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Pershing Square Capital Management

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Pershing Square Capital Management, L.P.
IndustryFinancial services
Hedge funds
Founded2003[1]
FounderBill Ackman
Headquarters787 11th Avenue, New York City
ProductsInvestment funds
ServicesInvestment management
AUMUS$ 8 billion
(as of June 30, 2019)[2]

Pershing Square Capital Management is an American hedge fund management company founded and run by Bill Ackman, located at 787 11th Avenue in New York.[3][4][5][6]

Company history

Bill Ackman

In 2004, with $54 million in funding from his personal funds and former business partner Leucadia National, Ackman started Pershing Square Capital Management.[7]

Ackman has been known to 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."[8]

In October 2014, Ackman launched a UK-based closed-end fund, Pershing Square Holdings, on the London Stock Exchange.[9]

Investment history

Pershing has launched activist campaigns against McDonald's, Wendy's, and Herbalife.[5][6]

In 2005, Pershing bought a significant share in fast food chain Wendy's International and successfully pressured them to sell off its Tim Horton's donut chain. Wendy's spun off the Canadian restaurant donut chain 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 the sale of Wendy's fastest growing unit left the company in a weaker market position.[7] Ackman blamed the poor performance on their new CEO.[7]

In December 2007, his funds owned a 10% stake in Target Corporation, valued at $4.2 billion[10] through the purchase of stock and derivatives.[11] His funds now own a 7.8% stake.[12] 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.[13]

On January 9, 2009, the fund disclosed a 7.4% ownership stake in General Growth Properties (GGP) according to documents filed with the SEC,[14] becoming the second-largest shareholder behind Brookfield Asset Management. The fund was betting on the company going bankrupt in such a way as to leave its shareholders intact.[15] In November 2010, Pershing Square helped the company emerge from Chapter 11 bankruptcy protection.[16] As of August 2012 the fund holds beneficial ownership of 7.7 percent of General Growth's stock.[17]

In 2010, Pershing Square reported having taken large ownership stakes in JC Penney and Canadian Pacific Railway.[18]

In July 2012, Ackman acknowledged to CNBC 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. Pershing Square later reduced its stake in Procter & Gamble, which was valued at around $60 million by the end of 2013.[19]

In the first quarter of 2016, the hedge fund experienced its "biggest-ever quarterly loss" of 25%, due in part to its 9% stake in Valeant Pharmaceuticals International. Ackman, who joined Valeant's board in March 2016, commented on the company's 88% loss since August 2015 stating, “This is going to be a badly scraped knee that may even require stitches but it is not life threatening... We should be able to recover the lion's share of our investment—if not all of it—over time".[20][21][22] After the controversial drug prices and operations of Valeant became public, Ackman and Valeant's board fired former CEO Mike Pearson, and Pershing Square sold all of its stake in Valeant with a total loss of $4bn.[23]

In September 2016, Pershing Square continued its investment in fast food by buying a 9.9% stake in Chipotle Mexican Grill.[24] As of March 2018, Pershing Square held a 10.3% stake in Chipotle.[25] In 2018, Ackman dumped $500 million into the publicly traded arm of Pershing Square Capital Management stating it was significantly undervalued at roughly $15 a share. As of September 2019, the fund returned 54.5% with a share price of $19.10, the highest since January 2016.[26][27]

Herbalife

See also: Bill Ackman Herbalife short

In December 2012, Ackman announced 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".[28] 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.[29] After a persistent political and grassroots campaign funded by Ackman and the firm,[30][31] 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.[29] In April 2014, Reuters reported that, according to its sources, the FBI conducted a probe into Herbalife and reviewed documents obtained from the company's former distributors.[32]

In March 2015, U.S. District Judge Dale Fischer dismissed a suit filed by Herbalife investors alleging the company is operating an illegal pyramid scheme.[33] On March 12, 2015, it reported that Ackman was under investigation by federal prosecutors and the FBI; Ackman was quoted that he would not back down from his claims against Herbalife.[34][35]

