Improving Performance of Billionaire Bill Ackman’s Pershing Square in Q2; Comments on Herbalife Short and Other Updates

Mondelez International Inc. (NASDAQ:MDLZ)

– Shares owned by Pershing Square Capital Management as of March 31: 22.94 Million

– Value of Pershing Square Capital Management’s Holding as of March 31: $920.44 Million

The multi-billion-dollar asset manager cut its stake in Mondelez International Inc. (NASDAQ:MDLZ) by 20.42 million shares during the first quarter of 2016, ending the three-month period with 22.94 million shares valued at $920.44 million. Bill Ackman and his team reduced the stake for “portfolio management reasons”, as the Mondelez stake became an outsized position. Mondelez was the biggest positive contributor to Pershing Square’s performance in the second quarter, as Mondelez shares gained an impressive 13% during the quarter. In late June, the maker of Oreo cookies made a $23 billion cash-and-stock offer to buy chocolate maker Hershey Co (NYSE:HSY), an offer Hershey’s board unanimously rejected. Bill Ackman and his team are worried that a possible agreement to buy Hershey would disrupt the cost cutting efforts currently implemented by Mondelez. “In short, as shareholders we would find it unacceptable for an acquisition of Hershey by Mondelez to delay or derail the productivity and cost-saving transformation that’s under way”, said a member of Pershing Square’s investment team on the recent conference call. Stephen J. Errico’s Locust Wood Capital Advisers acquired a new stake of 283,031 shares of Mondelez International Inc. (NASDAQ:MDLZ) during the June quarter.

Valeant Pharmaceuticals Intl Inc. (NYSE:VRX)

– Shares owned by Pershing Square Capital Management as of March 31: 21.59 Million

– Value of Pershing Square Capital Management’s Holding as of March 31: $567.85 Million

Billionaire Bill Ackman’s firm increased its exposure to Valeant Pharmaceuticals Intl Inc. (NYSE:VRX) by 30% during the first quarter to 21.59 million shares. The upped stake was valued at $567.85 million on March 31 and made up 6.4% of the hedge fund’s concentrated portfolio. Mr. Ackman continues to bullish on the embattled Canadian drugmaker despite a 91% decline the value of Valeant shares in the past 12 months. During the aforementioned quarterly update call, the billionaire money manager defended the company’s research and development program, saying that “this company has one of the most productive R&D programs of any pharmaceutical company in the country”. However, the Food and Drug Administration recently delayed the approval of Valeant’s experimental glaucoma treatment, latanoprostene bunod, due to manufacturing deficiencies at a Bausch and Lomb facility. Phil Frohlich’s Prescott Group Capital Management added a 65,000-share position in Valeant Pharmaceuticals Intl Inc. (NYSE:VRX) to its pool of holdings during the second quarter.

Zoetis Inc. (NYSE:ZTS)

– Shares owned by Pershing Square Capital Management as of March 31: 41.82 Million

– Value of Pershing Square Capital Management’s Holding as of March 31: $1.85 Billion

Zoetis Inc. (NYSE:ZTS) was the largest long position in Pershing Square’s portfolio at the end of the first quarter, constituting 20.9% of the entire value of the long-only portfolio. The 41.82 million-share stake was worth $1.85 billion on March 31. According to freshly-amended filings, Bill Ackman’s Pershing Square trimmed its Zoetis position to 18.89 million shares in early July from 24.97 million shares owned in mid-May and 41.82 million shares in late April. The 18.89 million-share stake accounts for 3.8% of the company’s total number of outstanding shares. The animal health company’s total revenue for the three months ending April 3 increased by $60 million year-on-year to $1.16 billion, reflecting operational revenue growth of 12%. Operational revenue growth represents revenue growth excluding the impact of foreign exchange headwinds. The acquisition of privately held Norwegian aquaculture company called Pharmaq in November 2015 also contributed to the company’s top line growth. Steve Cohen’s Point72 Asset Management had 3.94 million shares of Zoetis Inc. (NYSE:ZTS) in its portfolio on March 31.

Disclosure: None