A quick glance at three of Bill Ackman's new positions – Netflix, Mastercard, and Visa; Update on Willis Lease Finance
1) My college buddy Bill Ackman successfully executed two IPOs earlier this year, which I covered in my April 30 e-mail.
He raised $5 billion for a closed-end fund, Pershing Square USA (PSUS), and his management company, Pershing Square (PS). PSUS was the largest-ever IPO for a closed-end fund in the U.S. and the sixth-largest IPO in the past decade.
On Wednesday, Pershing Square reported earnings for the first time as a public company. Here's the shareholder letter, earnings call, and Q&A.
Bill is one of the smartest investors I know, with an outstanding long-term track record. So I want to take a quick glance at the six new stock positions he disclosed: Netflix (NFLX), Mastercard (MA), Visa (V), S&P Global (SPGI), Intercontinental Exchange (ICE), and Alcon (ALC).
Today, I'll review the first three and save the others for Monday. (If you're particularly interested in one or more of them, please let me know in an e-mail by clicking here.)
Netflix
I was most interested to see that Bill reinitiated a position in streaming giant Netflix, which he had bought and then sold at a loss in 2022. It was a poorly timed sale, as the stock soared afterward.
But it has fallen 42% since hitting an all-time high last June, giving investors another bite at the apple, as you can see in this five-year chart:
In Bill's shareholder letter, he outlines what has changed over the past few years:
When we first invested in early 2022, investors feared an escalating content arms race among a crowded field of streaming entrants. At the same time, cash content spend substantially exceeded content amortization, weighing on free cash flow. The launch of a previously disavowed advertising tier added further uncertainty.
Netflix has since effectively won the streaming wars. Its subscriber base now exceeds any competitor's by a wide margin, and that scale is self-reinforcing. Netflix can outspend rivals on content while spreading the cost across the industry's largest user base, improving both the value proposition for subscribers and profitability for the company.
He concludes that Netflix looks to be trading at a discount now:
Looking forward, we expect Netflix to compound revenue at a double-digit growth rate, with content costs growing more slowly than revenue driving continued margin expansion. Combined with a robust buyback program, we estimate earnings should compound at close to 20% annually. We believe the company's current valuation multiple represents a substantial discount for a business with such a strong growth profile and dominant market position.
I agree that Netflix is a great idea, which is why my friend and former colleague Glenn Tongue and I pitched it a month ago at the Value Investing Seminar in Italy.
I shared our presentation in my July 28 e-mail and analyzed the company's financials in my July 6 e-mail, concluding:
[This] is an A+ financial picture: Netflix continues to grow rapidly, [free cash flow] is soaring, and its balance sheet is strong.
As for valuation, the stock got ahead of itself when it peaked 13 months ago at more than 50 times forward earnings.
But with the stock down and earnings up, it now trades at only 21.8 times this year's consensus analysts' estimates and 20.5 times next year's. Those are below-market multiples for a far-above-market-quality business.
Mastercard and Visa
I analyzed Mastercard in my June 25, 2025 e-mail and concluded:
Mastercard appears perfect in every way. But there's one teeny, tiny little problem: Everyone else agrees, so the stock's valuation is very high...
Given the quality of the business and its continued strong growth prospects, I wouldn't say the stock is overvalued... but it's certainly fully valued. And I'm not in the business of buying fully valued stocks, so I'm going to watch and wait.
I analyzed Visa the next day in my June 26, 2025 e-mail and reached a similar conclusion that its valuation looked very high, though I also noted:
I like Visa's stock better than Mastercard's because it's a slightly bigger, better business – yet its stock is cheaper.
Sure enough, Visa has slightly outperformed since June 2025, rising 5.8% versus 3.2% for Mastercard. But both have badly trailed the S&P 500 Index's 28% return, as you can see in this chart:
Bill believes this underperformance has created an excellent investment opportunity:
Visa and Mastercard are among the highest-quality businesses in the world. Both are capital-light "toll-takers" that earn a nominal fee on each transaction without taking any material risk and are natural beneficiaries of higher inflation. Their networks, built over decades, connect billions of consumers with hundreds of millions of merchants and thousands of financial institutions. Each new member and transaction further strengthens the networks and deepens their data advantage...
