Bill Ackman’s Pershing Square Holdings hedge fund gained almost 10 percent in October, slashing its year-to date-loss to 12 percent. At the end of September it was down 19.9 percent for the year.
Pershing Square’s big monthly gained eclipsed that of the S&P 500 index, which jumped 8 percent, but fell short of the Dow Jones Industrial Average, which rose about 14 percent in October — its best monthly gain since 1976.
Ackman’s top three holdings are Universal Music Group, Lowe’s Cos., and Chipotle Mexican Grill. All three underperformed the markets in October.
Universal, his biggest position, was only up 6 percent in October and is down 20 percent for the year. Lowe’s gained only 2.36 percent in October while falling 26 percent for the year, and Chipotle was basically flat for the month, leaving it down around 18 percent for the year.
As for the portfolio’s other holdings, Hilton Worldwide Holdings rose 11 percent for the month but is down 15 percent for the year, while Restaurant Brands International gained 9 percent in October, and is down only 2.8 percent for the year. Other October gainers were Howard Hughes, up 12 percent, and Canadian Pacific, which gained about 9 percent. For the year, Howard Hughes is down 40 percent, while Canadian Pacific Railways is up more than 4 percent for the year — Pershing Square’s only positive gainer in 2022 so far.
Ackman appears to still be relying on his interest rate hedge, which he put on last year, to help boost the portfolio. In August, Pershing Square reported that its interest rate hedge was its biggest winner for the year as of mid-month, accounting for almost 10 percentage points in gross gains.
A year ago, Ackman called for the Federal Reserve to raise rates aggressively to counter inflationary tendencies that were building. Since then, the Fed has made four consecutive 75 basis point rate hikes, the latest of which was Wednesday. At that point, the central bank indicated that future rate hikes could be smaller, given “the lags with which monetary policy affects economic activity and inflation,” among other factors. The stock market initially surged on the news, but later fell into negative territory.
Still, this year massive interest rate hikes have pummeled the stock market — and Ackman’s hedge fund.
Ackman has two more months to turn his hedge fund positive. But if 2022 ends with a loss, it will be Pershing Square Holding’s first negative annual return since 2018, when it ended slightly in the red, down less than 1 percent. Since then, Ackman has had some stunning years. The publicly traded hedge fund gained about 58 percent in 2019, 70 percent in 2020, and 27 percent in 2021.
Pershing Square Capital now has $14.77 billion in assets under management, with $11.96 billion of that in the publicly traded hedge fund. Ackman’s legacy hedge funds and a co-investment vehicle that owns shares of Universal Group make up the rest of the assets.