While I don’t own shares in Bill Ackman’s FTSE 100 investment trust, Pershing Square Holdings, I do tend to keep an eye on its holdings. That’s because Ackman has a history of identifying high-quality stocks at attractive valuations (and making a lot of money from them).

Recently, I was looking at the April factsheet for this fund, as well as a recent Q1 regulatory filing, and I noticed that Ackman has made huge bets on two of my favourite US stocks. This suggests that he sees value in them at present.

Decades-long growth potential

The first stock I want to highlight is Amazon (NASDAQ: AMZN). At the end of Q1, it represented about 17% of Ackman’s total portfolio.

I’m not surprised that the hedge fund manager is bullish on this Mag 7 name. In my view, it has a ton of long-term potential.

This is no longer just a play on online shopping and cloud computing. Today, it’s a play on these industries plus AI chips, space satellites, self-driving cars, digital healthcare, and more.

Put all this together, and there’s potential for the company to get much bigger. I think it could easily double in size in the next five to seven years (Ackman is expecting earnings growth 20%+ over the medium to long term).

Amazon operates two of the world’s great, category-defining franchises between its Amazon Web Services (AWS) cloud business and its e-commerce retail operations. Both businesses are underpinned by decades-long secular growth trends.
Bill Ackman

As for the valuation, it doesn’t look stretched, despite the fact that the stock is trading near record highs. Looking at earnings forecasts for next year, the forward-looking price-to-earnings (P/E) ratio is only about 27.

At that valuation, I think the stock is worth considering. There are risks around AI spending, but overall, I see the risk/reward set-up as compelling.

A big bet on mobility

Another massive holding for Ackman is Uber (NYSE: UBER). At the end of Q1, this stock was over 15% of this portfolio.

Again, this doesn’t really surprise me. To my mind, Uber – with its scalable platform – has the potential to be a Mag 7-like name in the future.

The stock market clearly underappreciates the durability of Uber’s moat, the magnitude of its earnings growth, and the strategic role it will play in shaping the future of mobility.
Bill Ackman

Now, some investors see competition from robotaxi players such as Tesla and Waymo as a major risk here. However, the way I see it, lots of automotive companies will have robotaxis in the future and many of them will partner with Uber to connect with consumers.

It seems Ackman shares a similar view. “We believe that AV technology will not be a winner-take-all model and that third-party networks, and Uber in particular, have a valuable role to play”, he wrote in his company’s annual report.

At present, Uber trades at less than 20 times next year’s earnings forecast. And Ackman sees that as a ‘bargain’ as he expects earnings to grow by 30% or greater over the medium term.

I agree that it’s a bargain and believe it’s worth a look today. There’s no guarantee that it will do well given the changing automotive landscape but there’s certainly a lot of potential.

Should you invest £5,000 in Amazon right now?

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Edward Sheldon owns shares in Amazon and Uber.