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On October 17, 2025, Shaker Investments disclosed it sold out of The Progressive Corporation (PGR 0.83%), liquidating 9,829 shares for an estimated $2.62 million.

What Happened

Shaker Investments disclosed in a filing with the Securities and Exchange Commission dated October 17, 2025, that it had sold its entire stake in The Progressive Corporation in the third quarter. The liquidation involved 9,829 shares, with an estimated transaction value of $2.62 million based on the average price for the quarter. The fund’s post-trade holding in the insurer is now zero shares.

What Else to Know

The fund sold out of Progressive, reducing its allocation from 1.07% of 13F AUM in the previous quarter to zero.

Top holdings after the filing:

• NYSE:AX: $33.84 million (13.5% of AUM)
• NASDAQ:AVGO: $12.30 million (4.9% of AUM)
• NASDAQ:NVDA: $12,301,219 (4.9% of AUM)
• NASDAQ:MSFT: $8,486,093 (3.4% of AUM)
• NASDAQ:GOOGL: $8,297,003 (3.3% of AUM)

As of October 16, 2025, shares of Progressive were priced at $221.74, down 13.17% over the past year; shares have underperformed the S&P 500 by 24.06 percentage points over the past year.

Company Overview

Company Snapshot

The Progressive Corporation is a leading U.S. property and casualty insurer with a diversified portfolio spanning auto, residential, and specialty insurance lines. Its multi-channel distribution model includes independent agencies, online, and phone channels.

The company offers personal and commercial auto insurance, residential property coverage, and specialty property-casualty products, including insurance for motorcycles, RVs, watercraft, and business vehicles. It generates revenue primarily from underwriting insurance policies and related services.

Progressive serves individual consumers, small businesses, and property owners across the United States through direct channels and independent agencies.

Foolish Take

By selling its entire stake of more than $2.6 million worth of Progressive stock, Shaker Investments has cut loose one of America’s largest insurers. Should retail investors do the same? Let’s have a closer look.

It’s been a less than stellar year so far for Progressive. Shares have declined (3.9%) year-to-date, while the S&P 500 has advanced by 14.5%. Even within the insurance sector, Progressive has lagged major benchmarks, such as the SPDR S&P Insurance ETF (KIE) and iShares US Insurance ETF (IAK), which have generated a total year-to-date return of 1.5% and 1.8%, respectively.

Adding to the stock’s tough year, Progressive recently released disappointing third-quarter earnings results on October 15. Both earnings-per-share and revenue came in below analysts’ estimates, with Progressive stock falling on the announcement. In addition, the company noted that it was recording a nearly $1 billion expense related to a change in Florida policy that limits profits on auto insurance in the state. Despite these setbacks, the company reported increased premiums written and earned, indicating growth in the company’s core operations.

At any rate, retail investors looking for exposure to the insurance sector may want to consider a broad-based ETF, like the SPDR S&P Insurance ETF (KIE) or the iShares US Insurance ETF (IAK). These ETFs provide diversification within the sector, ensuring that investors aren’t as exposed to operational risks at any single company.

Glossary

Exited its position: When an investor sells all shares of a particular investment, fully closing out that holding.
13F reportable assets under management (AUM): The total value of securities a fund must report quarterly to the SEC on Form 13F.
Allocation: The percentage of a fund’s assets invested in a specific security or asset class.
Liquidation: The process of selling an investment position, often fully, to convert it into cash.
Stake: The amount or percentage of ownership an investor holds in a company or asset.
Dividend Yield: A financial ratio showing how much a company pays in dividends each year relative to its share price.
Distribution model: The methods a company uses to sell its products or services to customers (e.g., direct, agencies).
Underwriting: The process by which an insurer evaluates and assumes the risk of insuring a person or asset.
Property and casualty insurer: An insurance company providing coverage for property loss and liability for accidents, injuries, or damage.
Specialty insurance lines: Insurance products designed for unique or non-standard risks, such as motorcycles or RVs.
TTM: The 12-month period ending with the most recent quarterly report.

