Pershing Square Capital Management’s William Ackman is preparing to move on to his next activist target. In a speech at Euronext Amsterdam, the New York investor said he is planning to buy a “decent-sized stake” in a U.S. company and plans to announce this position in the next couple of months, according to Bloomberg. The tease came on the day shares of his new public fund, Pershing Square Holdings, began trading. The stock, priced at $25, closed down 12 percent at $22.
“The stock is down, which is good,” Ackman reportedly said jokingly. “If it went up we’d have sold it too low.” Nice spin. “He got the highest price for his fund instead of following the usual practice of pricing a little low to give buyers an early gain,” Erik Gordon, a professor at the Ross School of Business at the University of Michigan, told Bloomberg. Of course, the purpose of raising money in this vehicle is to create permanent capital not sensitive to potential redemptions every quarter, enabling Ackman to establish longer-term positions.
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Hedge fund flows declined 1.01 percent in October, according to the SS&C GlobeOp Capital Movement Index, published by hedge fund administrator SS&C GlobeOp. Bill Stone, chairman and chief executive officer of SS&C Technologies, which makes financial services software, characterized this monthly negative net flow as “typical quarter-end rebalancing.” The firm also said the gross return of the SS&C GlobeOp Hedge Fund Performance Index for September measured 0.24 percent.
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Call it another case of selling on the news. Shares of Darden Restaurants Monday fell 2.67 percent in the first trading day after activist hedge fund Starboard Value won its proxy fight and will replace all 12 directors of the restaurant company, best known for its Olive Garden chain. On Monday Piper Jaffray downgraded Darden from Overweight to Neutral and cut the price target from $55 to $50, according to reports. Piper reportedly said it is now taking “a more cautious stance…as we look for more clarity on strategy among incoming leadership.”
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A tug-of-war broke out with J.C. Penney’s stock on Monday. Initially it looked like the bulls clearly won, as the stock surged more than 5 percent at the open after the embattled retailer announced that Home Depot executive Marvin Ellison will take over as chief executive officer next year. However, the same day UBS cut its rating on the stock from Buy to Neutral and halved its price target to $5 from $10, asserting it is “becoming clearer that the stock is pricing in an overly-bullish scenario.”
The note seems to have been written before the management change was announced. Alas, the stock tumbled late in the day and closed at $7.09, down 0.42 percent amid a wider market meltdown. Two of the top investors in J.C. Penney as of the end of June were Patrick McCormack’s Tiger Consumer Management and Larry Robbins’ Glenview Capital Management.
