Bill Ackman

Bill Ackman

Last Update: 09-13-2016

Number of Stocks: 9
Number of New Stocks: 0

Total Value: $7,513 Mil
Q/Q Turnover: 0%

Countries: USA
Details: Top Buys | Top Sales | Top Holdings  Embed:

Bill Ackman Watch

  • 21 Questions With Michel Charbonneau

    1. How and why did you get started investing? What is your background?

    I have a background in physics (Ph.D.) and came to investing through a rather long and indirect path. When I was young, people in my rural community were seeing investing in the stock market as a dangerous gamble, where one could easily loose his shirt. My grand-parents had lived through the Great Depression and knew someone who had lost all of their money in it or had read horrible stories about it. This had scared the hell out of them and they remained convinced until the end of their life that it was better to keep your money under the mattress than putting it in the stock market.


  • Warren Buffett Wants You to Read These 3 Letters

    Pivoting away from a scandal involving one of his biggest holdings, Wells Fargo (NYSE:WFC), Warren Buffett (Trades, Portfolio) took some time to discuss a philanthropic initiative he created with Bill and Melinda Gates called The Giving Pledge.

    The pledge calls for the world's billionaires to donate a large majority of their wealth to charities.


  • Risk/Reward With Herbalife

    Herbalife (NYSE:HLF) is a global nutrition company.

    It develops and sells meal replacement products across weight management, healthy meals and snacks, sports and fitness, energy and personal care products. It has over 5,000 SKUs globally sold through a network of director marketing representatives.


  • Two Key Checklist Items

    I am not a big fan of going through specific “checklist” items one by one when evaluating an investment idea. I know this idea has gained enormous popularity in recent years, partly due to the good book The Checklist Manifesto, and partly popularized in value investing circles by Mohnish Pabrai (Trades, Portfolio).

    I respect Mohnish a lot, and I think his idea of evaluating previous investment mistakes (both his own mistakes and especially the mistakes of other great investors) is an excellent exercise.  

  • The Other Top Investors Who Love & Hate Bill Ackman's Next Target, Chipotle

    Bill Ackman (Trades, Portfolio) purchased a 9.9% stake in Chipotle (NYSE:CMG) last week with intent to push for changes. While the investing world has largely bemoaned his involvement after a string of misadventures with stocks such as Valeant Pharmaceuticals (NYSE:VRX), some other managers of big funds hopped in and out of the Chipotle boat last quarter after its widespread food poisoning scare.

    A purveyor of “responsibly raised” and fresh ingredients, Mexican food chain Chipotle was home to food-borne illness causing pathogens norovirus, salmonella and E. coli in 13 states from August through December of 2015, according to its information website festooned with bacteria shapes. Over those five months, the stock fell by 33% and to date has declined 42%.


  • 2 Things Ackman Wants to Change at Chipotle

    Chipotle (NYSE:CMG) jumped on the news Bill Ackman (Trades, Portfolio)’s Pershing Square acquired a 9.9% stake. Given the star fund manager has had 1 ¾ of terrible years in the rearview mirror, that may have come as a bit of a surprise. Ackman’s struggles with Valeant (NYSE:VRX) and Herbalife (NYSE:HLF) notwithstanding, his track record in the restaurant business is to be envied. He racked up wins with Macy’s, McDonald’s, Burger King, Yum Brands and others. Pershing stated in its 13-D filing Chipotle has a strong brand, differentiated offering, enormous growth opportunity and visionary leadership. In addition, the 13-D called Chipotle an undervalued and attractive investment.

    But what’s Ackman’s plan with Chipotle? Why’s he engaging with this chain? His successes came through operational improvements, lots of cost cutting and financial engineering.


  • Bill Ackman Buys Chipotle Mexican Grill

    Bill Ackman (Trades, Portfolio) of Pershing Square Capital Management acquired a new holding in Chipotle Mexican Grill Inc. (NYSE:CMG) on Aug. 24.

    Ackman is an activist investor who has been plagued recently by both a scandal surrounding Valeant Pharmaceuticals (NYSE:VRX) and a failed attempt at shorting Herbalife (NYSE:HLF). This is his first major investment since the Valeant scandal unfolded. As an activist investor, Ackman takes a position in a company and pressures management for change. He has indicated that he may take an activist role in regard to Chipotle’s corporate governance, operations and capitalization.