It’s impossible to predict with certainty whether a recession is coming, but certain developments sure make it more likely. President Donald Trump’s tariff policies could lead to increased prices and plunge the economy into a downturn. The recent government shutdown, especially if it drags on, could lead us directly into a recession.

Of course, that may not happen, but it’s not a bad idea for investors to prepare for that possibility by investing in stocks that are well-equipped to perform well during recessions. Here are two great examples: Walmart (WMT 0.41%) and Johnson & Johnson (JNJ 0.42%).

Image source: Getty Images.

1. Walmart

Some might point out that Walmart, one of the leading retailers in the U.S., is facing challenges. Trump’s tariffs are increasing the company’s expenses and forcing it to pass these costs on to customers, which in turn affects purchasing decisions. How will Walmart handle a full-blown recession when the purse strings get even tighter? In my view, the company will be just fine. Walmart has performed well for decades, generating steady revenue and profits even if the economy is not doing well.

The past is no guarantee of future performance, but Walmart’s core business remains well-equipped to handle significant challenges. The company’s retail footprint in the U.S. is one of the strongest. Roughly 90% of Americans live within 10 miles of one of the company’s stores. So, for most U.S. consumers, Walmart is a convenient option.

Even if people become more price-sensitive during recessions, Walmart remains a great option. The company’s size grants it significant negotiating power when purchasing items from suppliers. This allows it to pass these cost savings to customers. Even in an inflationary environment due to tariffs, Walmart should remain one of the lower-cost options compared to its peers, who would be dealing with the same challenge. 

Furthermore, the company has become even more convenient by doubling down on its e-commerce efforts. Walmart has one of the largest e-commerce footprints in the U.S., ranking second only to Amazon.

It’s not just its size: Walmart is the second cheapest (again, behind Amazon) online retailer in the U.S. So, whether online or in its stores, Walmart should continue to offer competitive prices, making it a top option for shoppers looking to spend as little as possible.

Lastly, Walmart is an excellent dividend stock. The company is part of the elite group of Dividend Kings that have raised their payouts for at least 50 consecutive years — Walmart’s streak is at 53.

Opting to reinvest the dividend helps smooth out market losses. That’s another reason why Walmart is an incredible investment option when preparing for a recession.

2. Johnson & Johnson

Johnson & Johnson is a leading healthcare giant. It offers products and services, such as pharmaceutical drugs, for which demand is not heavily dependent on the state of the economy. Johnson & Johnson has a diversified pharmaceutical portfolio across several therapeutic areas, including some of the biggest, such as oncology and immunology. Despite losing patent protection for one of its biggest growth drivers, Stelara — an immunosuppressant — in the U.S. this year (and in Europe last year), the company has continued to post strong financial results.

In the second quarter, the company’s revenue increased by 5.8% year over year to $23.7 billion. Johnson & Johnson’s adjusted earnings per share declined by 1.8% year over year to $2.77, due to several factors, including the effect of acquisitions. Nevertheless, this is nothing to be worried about.

Overall, Johnson & Johnson is performing well, and it should continue to do so. The company’s navigation of the Stelara patent cliff shows its ability to overcome these meaningful challenges for drugmakers. Johnson & Johnson’s medtech business enhances its operations with greater diversity. With the company working on the promising Ottava robotic-assisted surgery (RAS) system, it could capitalize on this massive growth opportunity over the long run as the RAS market remains underpenetrated.

Furthermore, with recent developments in the pharmaceutical industry, tariffs may not be as significant a problem for Johnson & Johnson. The company will face some headwinds, including legal challenges, but its robust balance sheet enables it to effectively navigate those obstacles.

Finally, Johnson & Johnson is also a Dividend King, having achieved 62 consecutive years of dividend increases. The company is an excellent choice to get you through a recession.

Headlines are filled with news of the U.S. government shutdown thanks to a budget impasse. There are real-world impacts from this event and it is both serious and worth watching. However, you need to keep what is likely to be a short-term issue in perspective when you consider the long-term investment approach you take. Here’s what you should do instead of panicking.

