Pershing Square Capital Management

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Pershing Square Capital Management
Industry Hedge funds
Founded 2004
Founder(s) Bill Ackman
Headquarters 888 7th Avenue, NYC
Total assets $13.2 billion (2013)[1]

Pershing Square Capital Management is an activist hedge fund management company founded and run by Bill Ackman located at 888 7th Avenue in New York.[2][3][4][5]

Company history[edit]

In 2004, with $54 million in funding from his personal funds and from his former business partner Leucadia National, Ackman started Pershing Square Capital Management.[6]

Ackman is known to occasionally hire people outside of traditional finance backgrounds; for instance, his professionals have included a former fly fishing guide, a former tennis pro and "a man whom he met in a cab."[7] However, most of the firm's investment professionals come from The Blackstone Group and Goldman Sachs, and earned undergraduate degrees at Wharton School of the University of Pennsylvania and Harvard.[8]

Investment history[edit]

Pershing has in its history launched activist campaigns against McDonald's[5] and Wendy's.[4][5]

In 2005, Pershing bought a significant share in fast food chain Wendy's International and successfully pressured them to sell its Tim Horton's doughnut chain. Wendy's spun off Tim Horton through an IPO in 2006 and raised $670 million for Wendy's investors. After Ackman sold his shares at a substantial profit after a dispute over executive succession, the stock price collapsed, raising criticism that the sale of Wendy's fastest growing unit left the company in a weaker market position.[6] Ackman blamed the poor performance on their new CEO.[6]

In December 2007, his funds owned a 10% stake in Target Corporation, valued at $4.2 billion[9] through the purchase of stock and derivatives.[10] His funds now own a 7.8% stake.[11] In December 2010, his funds held a 38% stake in Borders Group and on December 6, 2010, Ackman indicated he would finance a buyout of Barnes & Noble for US$900M.[12]

On January 9, 2009, the fund disclosed a 7.4% ownership stake in General Growth Properties (GGP) according to documents filed with the SEC,[13] becoming the second-largest shareholder behind Brookfield Asset Management. The fund was betting on the company to go bankrupt in a way that would leave its shareholders intact.[14] In November 2010, Pershing Square helped the company emerge from Chapter 11 bankruptcy protection.[15] As of August 2012 the fund holds beneficial ownership of 7.7 percent of General Growth's stock.[16]

In 2010, Pershing Square reported having taken a large ownership stakes in JC Penney and Canadian Pacific Railway.[17]

In July 2012, Ackman acknowledged to CNBC that he had acquired shares in Procter & Gamble worth approximately $1.8 billion, a 1% stake in the company, with the idea of taking an activist role within the corporation. But after acquiring a stake in Air Products & Chemicals, Pershing Square dropped its stake in Procter & Gamble, and held only $60 million by the last quarter of 2013.[18]

Herbalife[edit]

In December 2012, Ackman announced that the firm had made a $1 billion short bet against Herbalife, a maker of weight-loss and vitamin supplements, calling the company a "pyramid scheme".[19] After activist billionaire investor Carl Icahn bought a stake in the company in January 2013, the share price rose nearly 13% and the investment was seen by analysts as the worst investment ever made by the firm.[20] After a persistent political and grassroots campaign funded by Ackman and the firm,[21][22] the Federal Trade Commission initiated a civil investigation into Herbalife, causing its stock to drop enough that by March 2014 Pershing Square was nearly even on their bet.[20] In April 2014, Reuters reported that, according to its sources, the FBI is conducting a probe into Herbalife; agents are also reviewing documents obtained from the company's former distributors.[23]

References[edit]

  1. ^ Pershing Square Capital Management Proposes Restructuring of Fannie Mae and Freddie Mac
  2. ^ Markus Krebsz (15 June 2011). Securitisation and Structured Finance Post Credit Crunch: A Best Practice Deal Lifecycle Guide. John Wiley and Sons. pp. 83–. ISBN 978-0-470-71391-4. Retrieved 2 August 2011. 
  3. ^ Joseph A. McCahery; Erik P. M. Vermeulen (19 November 2010). Corporate Governance of Non-Listed Companies. Oxford University Press US. pp. 178–. ISBN 978-0-19-959638-6. Retrieved 2 August 2011. 
  4. ^ a b Philip Coggan (9 November 2010). Guide to Hedge Funds: What They Are, What They Do, Their Risks, Their Advantages. John Wiley and Sons. pp. 49–. ISBN 978-0-470-92655-0. Retrieved 2 August 2011. 
  5. ^ a b c David Stowell (16 February 2010). An Introduction to Investment Banks, Hedge Funds, and Private Equity: The New Paradigm. Academic Press. pp. 49–. ISBN 978-0-12-374503-3. Retrieved 2 August 2011. 
  6. ^ a b c Minneapolis Star Tribune: "William Ackman - Targeting Target" by CHRIS SERRES January 13, 2008
  7. ^ "From Hedge Funds to to Bonefishing," Forbes, July 16, 2012
  8. ^ http://www.youtube.com/watch?v=QH14_4EXelY
  9. ^ "Ackman Boosts Target State". Bloomberg. 24 December 2007. 
  10. ^ Ackman's Target Campaign Is Off-Target, Barrons, May 25, 2009
  11. ^ "Ackman loses in Target proxy contest". Reuters. 28 May 2009. 
  12. ^ Jarzemsky, Matt. "UPDATE: Ackman Offers To Finance Borders Buyout Of Barnes & Noble" The Wall Street Journal, December 6, 2010.
  13. ^ http://www.marketfolly.com/2009/01/pershing-square-bill-ackman-files-13d.html Pershing Square (Bill Ackman) Files 13D on General Growth Properties (GGP)
  14. ^ http://seekingalpha.com/article/114750-the-logic-behind-bill-ackman-s-purchase-of-general-growth-properties
  15. ^ "General Growth cleared to exit bankruptcy". Reuters. 22 October 2010. 
  16. ^ http://seekingalpha.com/article/825531-pershing-square-urges-shareholders-to-consider-sale-of-general-growth-properties Pershing Square Urges Shareholders To Consider Sale Of General Growth Properties
  17. ^ Forbes. 15 June 2012 http://www.forbes.com/sites/gurufocus/2012/06/15/bill-ackmans-activist-positions-in-j-c-penney-and-canadian-pacific-railway/ |url= missing title (help). 
  18. ^ Benoit, David (14 February 2014). "7:27 pm Feb 14, 2014 HEDGE FUNDS Pershing Square Slashes Procter & Gamble Stake". Wall Street Journal. Retrieved 24 March 2014. 
  19. ^ Stevenson, Alexandra (11 March 2014). "Herbalife Shares Fall as Ackman Makes New Accusations". New York Times. Retrieved 24 March 2014. 
  20. ^ a b Stanford, Duane (24 March 2014). "Herbalife Strengthens Ties With Icahn as Ackman War Rages". Bloomberg News. Retrieved 24 March 2014. 
  21. ^ Schmidt, Michael S. (9 March 2014). "After Big Bet, Hedge Fund Pulls the Levers of Power". New York Times. Retrieved 24 March 2014. 
  22. ^ "Ackman vs. Herbalife, a History". New York Times. 10 March 2014. Retrieved 24 March 2014. 
  23. ^ "FBI conducting a probe into Herbalife: sources". April 2014. Retrieved 11 April 2014. 

External links[edit]