  • Chou RRSP Fund Buys Valeant

    The Chou RRSP Fund (Trades, Portfolio) acquired a new holding in Valeant Pharmaceuticals International Inc. (TSX:VRX)(NYSE:VRX) in the second quarter.

    The fund purchased 260,000 shares in Valeant for an average price of 36.51 Canadian dollars ($27.83) per share. The transaction had an impact of 14.1% on the portfolio.


  • Bill Ackman Comments on Canadian Pacific

    On August 4, 2016 we sold our remaining 9 8 million shares of Canadian Pacific (NYSE:CP). This sale marked the end of our five-year investment in CP, which was a noteworthy success. I have agreed to continue on the board up until the next annual meeting or until qualified replacement directors have joined the board.

    We initiated our investment in Canadian Pacific in the fall of 2011. Prior to our investment, CP had meaningfully underperformed its closest competitor, Canadian National ("CN"), and the other North American railroads in nearly all key operating measures for more than a decade, a performance deficit best illustrated by CP's operating margin of 19%, or about half of CN's 37% margins at the time. As a result of this underperformance, CP' s shares had languished behind competitors and its potential for many years.


  • Bill Ackman Comments on Zoetis Inc.

    There is still a lot more work to do, but we are pleased with the company's progress over the last several months. Zoetis Inc. (NYSE:ZTS) Zoetis delivered another exceptional quarter of performance. Organic revenue growth was +4%, driven by +13% growth in Zoetis' companion animal segment. Excluding the revenue impact of the company's operational efficiency initiatives, organic revenue growth was 9%. Management's execution of its operational efficiency initiative continues to be excellent. SG&A as a percentage of sales fell by 180bps in the quarter, year-over-year and gross margins expanded 240bps. While we have sold a substantial portion of our investment to raise capital for new investments, we continue to believe that Zoetis' history of strong organic growth and margin expansion will continue.

    From Bill Ackman (Trades, Portfolio)'s mid-year 2016 letter.   

  • Bill Ackman Comments on Valeant

    At the time of our last financial report in March, Steve Fraidin and I had just joined the board of Valeant (NYSE:VRX) in an attempt to stabilize and enhance our investment in the company. Since we joined the board, the company has hired Joe Papa, an extremely capable and talented CEO, the substantial majority of the board has been replaced, the company has returned to filing its fmancial reports in a timely fashion, its bank debt has been successfully modified to substantially reduce the risk of covenant default, a highly credible and experienced CFO, Paul Herendeen, and General Counsel, Christina Ackermann, have joined the company, a new strategy and new fmancial reporting structure have been announced, and approximately $8 billion of assets are being evaluated for potential disposition.

    As a result of the above developments, we believe that Valeant has been successfully stabilized and is on the path to recovery. While we still expect the occasional negative press article about the company due to the ongoing government investigations and civil litigation, continued business progress should begin to focus investors and the public's attention on the company's high quality brands and products and its mission to improve patients' lives. With improved business performance, cash generation and leverage reduction, we expect Valeant's stock price to increase substantially from current levels.


  • Bill Ackman Comments on Restaurant Brands

    Restaurant Brands (NYSE:QSR) reported another strong quarter of underlying earnings in the second quarter of 2016. The company continued to deliver strong net unit growth at both concepts while substantially improving Tim Hortons' cost structure. Same-store-sales growth decelerated from prior quarters against a backdrop of slowing growth for the U.S. fast-food industry.

    Same-store-sales for the quarter grew nearly 1% at Burger King and 3% at Tim Hortons. Same-store-sales for Burger King's U.S. business declined 1% in the second quarter, due in part to the industry slowdown and a tough comparison against nearly 8% growth in last year's second quarter. Over time, we expect Burger King's U.S. same-store sales to increase at a healthy rate as the company narrows the sales gap with its key U.S. competitors. Net units grew 4% and the development pipeline remains strong. As a result of same-store-sales and net unit growth, Restaurant Brands' organic revenue grew 4%.