The media’s job is to grab your attention

Budget battles in Washington are actually a pretty common affair, as each political faction attempts to advance its priorities. On occasion disagreements lead to a failure to find common ground, and the necessary bills needed to fund the government don’t get passed in time to keep the government funded. When that happens the government is “shut down.” Even the U.S. government needs to work within a budget.

Image source: Getty Images.

“Shutdown” is a rather harsh word, since the government isn’t exactly shut down. For example, the Social Security Administration (SSA) provided a contingency plan for a shutdown before it began. According to that plan, the SSA employed 51,825 people before the shutdown and following the shutdown it plans to retain 45,628 of those employees. That’s hardly shutting down, and Social Security recipients are still going to be paid.

Simply put, the government will continue to operate select services that are deemed vital. The big impact is going to be on what some would consider less essential government-run operations, such as national parks and museums. And some essential employees may be asked to work without pay until a budget is passed, and then get paid retroactively. On that note, it is important to keep in mind that the longest shutdown to date lasted roughly a month (35 days).

Even though most media outlets are covering the shutdown intensely, and it could affect parts of the economy directly and indirectly, history suggests that it probably isn’t as big a deal as it may seem for most investors and for the markets. Remember, the media, including financial media, is trying to get your attention so it can generate advertising revenue. Turning news events into something huge and exciting is how it does that.

Step away from your portfolio

There is a problem here that investors should pay attention to. The news frenzy around the budget impasse could lead some people to make short-term investment decisions that end up being bad for their long-term financial health. Letting emotions drive investment choices is usually a bad choice. The chart below offers evidence that government shutdowns have little real effect on markets.

Data by YCharts.

The chart shows the performance of the S&P 500 (^GSPC 0.36%) since 1974, which is when the Congressional Budget Act was passed. It’s a pretty darn good return, right? As the chart highlights, the S&P 500 index has advanced more than 6,700% even though there have been multiple government shutdowns along the way. So far, not a single shutdown has resulted in the permanent destruction of capital.

Data by YCharts.

The shutdown started Oct. 1. As the one-month chart above shows, the market isn’t reacting negatively … so far and is maintaining its current upward trajectory. That said, there could be near-term uncertainty. Emotions can be a powerful force on Wall Street, and the longer the shutdown lasts the more emotional investors are likely to get. Try not to get carried along with the herd. Step back and think about your long-term goals. For example, if you are a buy-and-hold investor, don’t suddenly start selling all of your stocks. If history is any guide, this situation will blow over in a month or so, and maybe much sooner.

Little reaction so far

So far there’s no indication that a precipitous bear market has begun. Wall Street appears to have seen the news and continued along its merry way. That’s exactly what you should do, too. In fact, history suggests you should keep doing that even if Wall Street starts to notice that there is a government shutdown going on.

Sticking to a long-term buy-and-hold investment plan has been the winning play through all of the shutdowns that have taken place to date. In other words, you are better off doing nothing than reacting rashly and making emotionally driven portfolio decisions.

In June 2020, I happily invested in one of my favorite consumer brands: Coffee giant Starbucks (SBUX -0.36%). But after it’s underperformed the returns from the S&P 500 by a wide margin over these five years, it’s high time I reconsidered its role in my portfolio.

I believed that Starbucks stock would provide my portfolio with a blend of growth and income. For growth, I was quite optimistic that the company’s business in China would quickly rebound from the pandemic and unlock much higher earnings. That hasn’t happened. With it now looking for strategic options for its China business, it’s time for me to wave the white flag here.

Regarding income, Starbucks didn’t disappoint. It’s increased its dividend payment every year that I’ve held it, and is currently on a 14-year streak of doing that. And as of this writing, the dividend yield is approaching 3%, which is close to the highest it’s ever been.

