Bill Ackman’s Pershing Square Capital reported 13.4% passive stake in Fortune Brands Home & Security, Inc.(FBHS) on October 18th. The 13G filing indicates that Bill Ackman now has 20.82 million shares in FBHS. The stock soared after the disclosure. In September, Fortune Brands spun off its Home & Security business to existing shareholders (FBHS) and changing its parent company name to Beam Inc. (BEAM). So shareholders who had Fortune Brands’ parent company shares will receive the same amount of new shares in FBHS, and the old parent company shares will automatically convert into BEAM. It’s possible that Bill Ackman received a large amount of FBHS share during the spinning off process. Now FBHS is priced at about $15.
Beside Bill Ackman’s bet in FBHS, Kenneth Mario Garschina’s Mason Capital also initiated a position in the stock. The firm filed 13G on October 14th for its 10.74 million FBHS shares, corresponding to a 6.9% stake.
Bill Ackman is a long term value investor, taking advantage of short term downward moves in prices. He is particularly successful at special situations investments. William Ackman’s Pershing Square has a very concentrated portfolio. Bill Ackman’s returns have displayed option-like characteristics in 2009 and 2010. His General Growth Properties investment is almost as big as John Paulson’s subprime shorts. In May 2009, he recommended GGP stock at the Ira Sohn Conference and the stock returned more than 1000% since then. As a result of that investment, Ackman had a great 2010, returning 29.7%. This is very important because one might be imitating 90% of Ackman’s holdings and getting below market returns while Ackman’s clients enjoy 30% returns.
According to Yahoo! Finance, Fortune Brands Home & Security, Inc. engages in the manufacturing and selling products “for use in residential home repair, remodeling, new construction, security, and storage applications”. The company operates four segments, including Kitchen & Bath Cabinetry segment, Plumbing & Accessories segment, Advanced Material Windows & Door Systems segment, and Security & Storage segment. The company primarily sells its products through dealers, wholesalers, distributors, do-it-yourself remodeling-oriented home centers, and other outlets.