high cash generation, making it appealing to value investors [11] - The company reported a 5.3% year-over-year increase in total restaurant sales and a 16% rise in revenue in the second quarter [12] - Stanley Druckenmiller and Bill Ackman have invested in Restaurant Brands, with Ackman's fund holding an 11% position [13] - The stock offers a dividend yield of 3.8%, making it attractive for passive income investors [14] Group 3: Whirlpool - Whirlpool is a U.S. manufacturer of home appliances, sensitive to housing market conditions, and has faced challenges due to high interest rates [15] - The company may benefit from a resurgence in home buying and has a $2 billion builders business, positioning it well for future growth [16] - Whirlpool is currently trading at a forward P/E ratio of 11, indicating it may be undervalued, and billionaire David Tepper purchased 266,092 shares worth $27 million [18]