Therefore, I can’t really complain when it comes to dividend income from Starbucks stock. But growth has been lacking. Going back to just before the pandemic started, Starbucks has averaged a single-digit compound annual growth rate (CAGR) for revenue. This often isn’t good enough to propel market-beating stock performance. So the question is: Can I find a comparable dividend-paying stock that offers better growth? Indeed, there are some options.

1. Academy Sports & Outdoors

With only 300 locations, sporting goods retailer Academy Sports (ASO 1.77%) is easy to overlook. But if management has its way, the company could put up better top-line growth than Starbucks from here.

Perhaps the biggest way that Academy Sports is driving revenue growth is by opening new stores. This year, it hopes to open up to 25 locations. It had already opened eight of these by the end of the second quarter of 2025. Past guidance suggests that the company intends to open around 150 additional locations by the end of 2028.

These new store openings could allow Academy Sports to deliver a double-digit growth rate in coming years. Management is also known for methodically returning cash to shareholders. It buys back stock, and its quarterly dividend has grown at a nice pace in recent years.

ASO Shares Outstanding data by YCharts.

With a dividend yield of only 1%, Academy Sports won’t necessarily attract income investors today. But those with a long-term view hope to ride the company’s growth plans to much higher earnings in time, which could result in much better dividend income down the road.

2. Arcos Dorados

Restaurant chain Arcos Dorados (ARCO -0.15%) owns the rights to the McDonald’s brand in 21 countries in Latin America and the Caribbean, allowing it to own and operate franchised locations and sub-franchise to other operators. With over 2,400 locations, it’s the largest independent McDonald’s franchisee.

Differences in currency exchange rates are masking double-digit revenue growth for Arcos Dorados. For the second quarter of 2025, the company reported just 3% year-over-year growth. But adjusting for currency fluctuations, it grew by 15%. This includes both same-store sales growth and the contribution of new restaurant locations.

With a 3.5% dividend yield, Arcos Dorados stock is more attractive than Starbucks stock as an income investment. The company also pays out just a small portion of its earnings as a dividend, leaving plenty of room for future growth.

About one-third of Arcos Dorados’ locations are sub-franchised. And like McDonald’s itself, Arcos Dorados generates some revenue from its franchisees via rental income — it owns the land and buildings at nearly 500 locations. This real estate layer to the business can make it a stronger investment compared to other restaurant companies.

3. Stick with Starbucks?

Over my investing career, I’ve learned to only sell a stock after taking plenty of time to think it over. So while I’m thinking about selling Starbucks stock and buying a replacement that’s growing faster and still offers income, it’s not a done deal. In fact, I see some reason to continue holding Starbucks stock.

It’s been just over one year since Starbucks hired new CEO Brian Niccol, and he’s still trying to reinvigorate the brand. That starts with bringing back the more inviting coffeehouse atmosphere. The company just announced that it will close hundreds of locations that don’t fit its vision.

Niccol’s plan comes with an expensive price tag of around $1 billion. But investors’ expectations are now low, and Starbucks can start bouncing back as difficult decisions pay off.

For now, I believe the downside risk for Starbucks stock is low because it’s still a top consumer brand and Niccol has a good reputation as an operator. Academy Sports and Arcos Dorados are on my radar as potentially filling the role in my portfolio currently filled by Starbucks. But I see no reason to rush this decision today, so I’ll keep holding Starbucks stock for now.

Broadcom (AVGO -0.06%) and Oracle (ORCL 1.72%) have been two of the best-performing mega-cap growth stocks in 2025. As of this writing, Broadcom is up 19% since reporting earnings on Sept. 4, and Oracle soared 36% on Sept. 10 in response to its own blowout earnings and guidance.

Broadcom is getting closer to reaching a $2 trillion in market cap, and Oracle is knocking on the door of $1 trillion. Yet, you won’t find either of these stocks in the “Magnificent Seven,” which only includes Nvidia (NVDA -0.20%), Microsoft (MSFT 0.73%), Apple (AAPL 2.98%), Amazon (AMZN 1.04%), Alphabet (GOOG 0.69%) (GOOGL 0.65%), Meta Platforms (META -1.32%), and Tesla (TSLA 1.48%).

