Bill Ackman: the Indiana Jones of Investing
Herbalife (NYSE: HLF). Valeant Pharmaceuticals (NYSE: VRX). Target (NYSE: TGT). These are just a few of the companies that activist investor Bill Ackman has muscled his way into, some of which have left him tattered and others have catapulted him to billionaire status. A Harvard grad, Ackman was raised in the hamlet of Chappaqua, New York (where Hillary Clinton calls home) and is the founder of Pershing Square Capital Management.
When Ackman invests, he places billion-dollar bets on a handful of companies. The Indiana Jones approach has led to some bruising defeats, including a nearly $4 billion loss from a misplaced Valeant position. With rare humility, Ackman apologized to his investors for what he coughed up as a mistake.
More recently Ackman failed in his attempt to obtain a trio of seats on the board of payroll and HR company Automatic Data Processing (NasdaqGS: ADP), though it wasn’t a total loss. Pershing Square’s fund generated a profit of $300 million from its investment in the stock so far.
One of Ackman’s most infamous bets was his multi-year $1 billion short position on weight loss and nutritional supplements play Herbalife, a position he recently abandoned amid the rise of the company’s stock despite Ackman’s cries of a pyramid scheme.
Ackman currently boasts a net worth of $1.3 billion but is in jeopardy of losing his billionaire status amid steep losses and the failure of his marriage of more than two decades.
Ackman v. Icahn
Activist investors by nature have huge egos, as they’re attempting to convince investors that their plan for a company’s future is better than that of management’s. Ackman is no exception and has gone to battle against the likes of other famous corporate raiders such as Carl Icahn.
In addition to taking different sides of the Herbalife bet, Ackman and Icahn have been fierce rivals for years, dating back to when Ackman ran his first hedge fund, the now-dissolved Gotham Partners. A fight over a trade between the pair inspired a 2004 lawsuit that netted Ackman millions.
For all the controversy surrounding Ackman, no one can say he doesn’t give back. The Pershing Square Foundation has directed $400 million in grants and social investments around the world.
Pershing Square's Latest Form 13F Filing
On November 14, 2017, Ackman's firm Pershing Square Capital Management, L.P. filed their quarterly Form 13F regulatory filing. I reviewed the 13F filing to get a sneak peek at holdings in Pershing Square's portfolio.
Pershing Square's stock portfolio totals nearly $5.1 billion according to the latest filing. The list value of stock holdings is down -15.0% when compared to the prior quarter. As a benchmark, the S&P 500 was up 3.9% over the same period.
Pershing Square's Six Reported Holdings
The following table summarizes Pershing Square's six holdings reported in the last filing:
|Ticker||Name||Holding ($mil)||% Of Portfolio|
|QSR||RESTAURANT BRANDS INTL INC||1,692.9||33.1%|
|ADP||AUTOMATIC DATA PROCESSING IN||961.8||18.8%|
|CMG||CHIPOTLE MEXICAN GRILL INC||887.3||17.4%|
|MDLZ||MONDELEZ INTL INC||566.3||11.1%|
|HHC||HOWARD HUGHES CORP||554.8||10.8%|
|PAH||PLATFORM SPECIALTY PRODS COR||451.0||8.8%|
Pershing Square's Only Buy
Pershing Square added over $770 million to its position in Automatic Data Processing (ADP). ADP provides business process outsourcing services worldwide. The position represents approximately 19% of the reported portfolio.
Pershing Square Exits Nomad Foods
Pershing Square reduced positions in Restaurant Brands International (QSR) by $808 million and Mondelez International MDLZ by $23.1 million. The firm also exited its position in Nomad Foods (NOMD) by selling the 33 million shares it reportedly owned last quarter worth approximately $470 million.
|Ticker||Name||Sold ($mil)||% Of Portfolio|
|QSR||RESTAURANT BRANDS INTL INC||808.1||33.1%|
|NOMD||NOMAD FOODS LTD||470.3||7.8%|
|MDLZ||MONDELEZ INTL INC||23.1||11.1%|
Pershing Square's Recent Price Pullbacks
To find stocks in his portfolio that may be unpopular at the moment and trading at cheap valuations, I ranked his holdings by price pullbacks. The ranking table below lists the three stocks in Pershing Square’s portfolio that have dropped in the value over the last 30 days.
|Ticker||Name||Price 1-mo Ago||Current Price||% Change 1-mo|
|PAH||PLATFORM SPECIALTY PRODS||$11.58||$9.56||-17.5%|
|CMG||CHIPOTLE MEXICAN GRILL||$326.45||$285.97||-12.4%|
Analyst Targets on Pershing Square's Holdings
Banks and brokerages often release 12 to 18-month price targets for the stocks they cover. Analyst upgrades and downgrades alone can often impact a company's stock price.
"In the short run, a market is a voting machine but in the long run, it is a weighing machine." - Benjamin Graham
The table below ranks the six stocks in Pershing Square's portfolio by upside based on analyst targets:
|Ticker||Name||Upside (Analyst Target)||% Of Portfolio|
|PAH||PLATFORM SPECIALTY PRODS COR||53.8%||8.8%|
|HHC||HOWARD HUGHES CORP||29.0%||10.8%|
|MDLZ||MONDELEZ INTL INC||14.9%||11.1%|
|QSR||RESTAURANT BRANDS INTL INC||13.4%||33.1%|
|CMG||CHIPOTLE MEXICAN GRILL INC||10.8%||17.4%|
|ADP||AUTOMATIC DATA PROCESSING IN||1.0%||18.8%|
The Ideas section of finbox.io tracks top investors and trending investment themes. You can get the latest data on the holdings discussed above here.
As of this writing, I did not hold a position in any of the aforementioned securities and this is not a buy or sell recommendation on any security mentioned.