Despite these attributes, Visa and Mastercard recently de-rated to 22 times next twelve months' earnings. We attribute this to investor concerns around stablecoin disruption, agentic commerce, and proposed U.S. regulation, each of which we believe is misplaced.
He dismisses the investor concerns for several reasons:
We believe stablecoins represent an opportunity for the card networks rather than a threat. They are most relevant where cards are not the incumbent: cross-border business-to-business payments, high-cost remittance corridors, and dollar savings in countries with volatile currencies. Adoption in these areas should grow in parallel with, not at the expense of, card volumes...
Similarly, we believe agentic commerce is more likely to expand the payments ecosystem than to erode the networks' moats, as agents reduce friction, enable more frequent purchases, and accelerate the digitization of commerce...
Finally, the U.S. regulatory proposals that unnerved investors earlier this year, which would cap interest rates and mandate routing competition on credit cards, have both stalled amid broad opposition.
Bill concludes:
The card networks have a long history of consistent growth despite periodic fears of disruption, the most recent of which created the opportunity for our purchase of shares in the companies[.] While Visa and Mastercard shares have appreciated from our cost as the S&P 500 has remained flat, they remain attractively valued at 23 and 24 times forward earnings. With a multi-year runway of double-digit revenue, low-to-mid-teens operating income, and mid-to-high-teens [earnings per share] growth, we expect both businesses to generate attractive returns for years to come.
I think Bill is right that these credit-card giants are very attractive. And Visa remains an open recommendation in Stansberry's Investment Advisory.
Subscribers have access to our report on Visa from April 2020, our specific buy-up-to price, and any updates on the stock... as well as our full portfolio and best new idea each month.
If you're not already a subscriber, you can become one by clicking here.
2) I've written about Willis Lease Finance (WLFC) more than a dozen times over the past two-and-a-half years (archive here). Reader Richard C. e-mailed me recently, asking for an update on the stock:
I was curious if your friend who had WLFC as his largest position might have any updated thoughts on the August 4 earnings release and presentation, the suggestion some have made based on the release that demand is softening, etc. The stock is down 23% since then. Would be curious to get his thoughts.
The friend Richard is referring to runs a successful hedge fund in the financial sector and is an expert on Willis (I shared his detailed thoughts on the company in my January 9 e-mail.) I forwarded Richard's question to my friend, who replied:
We have been very surprised by the decline in WLFC stock since it reported earnings, as the core earnings power continues to grow and all the major trends are strong.
Adjusting for all the one-time items and elevated expenses from stock compensation and growth initiatives, we still see annual core earnings power in the range of $7 to $8 (adjusted for last month's 3-for-1 split) over the next year, and rising from there as the asset management business and other maintenance investments grow.
(Worth noting, these earnings-per-share numbers are not adjusting for depreciation expense which was around $1 per share in the first quarter, and the value of WLFC's engine portfolio has continued to appreciate or maintain value, depending on the engine type.)
Industry concerns over softening demand could be derived from some operators flying fewer hours on legacy and less-fuel-efficient engines due to elevated oil prices. Airlines are trying to optimize flight schedules toward new-technology aircraft, which benefits WLFC given they are primarily focused on new-generation engines.
He concluded:
We think the pullback is a great opportunity to add to the position. At $54, it's trading at only seven times what we expect their core earnings power to be over the next year, and at a 23% discount to our calculation of their adjusted book value of around $70 per share.
In addition to the strong fundamentals, the increased liquidity in the stock now makes it eligible for potential S&P 600 Index inclusion, and we still anticipate sell side coverage could be launched in the near term.
WLFC remains our highest-conviction investment ever.
I think my friend is right that WLFC is very attractive at these levels.
Best regards,
Whitney
P.S. I welcome your feedback – send me an e-mail by clicking here.