The “Ten Titans” corrects that error by adding Broadcom, Oracle, and Netflix (NFLX 1.38%) to the group. Combined, these 10 growth stocks now make up 39.1% of the S&P 500 (^GSPC 0.28%).

Here’s how the Ten Titans have disrupted the stock market in just a few years and why their dominance in the S&P 500 can still impact your investment portfolio, even if you don’t own any of the Ten Titans outright.

Image source: Getty Images.

A lot has changed in less than three years

The S&P 500 is up a staggering 70% since the start of 2023, and a big reason for that is artificial intelligence (AI). Specifically, a few major companies are profiting from AI through semiconductors and associated networking hardware, software infrastructure, cloud computing, automation, and efficiency improvements.

The Ten Titans encapsulate this theme. The group is now double the market cap of China’s entire stock market and is largely responsible for moving the S&P 500 in recent years.

At the end of 2022, the Ten Titans made up 23.3% of the S&P 500. But since then, many of the Titans have increased in value several-fold, with Nvidia and Broadcom leading the pack.

Data by YCharts.

The Ten Titans’ combination of size and rapid gains has redefined the structure of the S&P 500. Here’s a look at each company’s weight in the S&P 500 as of this writing.

Data source: Slickcharts.

Oracle’s surge on Sept. 10 briefly pole-vaulted it to become the tenth-largest company by market cap. At that time, the nine largest names in the S&P 500 were all tech companies — a far cry from the days when the most valuable U.S. companies were from the oil and gas, consumer staples, financials, and industrial sectors.

The Ten Titans’ influence is growing

Even if you don’t own any of the Ten Titans stocks, their rise may still have ripple effects for your financial portfolio.

The biggest impact would be if you own index funds or exchange-traded funds (ETFs) with exposure to these holdings. Market-cap weighted passive funds that follow a growth theme or the general market will likely have sizable positions in the Ten Titans. And S&P 500 funds that mirror the index, like the Vanguard S&P 500 ETF, SPDR S&P 500 ETF, the iShares Core S&P 500 ETF will all have around 39% of their holdings in the Titans.

The sheer size of the Ten Titans means that the S&P 500 is no longer a balanced index, at least for now. Rather, it’s more of a growth index, similar to how the Nasdaq Composite is typically viewed.

The S&P 500 may contain hundreds of holdings, but its performance is now based on just a couple dozen companies. Investors looking for mid-cap or even large-cap stocks should venture outside the index because the S&P 500 offers little exposure to non-mega-cap names.

Navigating a Ten Titans-dominated market

The rise of the Ten Titans has benefited their shareholders, S&P 500 index fund investors, and folks with exposure to these stocks through ETFs. However, because they are so big, they will likely make the S&P 500 more volatile going forward.

Investors can offset the Ten Titans concentration by investing in value and dividend stocks that no longer make up a large percentage of the S&P 500. On the other hand, if you’re looking for a low-cost and straightforward way to get exposure to top growth stocks, the S&P 500 may be one of the simplest ways to do so.

The S&P 500 closed Sept. 12 up 12% year to date, 62% over the last three years, and 97% over the last five years. Mega-cap growth-focused companies are largely responsible for driving the index to new heights.

The “Ten Titans,” which includes Nvidia, Microsoft, Apple, Amazon, Alphabet, Meta Platforms, Broadcom, Tesla, Oracle, and Netflix, now makes up over 39% of the S&P 500. And the technology sector alone makes up 34% of the index.

Here’s how the S&P 500 being dependent on the performance of a single sector impacts the broader market and your financial portfolio — and is a low-cost and straightforward way to bet on the continued dominance of tech stocks.

Image source: Getty Images.