Platform Specialty Products Corporation

As of June 2014, Pershing Square is the largest institutional holder of the shares of Platform Specialty Products Corporation (NYSE: PAH), owning a 24.28% stake.[36] Pershing first disclosed the position in January 2014,[37] shortly after Platform debuted on the New York Stock Exchange.[38][39][40] Subsequently, in April 2014, Platform announced a deal to acquire the agrochemicals business of Chemtura for approximately $1 billion.[41] Agriphar, another agricultural specialty chemicals company, agreed in August 2014 to become the third company to join the Platform umbrella.[42]

In April 2014, Ackman singled out Platform Specialty Products in "The Outsider" presentation,[43] which discusses optimal methods of capital allocation.[44][45][46]

Pershing Square's investment ventures are prominently featured in two financial documentaries.

Further reading

  • Cheffins, Brian R. (2014). "Hedge Fund Activism Canadian Style". University of British Columbia Law Review. 47 (1): 1-59) (Discussing Pershing Square's activities in Canada, and a unique cultural reluctance to support active value creation by ethical intervening shareholders). SSRN 2204294.
  • Rojas, Claudio R. (2014). "An Indeterminate Theory of Canadian Corporate Law". University of British Columbia Law Review. 47 (1): 59-128 ("The author's perspective on Berkshire Hathaway's investment philosophy was informed by discussions with Warren Buffett in Omaha, Nebraska": pp. 59, 122-124). SSRN 2391775.

