Billionaire investor Bill Ackman became something of a household name a decade ago when he famously declared weight loss and nutrition supplement maker Herbalife (NYSE:HLF) a “pyramid scheme.” His Pershing Square Capital Management hedge fund took a massive $1 billion short position in the stock.

He waged war on the company for five years before conceding his loss and closed out the short. Sometimes you have to accept economist John Maynard Keynes’s maxim that regardless of your conviction, “the stock market can remain irrational longer than you can remain solvent.” Not that Ackman or his hedge fund was ever at risk of going under, but you need to know when to walk away. 

Over the past 10 years, Ackman steered Pershing Square to some phenomenal gains. The fund has enjoyed 250% gains during that period compared to a 225% total return by the S&P 500. Last year the hedge fund returned 26.7%.

Bill Ackman stocks tend to be large-cap companies (it owns zero small-caps) that tend to be consumer cyclicals. Because he runs a concentrated portfolio with just 10 stocks, these are the three biggest bets in Pershing Square totaling 46% of the portfolio.

Chipotle Mexican Grill (CMG)

Chipotle Mexican Grill (NYSE:CMG) is the largest position Ackman has in Pershing Square, accounting for 18.1% of the total value. His 825,000 shares valued at $1.9 billion further position Ackman as the largest outside shareholder in the restaurant chain. Yet, he has also been selling down his stake.

In the fourth quarter, Pershing cut its holdings in the Mexican food outlet by more than 13%. That followed a 7% reduction in the second quarter and could just represent Ackman taking profits on a stock he has owned since 2016. CMG stock is up 58% over the past year and is strongly gaining in 2024 with a near-14% start to the year. There’s no reason to think Chipotle won’t continue this torrid pace higher. 

The restaurant operator saw strong growth in Q4, beating Wall Street expectations. It opened 271 locations last year, most of which featured its popular Chipotlanes drive-thru windows. The company believes as many as 1,000 locations could have a Chipotlane by the end of 2024. Geolocation data analytics firm Placer.ai says visits to Chipotle are picking up in the evening, suggesting consumers are choosing to eat dinner at the restaurant rather than as an on-the-go lunch break. Chipotle’s lunch crowd visits haven’t rebounded since the pandemic. 

A quality stock for years, CMG stock will likely remain a fixture in Ackman’s portfolio for years to come. 

Restaurant Brands International (QSR)

Restaurant Brands International (NYSE:QSR) is the owner of Burger King, Popeye’s Louisiana Kitchen, Tim Horton’s, and Firehouse Subs. It is the second-biggest position held by Ackman representing 17.6% of the total value.

Ackman holds 23.4 million shares valued at $1.9 billion. The stock is one of the oldest holdings in Pershing’s account, and he’s again the largest outside shareholder. Ackman first picked up QSR stock back in 2012.

The hedge fund operator likes the breadth of coverage Restaurant Brands offers in the quick-serve sector. He calls the company “a high-quality, capital-light, growing annuity that generates high-margin brand royalty fees.” Ackman has only minimally pared back his position in QSR stock but hasn’t sold any for several quarters.

The Burger King chain is finally making a turnaround, which helped the Restaurant Brands beat analyst estimates in Q4. Tne company just bought back some 1,000 stores from its largest Burger King franchisee, Carrol’s Restaurants (NASDAQ:TAST). RBI has over 31,000 restaurants in its portfolio but envisions growing it to 40,000 stores by 2028.

The restaurant operator remains on a growth trajectory even if buying out its franchisee reduces those annuity-like royalties Ackman enjoys so much.

Hilton Worldwide (HLT)

The third largest holding in Pershing Square’s portfolio is hotelier Hilton Worldwide (NYSE:HLT). Also, Ackman was a seller of HLT stock in the fourth quarter, reducing his stake to 9.2 million shares valued at $1.7 billion. The position represents 16.1% of the portfolio’s total value.

Ackman had been a buyer of Hilton stock in the third quarter. He might have tried to take advantage of the travel rebound that is underway in the industry. But he cut the stock back to below where his holdings stood in Q2. Still, Hilton is performing quite well. Shares are up 30% over the past year and are 9% higher this year. HLT stock has gained over 250% since the low point hit when the Covid pandemic appeared.

Hilton is another “high-quality, asset-light, high-margin business” that Ackman finds attractive. He likes that the hotel’s net unit growth will accelerate this year until eventually achieving its historical 6% to 7% range. International growth will be an important driver for Hilton.

Revenue per available room (revPAR), a key metric of the hospitality industry, is now above pre-pandemic levels.  The stock is cheap at 24 times next year’s earnings and Wall Street forecasts Hilton will expand profits at a 16% CAGR for the next five years. That’s ahead of the 11% growth it experienced over the past five years. It makes Hilton Worldwide a good, long-term holding.

On the date of publication, Rich Duprey did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.