Tech is even more dominant than it appears

The S&P 500 has a high concentration in the tech sector, namely because of just a handful of stocks. Nvidia, Microsoft, and Apple collectively account for approximately 20% of the S&P 500. Throw in Broadcom and Oracle, and that number jumps to close to 24%. So, nearly a quarter of the index is in just five tech stocks.

However, there are many leading tech-focused companies that aren’t in the tech sector. Amazon, which owns the largest cloud computing company by market share — Amazon Web Services — is in the consumer discretionary sector, along with Tesla, which is being valued more for its activities outside of electric vehicles, such as robotics, automation, and artificial intelligence (AI).

Alphabet and Meta Platforms are often thought of as big tech companies, but they are in the communications sector, along with Netflix.

The tech sector, plus these five companies, makes up 48.7% of the S&P 500. So, as big as the tech sector is, purely based on the companies that are classified as tech stocks, the real reach of tech-focused companies is far larger.

Let the S&P 500 work for you

The S&P 500’s concentration in the tech sector has expanded its valuation and made it more of a growth-focused index. This can pay off with outsized gains if tech keeps outperforming, but it can also lead to more volatility.

During the worst of the tariff-induced stock market sell-off in April, the Nasdaq Composite fell 24.3% and the S&P 500 also got crushed, falling as much as 18.9%. So while the S&P 500 used to be led by consumer staples, industrial, and energy companies, it has now become like a lighter version of the Nasdaq.

Any investor with exposure to index funds or market-cap-based exchange-traded funds (ETFs) will be impacted by this change. An S&P 500 index fund may seem diversified at first glance, with over 500 industry-leading companies. But the reality is that the S&P 500 is really betting big on just a handful of companies. This presents a dilemma for risk-averse investors, but an opportunity for risk-tolerant investors.

Risk-averse investors can reduce their dependence on mega-cap tech companies by mixing in value and dividend stocks or value-focused ETFs. Many low-cost ETFs have virtually the same expense ratio as an S&P 500 index fund, meaning there’s next to no added cost for picking an ETF that better suits your investment objectives.

However, some investors may feel that it’s best not to fight the market’s momentum, and if anything, lean into it. The Ten Titans are massive, but they are also extremely well-run companies with high-margin businesses and multi-decade runways for future growth. So some folks may cheer the fact that these companies have gotten so large and are dominating the S&P 500.

In that case, buying an S&P 500 index fund may be more interesting. Or even a sector-based fund like the Vanguard Information Technology ETF, which has a staggering 53.2% invested in Nvidia, Microsoft, Apple, Broadcom, and Oracle.

Navigating a tech-driven market

As an individual investor, you don’t have to measure your own performance against an index like the S&P 500. Rather, it’s best to invest in a way that suits your risk tolerance and puts you on a path to achieving your investment goals.

Regardless of your investment time horizon, I think it’s important for all investors to be aware of the current state of the S&P 500 and what’s moving the index. Knowing that so much of the index is invested in tech-focused companies explains why the S&P 500 has such a low dividend yield and a higher-than-historical valuation.

Put another way, the U.S. stock market is being increasingly valued for where its top companies could be years from now rather than where they are today. And that puts a lot of pressure on leading growth stocks to deliver on earnings and capitalize on trends like artificial intelligence and cloud computing.

Bill Ackman is one of the most closely followed investment managers on Wall Street. His Pershing Square Capital Management hedge fund holds just a handful of high-conviction positions, and he typically holds those positions for the long run.

Ackman is often forthcoming with the biggest moves in his portfolio. He’ll usually disclose new trades through his social media accounts or monthly updates to his hedge fund investors. But Pershing Square’s quarterly 13F filing with the Securities and Exchange Commission (SEC) can provide a full accounting of the hedge fund’s portfolio of publicly traded U.S. stocks.

Ackman made a couple of big moves last quarter, and now holds roughly 58% of the portfolio in just three companies.

Image source: Getty Images.

1. Uber (20.6%)

Ackman made a massive investment in Uber Technologies (UBER -2.28%) at the start of 2025, accumulating 30.3 million shares for Pershing Square. That immediately made the stock the hedge fund’s largest position, and it’s only grown bigger since. Uber shares are up 57% so far in 2025 as of this writing.

