Ackman's Four Inflation-Resistant Financial Stocks
Star investor Bill Ackman and his team at Pershing Square Capital Management made headlines when they revealed six new positions, four of which are top financial stocks. The quartet includes payment card titans Visa (V) and Mastercard (MA), data and analysis specialist S&P Global (SPGI), and securities market operator Intercontinental Exchange (ICE).
Ackman explained his reasoning behind the move in a shareholder letter accompanying the second-quarter earnings report. He described Visa and Mastercard as 'capital-light toll takers' due to their open-loop business model, where they facilitate transactions without taking on risk themselves.
The pair's volumes are considerable, with many people holding cards branded by one or both companies. Ackman also noted that the two are a good hedge against inflation, as higher consumer prices mean they earn higher fees. Additionally, their value-added services, such as fraud detection and authentication solutions, add significant value to their operations.
Pershing Square also owns S&P Global, which earns revenue from credit ratings, indexes, and Platts' price reporting agency for commodities and energy markets. Ackman highlighted the company's three dominant businesses and expressed enthusiasm about its growth prospects.
Intercontinental Exchange is another key holding, with a dominant position in futures and options exchanges, particularly with its gold-standard ICE Brent Futures contract. The company also has high-margin businesses in fixed income and data services, and mortgage technology segments.