  • Bill Ackman Comments on Platform Specialty Products

    Platform (NYSE:PAH)'s earnings declined in the second quarter as positive results in Performance Solutions, increased cost synergies, and strong growth in the International Ag Solutions were offset by a significant decline in the North American Ag Solutions business and increased corporate costs.

    Platform's organic revenue increased 1% as Ag Solutions grew 5% and Performance Solutions revenue declined 2%. Ag Solutions achieved double-digit growth outside of North America (more than 80% of segment revenue), which was offset by a more than 40% decline in North America. The decline in North America resulted from the continued reduction in distributor channel inventories, decreased demand for pesticides due to lower pest pressures, and lower market share. The company stated that it has made changes to its sales force and product development initiatives and expects these efforts to improve business results over time. Performance Solutions' organic revenue declined primarily due to weakness in the electronics market in Asia, which the company noted should return to growth in the second half of the year.


  • Bill Ackman Comments on Nomad

    Nomad (NYSE:NOMD), the packaged frozen food company, announced second quarter results on August 25, 2016. Revenue for the quarter declined 3.8% on a like-for-like basis, excluding foreign currency changes. This marked the third straight quarter of sequential improvement in revenue trends. Margins and cash flow remained strong. The company reiterated its guidance for continued sequential revenue improvement throughout the year and €200 million of cash flow.

    Nomad stock trades at —9 times management's cash flow guidance per share, less than half the price of other packaged food businesses. We believe the company is taking the right actions to stabilize and enhance the business while integrating its recent Findus acquisition and working to deliver anticipated synergies.


  • Bill Ackman Comments on Mondelez

    On June 30, 2016, press reports, which were later confirmed, stated that Mondelez (NASDAQ:MDLZ) had made an offer to acquire The Hershey Company for $107 per share in a half-cash, half-stock transaction. While an acquisition of Hershey would certainly strengthen Mondelez's confectionery presence in North America, whether or not a deal creates value for shareholders depends on the price paid, the acquisition currency used and, as importantly, the potential for significant cost savings at Hershey.

    We believe that Mondelez shares are currently undervalued, and that the issuance of Mondelez stock at current prices to fund the acquisition of Hershey would likely be costly for Mondelez shareholders. More importantly, if Mondelez were to acquire Hershey or any other company, management must continue to be accountable for its own target of 17% to 18% operating profit margins by 2018 at the existing Mondelez business, excluding the impact or benefit of any acquisitions. We expect that shareholders would fmd it unacceptable for an acquisition of Hershey by Mondelez to delay or derail the productivity and cost savings transformation currently underway at the company.


  • Bill Ackman Comments on Howard Hughes Corp

    HHC's second quarter report highlighted the continued progress it is making across all of its initiatives and business segments.

    Net operating income ("NOT") from HHC (NYSE:HHC)'s operating assets increased from $28.5 million to $36 3 million year-over-year as recently developed properties continue to stabilize. HHC held steady its projected annual stabilized NOT estimate (excluding the South Street Seaport) of $215 million after increasing it from $203 million at year-end. Land sales closed in its Master Planned Communities ("MPC") segment decreased from $47 million to $34 million year-over-year in Q2 due to weakness at Woodlands in Houston and timing of superpad sales. The housing market in Summerlin remains strong as demonstrated by $48 million in land sales at The Summit, which is HHC's luxury golf course joint venture development within Summerlin. The Woodlands, which develops and sells lots at the upper end of the Houston residential market continues to experience a slowdown in housing activity. HHC saw increased activity, land sale closings and absorption rates at Bridgeland due to stronger demand for more affordable lots in Houston.


  • Bill Ackman Comments on Herbalife

    We have made substantial progress with our short position in Herbalife (NYSE:HLF). On July 15, 2016, after a more than two-year investigation, the FTC found that Herbalife has been operating illegally, misleading consumers about the potential profitability of its so-called business opportunity, among other extremely critical findings. The FTC's settlement with Herbalife avoided using the words "pyramid scheme" to describe its business, but found that the company had all of the hallmarks of other pyramid schemes it has prosecuted recently. The FTC's findings confirm each of our principal allegations against the company.