Uber continues to see strong adoption for both its mobility and delivery service. Total users climbed to 180 million last quarter, up 15% year over year, and it saw a 2% increase in trips per user. Delivery gross bookings climbed 20% year over year and produced strong EBITDA margin expansion. As a result, the company saw adjusted EBITDA growth of 35% year over year.

But the threat of autonomous vehicles is weighing on Uber stock. Ackman believes self-driving cars will benefit Uber in the long run, as it operates the network required for connecting vehicles with riders. That kind of network effect is hard to replicate, giving Uber a competitive advantage and a significant stake in the autonomous vehicle industry. To that end, the company has already partnered with 20 different companies, including AV leader Alphabet‘s (GOOG 0.56%) (GOOGL 0.63%) Waymo.

Shares of Uber currently trade for about 1.2 times its gross bookings over the past year. But with expectations for growth in the high teens, that puts it down closer to a 1 multiple. That’s historically been a good price to pay for the stock. In more traditional valuation metrics, its stock price is 3.9 times forward revenue expectations. Its enterprise value of $206 billion as of this writing is less than 24 times 2025 adjusted EBITDA expectations. Even after its strong performance in 2025, Uber shares still look about fairly valued.

2. Brookfield Corp (19.7%)

Ackman built a position in diversified asset manager Brookfield Corporation (BN -0.08%) over the last five quarters, adding to it each quarter since Pershing Square’s initial purchase in the second quarter of 2024. As a result, the stock is now the hedge fund’s second-largest position.

Brookfield saw its distributable earnings excluding carried interest and gains from selling investments climb 13% on a per-share basis last quarter. The company expects to produce distributable earnings growth of 21% per year from 2024 through 2029.

A huge growth driver for Brookfield is its Wealth Solutions segment, which grew total insurance assets to $135 billion as of the end of June. Its annualized earnings are now $1.7 billion.

The business is growing quickly. Just two years ago, insurance assets totaled $45 billion. Management expects the growth to continue with assets topping $300 billion by 2029. At that point, the segment will be the conglomerate’s largest contributor to distributable earnings.

Management is using its free cash flow to buy back shares and invest in new assets. This could further increase distributable earnings per share above its guidance for 21% organic growth over the next few years. Shares currently trade for less than 20 times management’s expectations for 2025 distributable earnings, offering compelling value for investors.

3. Alphabet (17.9%)

Ackman first bought shares of Alphabet in early 2023, shortly after the release of OpenAI’s ChatGPT. While many saw the growth of generative AI as a major threat to Alphabet’s Google, Ackman thought the market overreacted, offering a bargain price for the stock. While he trimmed the position a bit in 2024, he’s added back to it over the first two quarters of 2025, preferring the Class A shares (which come with voting rights).

Alphabet has produced strong financial results in 2025. Its core advertising business climbed 10% year over year last quarter, with particularly strong results from Google Search (up 12%). That speaks to the company’s efforts to incorporate generative AI into its search business with features like AI Overviews and Google Lens. The former has increased engagement and user satisfaction, according to management, while the latter lends itself to high-value product searches.

Alphabet has seen tremendous results in its Google Cloud business, which supplies compute power to AI developers. Sales increased 32% year over year, with operating margin expanding to 22% for the business. Overall, Google Cloud accounted for 43% of the total increase in Alphabet’s operating earnings last quarter, despite its relatively small size compared to the Search business.

That said, the company faces potential regulatory challenges to its business. The Department of Justice has ruled that it operates an illegal monopoly. The company is awaiting a ruling on required remedies, which could include divesting its Chrome browser or a ban on contracts positioning Google as the default search engine in other browsers.

As a result, Alphabet shares trade for less than 21 times forward earnings expectations. That’s the lowest multiple among the “Magnificent Seven” stocks and a great price for one of the leading AI companies in the world.