How Billionaire Bill Ackman Reshaped Pershing Square's Portfolio: Exiting Two Disappointing Bets to Focus on AI and Infrastructure for 2026

Bill Ackman’s hedge fund, Pershing Square Capital Management, just made some significant moves at the end of 2025, signaling a strategic shift in how the billionaire investor is positioning his portfolio heading into 2026. After holding a concentrated portfolio of roughly a dozen high-conviction investments, Ackman’s team has decided to lighten positions in two long-held stocks while doubling down on holdings that are outperforming.

The fund’s approach typically emphasizes turnaround opportunities and undervalued assets, maintained over multi-year periods. However, when the fundamental thesis breaks down or results fail to materialize as expected, Ackman and his team aren’t afraid to pivot. Recent exits from two major positions demonstrate this disciplined approach to capital redeployment.

The Departure from Chipotle: A Nearly Decade-Long Investment Coming to an End

One of Ackman’s longest-held positions finally came to an end recently when Pershing Square fully exited its Chipotle shareholding. The hedge fund initially began accumulating the restaurant stock back in 2016, just after the company faced multiple E. coli outbreaks that had shaken investor confidence. Ackman and his team wagered that strong management execution could restore the brand to its pre-crisis performance levels.

That bet initially paid off handsomely. Under CEO Brian Niccol’s leadership starting in 2020, Chipotle achieved approximately 9% comparable store sales growth through the end of 2024—a remarkable recovery from the troubled period. For years, this trajectory seemed to validate Ackman’s thesis of investing in misunderstood turnarounds.

Yet 2025 proved to be a turning point. The chain’s comparable store sales momentum evaporated through the first half of the year, turning negative. By the third quarter, comparable sales showed only marginal 0.3% growth, with management guiding toward mid-single-digit declines for the fourth quarter. Beyond topline struggles, the company’s profitability compressed significantly. Operating margins contracted by 800 basis points through the first nine months of 2025, eroding to 16.9%—a substantial deterioration from prior years.

With comparable sales declining, Chipotle lacks pricing power to offset food cost inflation accumulated over recent years. The margin pressure has become acute. Pershing Square’s investment team, including analyst Anthony Massaro, noted that despite the stock trading at around 25 times forward earnings—historically inexpensive—the confidence simply isn’t there that management can return to its historical growth trajectory. When the investment thesis loses conviction, even cheap valuations aren’t enough to justify staying invested.

Nike’s Stalled Turnaround: When Hope Fades Faster Than Expected

Bill Ackman’s second exit came from Nike, a position the fund had just recently escalated through an unconventional strategy. Seeing an opportunity in 2024 as Nike struggled under management missteps, Ackman’s team decided to deepen its commitment by exchanging shares for deep-in-the-money call options. This structure was meant to provide leveraged exposure while freeing capital for other opportunities.

Yet this aggressive bet unraveled within roughly 18 months. The turnaround under veteran executive Elliott Hill, who took over at the end of 2024, has progressed more slowly than anticipated. Nike’s core business challenge remains formidable: restoring the premium margins the company once commanded through brand strength and product innovation.

However, a critical headwind has emerged that makes margin recovery far more difficult. The Trump administration’s tariff policies will substantially impact Nike’s profitability. While management contends it can absorb most of these costs, fully offsetting them appears unrealistic. Simultaneously, the athletic footwear and apparel market has become increasingly competitive, with emerging challengers threatening Nike’s pricing power.

The operational reality shows the magnitude of the challenge. Fiscal 2025 saw Nike sales decline 10%, a significant retreat. EBIT margins compressed from 12.7% to 8.2%, reflecting both top-line pressure and cost challenges. Though fiscal 2026 projections show margin improvement, sales are expected to remain soft, leaving substantial uncertainty around long-term profitability. Management has guided toward double-digit margins, but as Massaro highlighted, the distance between a 10% margin and a 13-14% margin represents a vastly different business quality.

Facing this murky outlook and tariff-related headwinds, Pershing Square decided the conviction no longer justified the position. The exit came at a loss of 30% since the fund initiated its call option position, essentially crystallizing disappointment.

Where Ackman’s Portfolio Is Now Concentrated

With both Chipotle and Nike divested and no major new positions announced, Pershing Square’s equity portfolio has become more concentrated. The fund’s two largest holdings are now Alphabet and Brookfield, both of which have delivered strong returns throughout 2025 and remain in Ackman’s core holdings.

Alphabet has experienced significant momentum recently, particularly following a favorable antitrust ruling that imposed far lighter restrictions than many feared. Coupled with strong earnings and robust growth in cloud computing, the stock has appreciated substantially. As a leading provider of AI infrastructure and services, Alphabet benefits from multiple growth vectors. Its recently-released Gemini 3.0 foundation model has performed exceptionally well in benchmark testing, and adoption of its custom AI accelerators is accelerating.

Critically, Alphabet has integrated these advances across its core businesses—search, advertising, and YouTube—allowing it to maintain revenue growth despite early fears that AI chatbots could cannibalize traditional search. The cloud computing division, in particular, demonstrates operating leverage as it scales rapidly. These dynamics should persist into 2026, suggesting the stock still offers value despite earnings multiples moving into the upper 20s range.

Brookfield presents a different but equally compelling case. The conglomerate’s subsidiary, Brookfield Asset Management, plans to launch several substantial funds in 2026, positioning the company to capture significant asset management fees. More importantly, Brookfield is entering a phase where carried interest—the profit share from fund performance—should accelerate meaningfully. Management projects $6 billion in carried interest over the next three years, compared to just $4 billion accumulated over the previous decade.

The impact of this shift should compound as new funds mature. Management has projected 25% compound annual growth in distributable earnings over the next five years, suggesting significant upside. Trading at approximately 15 times forward earnings, Brookfield appears remarkably inexpensive relative to its growth prospects.

Consequently, these two investments now represent roughly 40% of Pershing Square’s remaining equity portfolio, underscoring Ackman’s conviction in their continued outperformance through 2026 and beyond.

The Investment Lesson: When Conviction Fades, Capital Must Flow

Bill Ackman’s recent portfolio decisions illustrate a fundamental principle of disciplined investing: maintaining positions in stocks when the original thesis deteriorates destroys value. Ackman built his reputation as a contrarian willing to hold through periods of doubt, but only when the underlying investment case remains intact.

With Chipotle, the fundamental deterioration in same-store sales growth and margin compression indicated the turnaround narrative had broken. With Nike, new variables—particularly tariffs—shifted the profit trajectory in unexpected ways, making recovery uncertain. In both cases, exiting, despite initial successes, was the rational response.

The concentration into Alphabet and Brookfield reflects where Ackman sees clearer visibility into value creation. Both benefit from secular trends—artificial intelligence adoption and alternative asset management growth, respectively—that should support returns well into 2026. For investors watching Ackman’s moves, the portfolio reshuffling serves as a reminder that even legendary investors must occasionally accept that yesterday’s great idea becomes today’s necessary exit.