New York-based hedge fund Pershing Square Capital Management L.P. and his founder, billionaire William A. Ackman, have been making headlines over the past year or so due to an uncharacteristic rough patch experienced since the summer of 2015. Bill Ackman’s well-known investment firm has incurred huge losses from the massive bet on embattled pharmaceutical company Valeant Pharmaceuticals Intl Inc. (NYSE:VRX).
According to a first-quarter letter to investors, Pershing Square Capital Management was down a whopping 25.6% net-of-fees in the first quarter of the year. In a recent quarterly investor conference call hosted by Mr. Ackman, the investor said his Pershing Square was down by 21.1% through the end of June, with his firm posting a profit for the second quarter. Although some retail investors may be wary of Mr. Ackman’s moves and commentaries due to his firm’s terrible performance over the past year, one should still pay close attention to the billionaire investor’s thoughts and investment ideas. Hence, the following article will discuss Pershing Square’s fresh thoughts on some of its most prominent positions that were discussed in the recently-held quarterly update call.
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Restaurant Brands International Inc. (NYSE:QSR)
– Shares owned by Pershing Square Capital Management as of March 31: 39.15 Million
– Value of Pershing Square Capital Management’s Holding as of March 31: $1.52 Billion
Restaurant Brands International Inc. (NYSE:QSR) was the third-largest equity holding in Pershing Square’s pool of holdings at the end of the March quarter, accounting for 17.2% of the hedge fund’s long-only portfolio. The New York-based asset manager upped its position in Restaurant Brands by 1.15 million shares during the first quarter to 39.15 million shares, which were valued at $1.52 billion on March 31. The quick service restaurant company owing Tim Hortons and Burger King brands was a positive contributor to Pershing Square’s performance in the second quarter, with the fast-food chain gaining 7% during the quarter. The Canadian company has seen the value of its shares gain 19% since the beginning of the year. The company’s TH global system comparable sales grew 5.6% year-over-year in the first three months of 2016, reflecting continued strength in beverages and grilled wraps. Meanwhile, BK global system comparable sales increased 4.6% year-on-year, mainly due to successful product launches and promotions. Christopher R. Hansen’s Valiant Capital owns 1.44 million shares of Restaurant Brands International Inc. (NYSE:QSR) as of June 30.
Bill Ackman Continues to Hold onto Herbalife Ltd. (NYSE:HLF) Short
– Shares owned by Pershing Square Capital Management as of March 31: Short Shares and Put Options
– Value of Pershing Square Capital Management’s Holding as of March 31: Roughly 10% of the firm’s capital
Herbalife Ltd. (NYSE:HLF) was the only short position of the 12 positions comprising Pershing Square’s portfolio at the end of March. Billionaire Bill Ackman’s asset manager is short the stock of Herbalife and owns put options on the company. Just recently, the dietary supplement company agreed to pay $200 million in consumer relief and restructure its business practices in a settlement with the Federal Trade Commission, allowing the company to avoid being charged with operating a pyramid scheme. Although the company and other stock market participants considered the recent settlement with the FTC as a positive development, Mr. Ackman, who previously alleged in public statements and video presentations that Herbalife operates as a pyramid scheme, views the settlement as very bad news for the company. In a fresh statement regarding Herbalife, Pershing Square said “we expect that once Herbalife’s business restructuring is fully implemented, these fundamental structural changes will cause the pyramid to collapse as top distributors and others take their downlines elsewhere or otherwise quit the business”. “…this is a massively overvalued company. A fraudulent business won’t survive”, said Mr. Ackman in the recently-held quarterly updated call. Meanwhile, Herbalife shares are up 26% year-to-date. Carl Icahn’s Icahn Capital LP was the owner of 17.00 million shares of Herbalife Ltd. (NYSE:HLF) at the end of March.
Let’s head to the next page of this article, where we will discuss three other major positions in Pershing Square’s portfolio.