    The FTC stated that it chose to settle with Herbalife to avoid an extended period of litigation and to bring relief to consumers more rapidly. While Herbalife has to-date successfully spun the terms of the settlement as a victory for the company, the facts speak differently as the market appears to have recently begun to understand. While Herbalife stock rose more than 20% on the initial announcement of the settlement, it has declined since that time, and is now trading at approximately the same price as before the announcement.


  • Bill Ackman Comments on Fannie Mae and Freddie Mac

    Fannie (FNMA) and Freddie (FMCC)'s underlying earnings progressed modestly in the second quarter as their core mortgage guarantee businesses improved due to an increase in the guarantee-fee rate and lower credit costs. Their non-core investment portfolios continued to be reduced, which is leading them to a safer and more capital-light business model. As in recent quarters, reported earnings remained volatile due to non-cash-accounting-based derivative losses in the non-core investment portfolio. As a result of the derivative losses and the continued Net Worth Sweep, the companies remain at risk of being required to draw capital from the Treasury, as a result of the requirement to pay dividends to Treasury under the Net Worth Sweep of more than $125 billion in excess of the original 10% dividend agreement. As the risk of capital draws from the Treasury increases, we believe that Congress will become increasingly focused on seeking a permanent resolution for Fannie and Freddie.

    In the litigation, the government recently released additional documents which further support shareholder claims From the documents, it is clear that high-level government officials were aware that the GSEs were expecting to become highly profitable just prior to the implementation of the Net Worth Sweep, which runs contrary to the government's contemporaneous public statements that the GSEs were in a "death spiral." In fact, private emails of key government officials show that the government intended to implement the Net Worth Sweep as a measure to prevent the GSEs from recapitalizing themselves and exiting conservatorship. Both of these points directly contradict key claims the government made on and after implementing the Net Worth Sweep and as a defense to the litigation. In addition, the courts rejected the government's request to have individual lawsuits consolidated as a multi-district litigation and sent to Judge Lamberth. This allows each case to continue to proceed separately and be evaluated on its individual merits, which improves the likelihood of a favorable legal outcome for shareholders.


  • Bill Ackman Comments on Air Products and Chemicals

    Air Products' (NYSE:APD) recent quarterly results marked the eighth straight quarter of double-digit EPS growth as APD continues its impressive transformation under CEO Seifi Ghasemi and his team.

    APD's fiscal year third quarter earnings per share of $1.92 were up 16% while currency-adjusted EPS growth was 19%. These impressive results were driven by currency-adjusted sales growth of 4% and operating margins which were up 340 basis points (bps) to 23.0%. Sales growth was driven by 4% volume growth, largely due to volume contributions from growth investments, and flat pricing. Margins increased across each major operating segment, including each region for industrial gases as well as the non-core Versum materials technology business. We believe this broad-based operating improvement is a testament to the cultural impact Seifi has had on APD along with the benefits of the company's decentralized operating model which has empowered local operating executives to drive performance and unlock the company's latent potential.


  • Bill Ackman Discusses Worst Year Ever in Mid-Year Letter

    Dear Pershing Square Holdings, Ltd. Shareholder,

    Below we provide PSH's performance since its inception. The period of the last twelve months has been the worst period of performance by a wide margin since the inception of the strategy on January 1, 2004. Performance has improved substantially in the last few weeks with significant progress at Valeant and increases in the value of other holdings bringing year-to-date performance through August 23, 2016 to -15.5%.


  • Bill Ackman: Valeant 'One Very Big Mistake'

    Bill Ackman (Trades, Portfolio), whose Pershing Square hedge fund lost money on Valeant (NYSE:VRX)'s collapsing share price, said on CNBC it was a unique investment in their history. Usually they would have more active involvement in their companies or buy simple, undervalued companies.


  • Insuring a Value Stock Against Downside Losses, at No Cost

    This article offers at a different approach to improving the risk and reward profile of a value stock.

    In previous articles, I’ve written about protective puts (sometimes called married puts) that you can use like an insurance policy. If the price of your stock goes down, your loss exposure is eliminated or reduced. I’ve also written about earning extra income from a stock, preferably one that’s growing slowly, by selling covered calls.


