Is Intercontinental Exchange (ICE) a Simple, Durable Business Misunderstood by Market?

Is Intercontinental Exchange (ICE) a Simple, Durable Business Misunderstood by Market?

Wed, August 19, 2026 at 2:57 PM GMT+3 3 min read

Pershing Square Holdings, an investment holding company, released its second quarter 2026 investor letter. A copy of the letter can be downloaded here. Pershing Square is an alternative asset manager that primarily manages capital in publicly traded investment vehicles, with 98% of its capital structure dedicated to such assets, including Howard Hughes Holdings. This capital permanency allows for long-term investments, fostering sustainable competitive advantages and yielding substantial market returns since 2018. The investment strategy focuses on acquiring high-quality companies at safe price points, anticipating significant annual EPS growth of 15% or more in the coming years. Additionally, reviewing the Fund's top five holdings could help identify its best picks for 2026.

In Q2 2026, Pershing Square Holdings added Intercontinental Exchange, Inc. (NYSE:ICE), a US-based financial services company that provides technology, data, and market infrastructure to financial institutions, corporations, and government entities. On August 18, 2026, Intercontinental Exchange, Inc. (NYSE:ICE) closed at $156.18 per share, reflecting a market capitalization of $87.68 billion. Intercontinental Exchange, Inc. (NYSE:ICE) posted a one-month return of 9.58%, and its shares lost 13.86% over the past 52 weeks.

Pershing Square Holdings stated the following regarding Intercontinental Exchange, Inc. (NYSE:ICE) in its Q2 2026 investor letter:

"We recently established an investment in Intercontinental Exchange, Inc. (NYSE:ICE), a business we have followed for nearly a decade. Founded in 2000 by current Chairman & CEO Jeff Sprecher, ICE is a leading global exchange operator and financial data and infrastructure provider built through 25 years of organic growth and acquisitions of marquee financial infrastructure assets. Its highly moated Exchanges segment generates nearly 70% of earnings, anchored by a crown-jewel energy franchise with revenues more than two-and-a-half times those of its next-largest competitor. Most of ICE's Exchanges revenue comes from its futures and options exchanges, which vertically integrate trading and clearing, meaning that a position opened on an ICE exchange can only be closed on that same exchange and can only receive offsetting margin benefits from other positions in the same clearinghouse. This structure results in highly dominant positions in individual products, such as Brent crude futures, where ICE is the global benchmark with ~90% market share, driving enhanced pricing power, faster growth, and far higher margins than products cleared externally, such as equities. Over the last five years, Exchanges grew revenue 8% and profits 10% annually, with margins expanding to 75%.

ICE generates just under 20% of earnings from its Fixed Income & Data Services (FIDS) segment, a collection of mostly subscription businesses that have grown revenue 6%, and the remainder from Mortgage Technology, assembled through acquisitions over the past decade and currently weathering a prolonged cyclical downturn. Both smaller segments are highly profitable, with 45% and 41% profit margins, respectively..." (Click here to read the full text)

Intercontinental Exchange, Inc. (NYSE:ICE) is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 86 hedge fund portfolios held Intercontinental Exchange, Inc. (NYSE:ICE) at the end of the first quarter which was 83 in the previous quarter. While we acknowledge the potential of Intercontinental Exchange, Inc. (NYSE:ICE) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Intercontinental Exchange, Inc. (NYSE:ICE) and shared Aristotle Capital Management's views on the company. In addition, please check out our hedge fund investor letters Q2 2026 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.