With interest rates at their highest points in years, it’s easy to wonder what in the world comes next. But hedge fund manager Bill Ackman may have the plan to get through, and it’s all about one key point: pricing power. With Ackman holding positions in everything from Google (NASDAQ:GOOG) to Chipotle Mexican Grill (NYSE:CMG), he’s living up to that credo but having mixed results in Friday’s trading.
Ackman’s holdings in Google and Hilton Worldwide (NYSE:HLT) were down in Friday afternoon’s trading, but his Chipotle, Restaurant Brands International (NYSE:QSR), and Lowe’s (NYSE:LOW) were all up at least fractionally. And all of these places have one thing in common: they set their prices. As Ackman described: “The beauty of these kinds of businesses is actually (that) inflation is ultimately their friend, as long as they can keep their costs, as long as their costs don’t inflate as quickly as their revenues.” This is true as long as the customer can hold out as well.
And this may be a distinction that has to stay in mind for some time. The Federal Reserve has already come out with its “higher-for-longer” credo that suggests interest rates may be high for some time to come. Just how long, however, depends; with an election coming up in a little over a year, it’s a safe bet that the Biden Administration wants a solid economy that it can tout when running. However, with Ackman himself anticipating even higher rates from here, it’s a safe bet that interest rates will be a major part of the economy going forward.
Which of Bill Ackman’s Holdings are Good Buys Right Now?
Currently, among Ackman’s top holdings, only Alphabet, Google’s parent company, is considered a Strong Buy. Yet, it also has the second-lowest upside potential at 11.25% and an average price target of $147.43. Meanwhile, the strongest upside goes to Moderate Buy Restaurant Brands International, which offers 20.97% upside against its average price target of $81.11.