  • Bill Ackman: Carl Icahn Propping Up Herbalife

    Bill Ackman (Trades, Portfolio) said he thinks when Carl Icahn (Trades, Portfolio), a big holder of Herbalife (NYSE:HLF), sells his stake, the "confidence factor" in the company will evaporate. "If he can sell this thing at 60 bucks and almost double his money, great for Carl. And he doesn't have to worry about what happenes to the company when they're required to completely change their business model," Ackman said. "I think he knows this thing is toast."

    Ackman has had a large short position in Herbalife since 2012. The stock has gained 12% year to date in spite of a Federal Trade Commission ruling in July that it is not, as Ackman declared, a Ponzi scheme.   

  • Herbalife: The Big Short Part 2

    The recent Hollywood financial blockbuster “The Big Short” may have a sequel on its hands.

    All the elements are there: the stubborn fund manager in Bill Ackman (Trades, Portfolio) who will not pull out of the short position no matter what, the irate clients trying to get out while they still have their shirts and the revelation of wrongdoing thrown in the face of the market with little to no reaction.


  • Francis Chou Adds to 2 Positions in 2nd Quarter

    During the second quarter, Francis Chou (Trades, Portfolio) of Chou Associates Management added 48.11% and 38.77% to its positions in Valeant Pharmaceuticals International Inc. (NYSE:VRX) and Sears Holdings Corp. (NASDAQ:SHLD). As the stock prices continue to decline, the companies offer investing opportunities. The above transactions align with Chou’s strategy of investing in companies with depressed prices.

    Established in 1986, the Chou Associates Fund seeks long-term capital growth by investing in undervalued U.S. and Canadian securities. As mentioned in its recent prospectus, the fund analyzes the company’s balance sheet and common financial metrics: profitability, growth potential and intrinsic value. While the manager has a limited number of positions, Chou reduces the portfolio risk by investing in companies with high margins of safety.


  • Valeant Misses 2nd Quarter Estimates

    Valeant Pharmaceuticals (NYSE:VRX) reported its second quarter earnings on Aug. 9. The second quarter earnings report was also the second report for new CEO Joseph Papa, who took over the company in May.

    A leading holding for many hedge funds, Valeant experienced a number of legal issues regarding its drug pricing strategies at the end of 2015 that eventually led to the company’s new executive management. Under the new management, the company is continuing to struggle. Since Papa took over, the stock is down 20% and for the year the stock is down 75%. Currently, the stock is selling for about $27.


  • Ackman Raises $1.4 Billion Selling Entire Stake in Canadian Pacific Railway

    Bill Ackman (Trades, Portfolio) is selling off 14 million shares of Canadian Pacific Railway Ltd. (NYSE:CP)(TSX:CP) – a stock making up about a fifth of his equity portfolio – ending one of his big turnaround plays.

    Unloading the shares will raise about $1.4 billion for Ackman’s hedge fund, Pershing Square Holdings, which suffered a 19% net loss year to date, nearly matching its worst-ever 20.5% loss last year. The Canadian Pacific transaction comes on a string of stock sells Ackman made in recent months, more than halving his position in Zoetis (NYSE:ZTS) – one of his three profitable positions in 2015 – in May and July, reaping $1.1 billion, and reducing holdings in Mondelez (NASDAQ:MDLZ) and Air Products (NYSE:APD) in the first quarter.


  • Can You Disagree With Yourself?

    One of the most important tools that we can have as investors is the ability to challenge our own ideas and conclusions. We live in an ever-changing world and to think that our conclusions should be excluded from this phenomenon is a little naïve.

    One of Charlie Munger (Trades, Portfolio)'s most celebrated and recommended books is "Influence: The Psychology of Persuasion" by Robert Cialdini. While the book covers and expands on six biases, I want to touch on one of the hardest to deal with from the list: consistency bias.


  • The Battle of the Billionaire Gurus – and the Future of Herbalife

    Two of the great investing names of our times, Carl Icahn (Trades, Portfolio) of Icahn Capital Management LP and Bill Ackman (Trades, Portfolio) of Pershing Square Capital Management, L.P. are both friends and bitter rivals. That rivalry arises out of their diametrically opposed views about Herbalife, the nutritional supplements company. And more specifically, about the compensation of independent distributors who sell those products to consumers.

