Pershing Square Share Discussion Threads

[rickyl1] 26/3/2020 08:38

It's actually over 90 times, unbelievable!

[rambutan2] 25/3/2020 20:14

So, the hedges made a quick 9x and we've still got 17% in cash.

[rambutan2] 25/3/2020 20:08

He says:

For all of the above reasons, we became increasingly positive on equity and credit markets last week, and began the process of unwinding our hedges and redeploying our capital in companies we love at bargain prices that are built to withstand this crisis, and which we believe will flourish long term.

On March 23rd, we completed the exit of our hedges generating proceeds of $2.6 billion for the Pershing Square funds ($2.1 billion for PSH), compared with premiums paid and commissions totaling $27 million, which offset the mark-to-market losses in our equity portfolio. Our hedges were in the form of purchases of credit protection on various global investment grade and high yield credit indices. Because we were able to purchase these instruments at near-all-time tight levels of credit spreads, the risk of loss from this investment was minimal at the time of purchase.

We have redeployed substantially all of the net proceeds from our hedges by adding to our investments in Agilent, Berkshire Hathaway, Hilton, Lowe’s, and Restaurant Brands. We have also purchased several new investments including reestablishing our investment in Starbucks which we sold in January. The proceeds of the hedges have enabled us to become a substantially larger shareholder of a number of our portfolio companies, and to add some new investments, all at deeply discounted prices. Even after these additional investments, we maintain a cash position of about 17% of the portfolio.

We continue to expect that markets (and our performance) will remain volatile, and therefore, new opportunities may present themselves that are superior to investments we currently own. This may lead us to sell certain of our existing holdings including investments we recently purchased. We may also choose to reestablish similar or different forms of hedges or raise more cash based on developments with the coronavirus and other market factors. In other words, we are more likely to have higher portfolio turnover in this environment.

[rickyl1] 25/3/2020 08:28

Psh is a risky investment at any time with such a concentrated portfolio. It's not one for widows and orphans as they say.

[cfro] 24/3/2020 22:23

I hope the market doesnt collapse then for shareholders sake. He is taking a very high risk bet.

[rambutan2] 24/3/2020 21:36

Here you go, courtesy of Bloomberg yesterday:

Activist investor Bill Ackman said he has made a “recovery bet” on the economy, investing $2.5 billion in equities, including upping his positions in several of his portfolio companies and reinvesting in others like Starbucks Corp.

The billionaire investor said he has taken off all the hedges that he put in place for his Pershing Square Capital Management, through shorts in the credit market. Those hedges were put in place to offset the effects of the coronavirus, he said.

Ackman said his hedge fund has used the proceeds to reinvest over the past 10 to 12 days in several of his portfolio companies, including Lowe’s Cos., Hilton Worldwide Holdings Inc. and Warren Buffett’s Berkshire Hathaway Inc.

“That’s about the most bullish thing we’ve done,” he said in a Bloomberg TV interview. “We are all long. No shorts, you know, betting on the country.”

Ackman has called for a federally mandated nationwide shutdown over the next 30 days rather than letting individual states implement their own measures for tackling the coronavirus pandemic. He reiterated that call Monday and urged for increased testing for the virus across the country.

“I built a lot of confidence over the last week that the president and his team are heading in the right direction,” Ackman said, adding that he had no “inside knowledge” of what the federal government will do next.

Chipotle, Zoom

One portfolio business he wasn’t able to increase his position in was Chipotle Mexican Grill Inc., which he said was trading at “crazy” prices. He said Chipotle is one of the businesses that stands to gain from the current crisis as people turn to delivery apps amid self-quarantine orders across the country.

“Some companies are actually going to be long-term beneficiaries. It’s not just Zoom,” he said, referring to the video conferencing company whose shares have soared 130% this year. “Chipotle, we think, is going to be a very long-term beneficiary of what’s taken place here.”

He said the sell-off on companies such as Hilton have been overdone. Pershing Square is looking at the cash flow of companies, like Hilton, which don’t carry a lot of debt, and discounting their earnings over the next 12 to 18 months. He said that shaves about 5% off their value, not 50%.

Boeing, Buffett

“If you can buy Hilton at $60 when it was trading at almost $120, it’s going to be a bargain,” he said.

Others, like Boeing Co., will need support to get through the current turbulence, either through government aid or the private sector, from someone such as Buffett, according to Ackman.

“If Buffett will do it, I don’t think the Treasury secretary should,” he said.

[rickyl1] 24/3/2020 15:59

Hedges removed and investing aggressively again apparently.

[rickyl1] 19/3/2020 17:58

Ackman's emotional interview yesterday probably turned the market off PSH for irrational reasons.

[rickyl1] 19/3/2020 17:56

True, these drops I imagine widen the discount to ridiculous levels. I'm holding and waiting.

[panshanger1] 19/3/2020 16:56

Nothing rational in this market - how quickly WAs hedging strategy has been forgotten

[rickyl1] 19/3/2020 16:14

Or maybe I'm a no brainer.

[rickyl1] 19/3/2020 08:41

Over 42% discount and price fell 8% yesterday but picking up this morning. It's a no brainer for me.

