Bill Ackman’s November Comeback

Pershing Square Holdings just posted its best month of the year but still trails the S&P 500.


Illustration by II (Photo: Jeenah Moon/Bloomberg)

After suffering through three losing months — and a reversal of his bet on interest rates — Bill Ackman had a bang-up November.

Pershing Square Holdings gained 7.7 percent in November and was up 16 percent for the year by the end of the month, according to a report to investors. It’s the best monthly performance all year for the publicly traded hedge fund. But Pershing Square, which is invested in only ten stocks, still isn’t beating the S&P 500, which had a total return of 21 percent through November.

The gains this year appear to be driven by two stocks: Chipotle Mexican Grill, the fast-food eatery, that is up 58 percent for the year and 8 percent for the month of November, and Alphabet, Google’s parent. The highflying tech stock was an unusual play for Pershing Square, which in the past has gone for undervalued, often unloved stocks. Alphabet, on the other hand, is a perennial hedge fund favorite. But following the crowd has turned out to be a winning strategy this year. Since Pershing Square first bought the stock — on March 2 — Alphabet has gained 48 percent. It was up 3 percent in November.

Other big bets have not fared so well. Universal Music, Pershing Square’s largest position — and where Ackman sits on the board — is still flailing. It’s up only 7.69 percent for the year and about 3 percent for the month.

Howard Hughes, the only other company where Ackman sits on the board (he is its chairman), is having an even worse year. After boosting its stake earlier in 2023, Pershing Square owns 36 percent of the stock, which is down 3.8 percent for the year after gaining 1 percent in November.

While Alphabet is the only big change to the stock portfolio, Ackman did change his view on the direction of long-term interest rates. As recently as August, he was predicting a further increase in rates and was holding onto a very big short bet that had been losing money all year. In a November conference call with investors, Ackman said that Pershing Square had lost $200 million on that short this year.

By the middle of October — a month when the fund fell 3.6 percent — he announced on X, formerly known as Twitter, that he had closed out the short because “there is too much risk in the world to remain short bonds at current long-term rates. The economy is slowing faster than recent data suggests.”

Ackman now expects interest rates to fall, possibly as early as the first quarter — and has gone long interest rates. “We’re betting that the Federal Reserve is going to have to cut rates more quickly than people expect,” Ackman said in an upcoming episode of The David Rubenstein Show: Peer-to-Peer Conversations, according to Bloomberg. “That’s the current macro bet that we have on.”

That may be wishful thinking. On Friday Federal Reserve Board Chairman Jerome Powell pushed back on expectations of lower rates in the first half of 2024, saying the Fed may even hike further, according to Bloomberg.

“It would be premature to conclude with confidence that we have achieved a sufficiently restrictive stance, or to speculate on when policy might ease,” Powell said Friday at an event in Atlanta, Bloomberg reported. “We are prepared to tighten policy further if it becomes appropriate to do so.”