    Bill Ackman and Carl Icahn


  • Bill Ackman Comments on Herbalife in 2nd Quarter Conference Call

    During his conference call this morning, Bill Ackman (Trades, Portfolio) presented on Herbalife’s settlement with the Federal Trade Commission. After summarizing background information of the case, Ackman discussed the implications of the settlement based on three complaint categories.

    On July 15, the FTC filed a complaint for a permanent injunction and relief against Herbalife Ltd. (NYSE:HLF), a company in which Ackman has a large short position, charging the company with several illegal business operations. The FTC categorized these complaints into three groups: unfair practices to customers, income misrepresentation and false or unsubstantiated claims from retail sales. According to the presentation, Ackman believes the company promoted an unrealistic compensation structure: Several “distributors” claimed in their testimonials that by working at Herbalife, their monthly salaries allowed them to live an extraordinary lifestyle.


  • Bill Ackman’s Portfolio Returns Diminish as Stock Prices Decline

    Activist investor Bill Ackman (Trades, Portfolio) founded the Pershing Square Capital Management Fund in 2003. With a simple investing approach, the fund manager seeks value by buying stocks at cheap prices and selling them once they reach their fair values. Despite having high returns in 2014, the fund experienced poor returns as of July 2016.

    For the month of June, Ackman’s fund realized a gross performance of -3.0% and a net performance of -3.1%. The fund’s year to date returns have fallen in the red: the gross return YTD is -20.4% and the net return year to date is -21.1%. The decline in stock prices likely tormented the fund manager’s portfolio.


  • Pershing Square's Statement Regarding Herbalife

    New York, July 15, 2016 //- Pershing Square Capital Management, L.P. (“Pershing Square”) today released the following statement:


  • Learn from Bill Ackman’s Mistakes

    Learn from Bill Ackman (Trades, Portfolio)’s Mistakes

    As of Friday’s close, July 15, 2016, Bill Ackman’s Pershing Square Holdings (PSH.AS, PSHZF) is down 41.3% since its IPO in October of 2014. Throughout the same timeframe, the S&P 500 is up 7.09%. Ackman has been a great portfolio manager and generated large gains of about 20% per year leading up to his IPO and gained 40.4% in 2014. Although he has experienced great success in the past, recently there are aspects of his investing that remind me of the most common mistakes that I have seen from amateur investors over my years as a stock broker. Let’s take a look at some of these characteristics that have helped lead to the large losses and use them as a learning experience.


  • Bill Ackman's Herbalife Settles With FTC, Stock Is Undervalued

    Bill Ackman (Trades, Portfolio)’s Pershing Square sustained another strike Friday when a long-time short, nutrition direct seller Herbalife (NYSE:HLF), settled with the FTC for $200 million if it made certain changes to its business model, finally laying to rest his allegation that it is a pyramid scheme.

    Ackman initially made a $1 billion short call against the company in 2012, sending its price spiraling down by more than half. His continued campaign against the stock and the FTC investigation enduring since 2014 have left the stock in limbo.


  • Bill Ackman: Herbalife Bilking People, NBC Helping Valeant Short-Seller Make Money

    Bill Ackman (Trades, Portfolio) spoke to CNBC this morning on the phone. He talked about the recent public short seller attack by Andrew Left on his holding Valeant (NYSE:VRX) and why he stayed short Herbalife (NYSE:HLF).   

  • Ackman Sells Nearly a Quarter of Stake in Zoetis

    Bill Ackman (Trades, Portfolio) of Pershing Square Capital Management LP reduced his stake in Zoetis Inc. (NYSE:ZTS) for the second time this year with the sale of 6,081,841 shares for $47.69 per share on July 7.

    Ackman sold more than 40% of his stake in May.


  • CEO of Valeant Joseph Papa Makes $5 Million Insider Buy

    The CEO of Valeant Pharmaceuticals (NYSE:VRX), Joseph Papa, has dropped almost $5 million on 202,000 shares of the company, according to insider filings.

