Bill Ackman’s Big Month Boosts Pershing Square

Bill Ackman’s publicly traded hedge fund just turned in a double-digit gain in May, the fund’s second-best month since it went public in 2014.

Pershing Square Holdings, now the biggest fund managed by Ackman’s Pershing Square Capital Management, is up 7.5 percent for the year as of June 5, after turning in a 10.3 percent gain for the month of May. It is a big reversal of fortune for Ackman, whose funds lost money for the three previous years. 

During May, all of the stocks in Pershing Square’s heavily concentrated portfolio of ten investments — even the beleaguered mortgage lenders Fannie Mae and Freddie Mac — posted gains. 

So far this year, Pershing Square’s performance also way outpaces the broader market, which has gained about 3 percent during the same time period. And, through May, Ackman’s also besting fellow managers like Dan Loeb, whose Third Point Offshore has gained just 1.2 percent year to date, and David Einhorn, whose Greenlight Capital is down 11.9 percent.

That said, Ackman still has a long way to go to meet his high-water mark, and massive redemptions have left Pershing Square with $8.1 billion in firm assets at the end of May. The publicly traded fund still trades at a wide discount; it announced Thursday that Ackman had bought about $160 million worth of the shares, giving him an 8 percent ownership of that fund. 

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The biggest story for Ackman this year is the turnaround at Chipotle Mexican Grill. The stock is up 54 percent this year, after Ackman finally convinced former Taco Bell CEO Brian Niccol to take the helm of the struggling Mexican food chain earlier this year. 

Ackman took a $1 billion stake in Chipotle in 2016 at about $405 per share, after the stock had been cut in half after a string of E. coli outbreaks that sickened customers in several states. He put one of his portfolio managers on the board at the end of that year, but the stock fell again precipitously after another incident last year. After going as low as $255, Chipotle now trades around $450.

Platform Specialty Products Corp., another long-time loser of Ackman’s, is also showing signs of life. On Wednesday, the Wall Street Journal reported the company, run by Ackman friend Martin Franklin and Nicolas Berggruen, is in “advanced talks to sell its agricultural-chemicals business to London-based Wilmcote Holdings for about $3 billion.”

The news helped boost Platform, which is now up nearly 24 percent through early June. At Wednesday’s close of $12.27, it is trading higher than its IPO price of $10 in 2013. Ackman, which bought into the IPO, has a 14 percent stake in the company.

Ackman has long vowed to come back after his disastrous bet on Valeant Pharmaceuticals International and his long-suffering Herbalife short, which he covered in February. This year, instead of courting investors and the media, Ackman told clients he would focus solely on investing. 

In its new investments this year, Ackman is taking a lower-key activist approach after his failed proxy battle last year at ADP — which nonetheless is also on a tear. It’s up 16 percent this year, and a special-purpose vehicle that only invests in ADP has gained more than 20 percent since he raised $500 million for it last summer.   

Pershing Square’s new investments in 2018 include United Technologies, where Ackman has joined Loeb in calling for a breakup of the company. That stock is off slightly for the year, down 0.59 percent, as it is considered one of the companies that would be most hurt by Trump’s proposed steel tariffs.

Last month, Ackman also announced a $1 billion stake in Lowe’s, where D.E. Shaw — which has lately joined the activist camp — had already wrangled three board seats and helped bring in a new CEO.  Ackman announced his Lowe’s stake the day after the new CEO, Marvin Ellison, joined the company — a move Ackman has endorsed. The stock has surged around 13 percent since then.

In keeping with his new low profile, Ackman declined to comment for this article. 

But in an interview with Institutional Investor last November, when he was told that his reputation was on the line, Ackman was sanguine. “I love all that,” he said. “When we make a turn, it’s that more rewarding.”