[rambutan2] 17/3/2020 21:45

Perhaps a small slice of humble pie from AGT:

While our investment in Pershing Square Holdings (PSH) detracted 41bps from returns over February, a month-end NAV almost 4% higher than expected surprised the market. The company later confirmed they have put on hedges against the impact of the Coronavirus, which they expect to have a “substantial negative impact on the US and global economies”. The subsequent NAV – as at 9th March - showed a very material positive impact from these hedges that we estimate to be in the region of +26%. As at the date of this last published NAV, PSH’s NAV was up +2.8% over 2020 vs a 14.7% decline from the S&P 500 despite its portfolio companies underperforming the index over that period. One of the criticisms levelled at PSH despite its very strong NAV performance in 2019 was that investors are paying “hedge fund” fees (1.5% of NAV plus 16% of absolute gains) for a long-only portfolio. This line of attack now looks far less valid and, if management can continue to successfully navigate this market sell-off, we would expect to see PSH’s discount – which we already felt unjustifiable, notwithstanding certain corporate governance concerns – narrow in response to changed perceptions.

[rickyl1] 11/3/2020 11:16

Top notch hedgefundery.

[topvest] 10/3/2020 21:42

Well that's a pretty impressive announcement. Maybe Bill Ackman is cleverer than people thought. Not many portfolio managers had the foresight to do that!

[rambutan2] 10/3/2020 11:30

Take a bow Bill!

PSH NAV per share as of close of business on 9 March 2020 was 27.70 USD / 21.13 GBP and its year-to-date performance was 2.8%.

PSH also released the following communication to shareholders from the investment manager:

Dear PSH Shareholder,

We are reporting our NAV today so that shareholders are informed of the materially positive impact on NAV of various hedges that we previously acquired to protect the portfolio from downward market volatility. As we explained in our March 3, 2020 communication, we have acquired large notional hedges with asymmetric payoff characteristics which will help to mitigate portfolio losses in severe market declines, while reducing the portfolio's upside potential if markets recover. While recent market declines have caused the market values of our portfolio companies to decline substantially, the increased value of our hedges has more than compensated for these losses as you will note from today's reported results.

We expect the capital markets and our portfolio to continue to be volatile. If markets recover, our hedges will become less valuable, and our portfolio companies will likely rise in value. Despite recent market declines, we believe that equity and credit markets have not sufficiently discounted the economic risks of coronavirus.

The NAV released today will be the only NAV provided this week. We will go back to our normal NAV and performance reporting schedule next week by reporting PSH NAV and performance as of Tuesday night's close on Wednesday evening.

[rickyl1] 05/3/2020 08:24

Yes, very sensible.

[rambutan2] 05/3/2020 03:16

Sensible, imho:

3 March 2020 4:20 PM EST
Pershing Square Holdings, Ltd. Releases Communication to Shareholders

LONDON–(BUSINESS WIRE)– Regulatory News:

Pershing Square Holdings, Ltd. (LN:PSH) (LN:PSHD) (NA:PSH) (“PSH”) today released the following communication to shareholders from the investment manager:

Dear PSH Shareholder,

During the past ten days, we have taken steps to protect the portfolio from downward market volatility. We have done so because we believe that efforts to contain the coronavirus are likely to have a substantial negative impact on the U.S. and global economies, and on equity and credit markets. Our approach to address this concern has been to acquire large notional hedges which have asymmetric payoff characteristics; that is, the risk of loss from these hedges is limited, while their potential upside is many multiples of our capital at risk. These hedges will likely mitigate portfolio losses in severe market declines, while also somewhat reduce the portfolio’s upside potential if there is minimal economic or market impact from the virus. We believe this approach to hedging is preferable to that of selling our portfolio of high quality, conservatively financed companies whose long-term intrinsic value is not likely to be materially affected by coronavirus developments.

Our approach to disclosure is to provide you with the information we would want if our positions were reversed, that is, if you were the investment manager and we the shareholder. We do not share information, however, which we believe could create a competitive disadvantage for PSH. For this reason, we do not intend to update you as to the specific details of our hedges, nor the timing of increases or decreases in the size of the program.

Sincerely,

William A. Ackman

[rickyl1] 20/2/2020 09:06

Today's nav means the share price would need to increase over 35% to reach true value. Great companies,top manager = easy hold

[cfro] 17/2/2020 15:56

Thanks for the presentation ramutan2, i hadnt seen it as yet.

Very timely exit then from Starbucks.

Very impressive portfolio of high quality companies here. I would hold every one myself and infact i do hold HLT separately too which is hitting new highs in price.
Other are hitting new highs regularly too like CMG - another high class company.

Bill Ackman is a bit like marmite, many dont like him like Terry Smith for instance, but imo you either trust in him or you dont and although as a rule i dont like many investment fund managers in this case i would and do back Bill in his investment decisions.

The wide discount to NAV of 27% is just ridiculous and no reason why it should not close.

[rickyl1] 17/2/2020 13:22

Happy to hold Berkshire Hathaway and Hilton etc at a 25% discount. Some really good companies and Bill Ackman back on form.

[rambutan2] 16/2/2020 20:16

I remain a very happy holder, in fact have added a few recently. A 25%+ discount means this stubbornly remains wrongly priced, imho. Note that Mr Ackman completed a timely disposal of Starbucks by the end of Jan.

[rambutan2] 24/1/2020 22:17

PSH NAV per share as of close of business on 21 January 2020 was 27.53 USD / 21.11 GBP and year-to-date performance was 2.2%.

[cfro] 29/10/2019 08:12

Share buy-back program to continue with another $100m.