    Papa bought the stock on June 10, paying $24.48 per share. Valeant's stock price has fallen almost 90% over the past year and has traded for as high as $264.


  • Ackman Pared His Stake in Mondelez International In 1st Quarter

    Bill Ackman (Trades, Portfolio) of Pershing Square Capital Management LP made transactions in four stocks in the first quarter, reducing his holdings in two and adding to his holdings in the others.

    Ackman pared his stake in Mondelez International Inc. (NASDAQ:MDLZ), a food processing company based in Deerfield, Illinois, by more than 47%. Ackman sold 20,424,117 shares for an average price of $40.73 per share. The deal had a -7.35% impact on Ackman’s portfolio.


  • Bill Ackman Asks Charlie Munger to Be Nicer About Valeant

    Some correspondence between Bill Ackman (Trades, Portfolio), a major Valeant (NYSE:VRX) shareholder, Warren Buffett (Trades, Portfolio) and Charlie Munger (Trades, Portfolio) surfaced this week in a slew of documents the U.S. Senate committee investigating drug price gouging has released.

    In the email (below), Ackman compares Valeant to Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B) in an effort to sway Munger to meet with him and CEO Michael Pearson to learn why the company isn't so bad. Munger has said Valeant is "ITT and Harold Geneen come back to life, only the guy is worse this time,” and called it "deeply immoral" and "a sewer."


  • Pershing Square's, and Ackman’s, Less Talked About Positions

    If there’s one hedge fund that has grabbed more headlines than any other this quarter it's Pershing Square, and specifically, its CEO Bill Ackman (Trades, Portfolio). The activist investor has long drawn the spotlight, famously with his so-called billion-dollar short position in Herbalife Ltd. (NYSE:HLF) and, more recently, his troubled long in Valeant Pharmaceuticals International Inc. (NYSE:VRX).

    Both positions have lost the company a large sum of money (at least, that is, on paper) across the last few years and continue to do so. You don’t get to $1 billion without some competence, however. The high-profile hits aside, Ackman – and Pershing Square – has a solid portfolio of assets. Here’s a look at a few of the fund’s largest holdings and how they have performed over the last couple of years.


  • Bill Ackman Slashes Position in Zoetis

    Guru Bill Ackman (Trades, Portfolio) and founder of Pershing Square Capital Management LP slashed his position in Zoetis Inc. (NYSE:ZTS) on May 9.

    Zoetis has a market cap of $22.85 billion, a P/E ratio of 69.59, an enterprise value of $26.67 billion, a P/B ratio of 19.64 and a dividend yield of 0.77.


  • Is Seasonal Investing the Best Way to Approach the Market?

    What happens when the markets stop making sense? How do you even begin to analyze which stocks to invest in?

    Over the last two years, markets have defied conventional theories, rallied even when the global economies appeared to be struggling and in the process managed to sway several investors into believing that everything was on a roll.


  • Bill Ackman Comments on Zoetis Inc.

    Zoetis (NYSE:ZTS) is the only large, independent, publicly traded animal health company in the world. The company has a market capitalization of ~$23 billion and $5 billion in revenue. The Pershing Square funds currently own a 5.0% economic stake in the company, down from 8.6% as a result of a recent block sale.

    During the first quarter, adjusted revenue grew 6%. The Companion Animal segment was the star of the quarter, with growth of 20% driven by new product launches. Livestock revenue growth was nominal at 1% due to competition in U.S. swine products and mild U.S. weather.


  • Bill Ackman Comments on Restaurant Brands International

    Restaurant Brands (NYSE:QSR) reported another strong quarter of underlying earnings with its results for the first quarter of 2016. The company continues to deliver strong same-store-sales growth and net unit growth at both concepts and continues to improve Tim Hortons’ cost structure.

    Same-store-sales this quarter grew 5% at Burger King and 6% at Tim Hortons as continued new product innovation, such as Grilled Dogs at Burger King and croissant breakfast sandwiches at Tim’s, drove improved results. Same-store-sales growth at Burger King U.S. was 4%, which highlights the progress the company is making in narrowing the sales gap between Burger King and its key U.S. competitors. Net units grew 4% at both concepts and management indicated that they have a strong development pipeline for new stores this year. As a result, Restaurant Brands’ organic revenue growth was 6%.