References

  1. ^ "About Pershing Square Capital Management, L.P." Pershing Square Capital Management, L.P. Retrieved 2018-04-08.
  2. ^ "The largest managers of hedge funds (P&I Sep 2019)". No. Special Report Hedge Funds. United States: Pensions & Investments. Crain Communications Inc. 16 September 2019. Retrieved 15 October 2019.
  3. ^ 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.
  4. ^ 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.
  5. ^ 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.
  6. ^ a b 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.
  7. ^ a b c Serres, Chris (13 January 2008). "William Ackman: Targeting Target". United States: StarTribune (Minnesota). Star Tribune Media Company, LLC. Archived from the original on 29 May 2012. Retrieved 16 May 2009.
  8. ^ "From Hedge Funds to Bonefishing," Forbes, July 16, 2012
  9. ^ "Bill Ackman's Pershing Square fizzles on IPO". FT. 13 October 2014. Retrieved 2 June 2017.
  10. ^ "Ackman Boosts Target State". Bloomberg. 24 December 2007. Archived from the original on 6 January 2008. Retrieved 27 February 2013.
  11. ^ Andrew Bary (26 May 2009). "Ackman's Target Campaign Is Off-Target". barrons.com.
  12. ^ "Ackman loses in Target proxy contest". Reuters. 28 May 2009.
  13. ^ de la Merced, Michael (6 December 2010). "Ackman Offers to Finance a Borders Bid for Barnes & Noble". New York Times. No. DealBook. United States. The New York Times Company. Retrieved 27 February 2013.
  14. ^ "Pershing Square (Bill Ackman) Files 13D on General Growth Properties (GGP)". Market Folly.
  15. ^ TraderMark (14 January 2009). "The Logic Behind Bill Ackman's Purchase of General Growth Properties". Seeking Alpha.
  16. ^ "General Growth cleared to exit bankruptcy". Reuters. 22 October 2010.
  17. ^ "Pershing Square Urges Shareholders To Consider Sale Of General Growth Properties". Seeking Alpha.
  18. ^ "Bill Ackman's Activist Positions in J.C. Penney and Canadian Pacific Railway". Forbes. 15 June 2012.
  19. ^ Benoit, David (14 February 2014). "Pershing Square Slashes Procter & Gamble Stake". No. MoneyBeat. United States: Wall Street Journal. Dow Jones & Company Inc. Retrieved 24 March 2014.
  20. ^ "Bill Ackman Is About to Get Seriously Grilled by Unhappy Investors". Fortune. 6 April 2016. Retrieved 16 April 2016.
  21. ^ Whitehouse, Kaja (6 March 2016). "Bill Ackman says he can recoup Valeant losses". USA Today. Retrieved 16 April 2016.
  22. ^ Gara, Antoine (21 March 2016). "As Bill Ackman Enters Valeant's Boardroom, The Stakes Rise Above The Billions He May Lose". Forbes. Retrieved 16 April 2016.
  23. ^ Franck, Thomas (2018-04-05). "Bill Ackman's hedge fund empire crumbles in less than 3 years from public wrong-way bets on Herbalife, Chipotle". CNBC. Retrieved 2019-09-26.
  24. ^ "Bill Ackman's Pershing Square takes 9.9% stake in Chipotle". CNBC. 6 September 2016. Retrieved 9 September 2016.
  25. ^ Franck, Thomas (2018-04-05). "How Bill Ackman's hedge fund empire crumbled in less than three years". CNBC. Retrieved 2018-04-05.
  26. ^ https://www.bloomberg.com/news/articles/2019-09-06/ackman-s-500-million-bet-on-ackman-pays-off-after-losing-streak
  27. ^ Franck, Thomas (July 2, 2019). "Pershing Square up 45% in the first half of 2019 as Bill Ackman win streak continues". CNBC.
  28. ^ Stevenson, Alexandra (11 March 2014). "Herbalife Shares Fall as Ackman Makes New Accusations". New York Times. United States. The New York Times Company. Retrieved 24 March 2014.
  29. ^ a b Stanford, Duane (24 March 2014). "Herbalife Strengthens Ties With Icahn as Ackman War Rages". Bloomberg News. Retrieved 24 March 2014.
  30. ^ Schmidt, Michael (9 March 2014). "After Big Bet, Hedge Fund Pulls the Levers of Power". New York Times. United States. The New York Times Company. Retrieved 24 March 2014.
  31. ^ DealBook (10 March 2014). "Ackman vs. Herbalife, a History". New York Times. No. DealBook. New York, N.Y., United States. The New York Times Company. Retrieved 24 March 2014.
  32. ^ "FBI conducting a probe into Herbalife: sources". April 2014. Retrieved 11 April 2014.
  33. ^ Zacks Equity Research (20 March 2015). "Herbalife Soars as Judge Dismisses Lawsuit (revised)". Yahoo Finance. Verizon Media. Retrieved 23 March 2015.
  34. ^ Lopez, Linette (13 March 2015). "REPORT: The FBI is investigating Bill Ackman over Herbalife". Business Insider. Business Insider Inc. Retrieved 16 June 2015.
  35. ^ Holm, Erik (13 March 2015). "Bill Ackman Not Backing Down On Herbalife". No. MoneyBeat. United States: Wall Street Journal. Dow Jones & Company Inc. Retrieved 16 June 2015.
  36. ^ "PAH Major Holders". Yahoo Finance. 30 June 2014.
  37. ^ "Why Pershing Initiates Position in Platform Specialty Products". Yahoo Finance. 19 May 2014.
  38. ^ "Pershing Square Discloses Platform Specialty Products Stake". Market Folly. 27 January 2014.
  39. ^ "Bill Ackman Announces 30.9% Stake in Platform Specialty Products". NASDAQ.com. 27 January 2014.
  40. ^ "Platform Lists on NYSE After MacDermid Deal, Pershing Stake". TheStreet. 25 January 2014.
  41. ^ "Ackman-Backed Platform to Buy Chemtura Unit for $1 Billion". Bloomberg Businessweek. 17 April 2014.
  42. ^ "Ackman Going Public, Should Mega Cap Stocks Worry?". ValueWalk. 13 August 2014.[permanent dead link‍]
  43. ^ "The Outsider". SEC. 22 April 2014.
  44. ^ "How 'The Outsiders' Became One Of The Most Important Business Books In America". Forbes. 8 May 2014.
  45. ^ "Pershing Square's Presentation on Allergan/Valeant: The Outsider". Market Folly. 23 April 2014.
  46. ^ "Ruling Puts Crimp in Takeover Alliances". Capital Activist. 8 November 2014. Archived from the original on 29 March 2016. Retrieved 11 November 2014.
  47. ^ "Betting On Zero". Betting On Zero. Retrieved 2019-09-26.
  48. ^ Carroll, Leah. "The Female Short Seller Of Netflix's". www.refinery29.com. Retrieved 2019-09-26.
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