TLDR
- Bill Ackman’s Pershing Square now holds 14 stocks, adding Netflix, Visa, and Mastercard in its latest 13-F filing
- Netflix shares are down 32% over the past year, trading at a P/E of 26, below its five-year average of 36
- Ackman’s fund has averaged 16% annual gains since 2004, beating the market’s 11% average
- Visa and Mastercard both trade at P/E ratios around 33, near or below their five-year averages
- Crypto is flagged as a potential threat to Visa and Mastercard’s dominance
Bill Ackman, founder and CEO of Pershing Square Capital Management, has made one of his biggest portfolio changes in years. His latest 13-F filing shows he added Netflix, Visa, and Mastercard to a concentrated portfolio of just 14 stocks.
Pershing Square has delivered cumulative net gains of 2,644% since launching in January 2004. That works out to an average annual return of around 16%, compared to the stock market’s 11% average over the same period.
The fund’s largest positions include Uber at $2.5 billion, Microsoft at $2.3 billion, and Amazon at $2.0 billion. Netflix comes in with a market value of $934 million, while Visa and Mastercard each sit at around $1.1 billion.
Ackman is known for buying stocks he sees as undervalued and holding them long-term. That approach appears to be the driving force behind these three new positions.
Netflix: Down 32%, But Undervalued?
Netflix shares have fallen around 32% over the past year. The stock’s current P/E ratio sits at 26, well below its five-year average of 36.
According to GuruFocus, Netflix carries a GF Score of 90 out of 100, with perfect marks for profitability and growth. Its estimated intrinsic value is $101.08, compared to a recent trading price near $79.84, suggesting the stock may be trading at a 21% discount.
The company has over 300 million subscribers globally and is expanding into international markets. It has also launched ad-supported subscription tiers to grow its revenue base.
Despite strong fundamentals, the stock’s momentum score is just 2 out of 10, pointing to short-term pressure. Insider selling has also topped $49 million over the past three months.
Visa and Mastercard: Steady Giants With New Risks
Visa trades at a P/E of 33, close to its five-year average of 32. The stock is up 17% over the past year and has averaged annual gains of nearly 22% over 15 years.
Mastercard also trades at a P/E of 33, slightly below its five-year average of 37. Its 15-year average annual return matches Visa at 22%, though it is up just 1.6% over the past year.
Both companies process the bulk of global electronic payments and are seen as long-term growers as more financial activity moves online.
Crypto is listed as a risk to both firms. Regulators may also increase scrutiny given how dominant the two companies are in the payments space.
Ackman’s net worth recently reached $8.9 billion, according to Forbes.
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