  • Bill Ackman Comments on Platform Specialty Products Corp

    Platform (NYSE:PAH) reported modestly improved underlying earnings due to strong cost synergies from its recent acquisitions, which were offset by weakness in several key end markets and an increase in corporate costs. Reported earnings were lower than the prior year due to significant headwinds from FX. Still, earnings beat expectations leading to a substantial increase in PAH’s stock price.

    Platform’s organic revenue declined 1% as Ag Solutions was flat and Performance Solutions was down 2%. Ag Solutions achieved solid growth in Europe and Latin America, which was offset by market weakness in North America. Performance Solutions’ organic revenue declined primarily due to weakness in the electronics market in Asia. Although several of the company’s end markets have softened recently, Platform’s underlying results continue to outpace its competitors. Platform’s organic EBITDA was up slightly, as the benefit of cost synergies more than offset the increase in corporate costs. In Ag Solutions, organic EBITDA increased 3%, as higher cost synergies more than offset the increase in corporate expenses. In Performance Solutions, organic EBITDA declined 2%, as cost synergies were more than offset by the increase in corporate expenses. Reported EBITDA declined 6% due to the negative headwinds from FX. As a result, EPS declined nearly 30% due to the negative impact from financial leverage.


  • Bill Ackman Comments on Nomad

    Nomad (NYSE:NOMD)’s acquisitions of Iglo and Findus created the leading branded frozen foods business inEurope, ~2.7 times the next largest competitor. It is the market leader in the UK, Italy, Germany, France, Spain, and Sweden. The business is stable, high-margin, and cash-flow generative with low capex requirements and modest cash taxes. Nomad purchased both assets for a total of €3.3 billion or ~8 times EBITDA post-synergies. In 2015, pro forma revenue was €2.1 billion, with €345million EBITDA and €0.95 EPS ($1.06), excluding synergies which are currently estimated at €43 to €48 million.

    Recent performance has shown weak top-line trends, with like-for-like sales down 5% for 2015, the result of Iglo’s historic strategy which was to disproportionately invest behind new frozen food categories, at the expense of core offerings, in the hope of driving incremental growth. Recently, Nomad has shifted its focus back to its core offerings. This shift will take some time to impact the Company’s financial performance, but ultimately we believe it will result in renewed growth.


  • Bill Ackman Comments on Mondelez

    We continue to believe that the opportunity for productivity improvement and margin expansion at Mondelez (NASDAQ:MDLZ) is significant. In February, the company announced a 2018 operating margin target of 17% to 18%. This target reflects some of the steps the company has taken over the last several years to improve its supply chain, reduce portfolio complexity, and rationalize overhead while increasing advertising and promotion. While we believe that the business is capable of higher margins, if Mondelez were to only achieve management’s target, the business would be worth significantly more than its current public market valuation.

    On April 27th, Mondelez reported first quarter 2016 results. Underlying organic growth continued its sequential acceleration, increasing about 3% in the quarter with volume up slightly. This was the best quarter for volume in two years, with growth in developed markets and in emerging markets excluding Brazil and Russia, both of which are in recession. Global growth for the snacks categories in which Mondelez participates remains healthy despite short-term demand weakness in some emerging economies. Management was confident about continued volume growth for the full year, citing the returns on their incremental brand investments and the closing of price gaps with competitors. Operating margins expanded by nearly 300 bps to just under 16% driven primarily by gross margin productivity including a substantial contribution from improvements in Mondelez’s manufacturing base.


  • Bill Ackman Comments on Herbalife

    On May 5th, Herbalife (NYSE:HLF) reported improved financial performance for the first quarter of the year and updated their regulatory disclosures as follows:

    “The Company is currently in discussions with the FTC regarding a potential resolution of these matters. The possible range of outcomes include the filing by the FTC of a contested civil complaint and further discussions leading to a settlement which would likely include a monetary payment and injunctive and other relief. The Company is cooperating with the investigation and at this time it is difficult to predict the timing, and the likely outcome, of these matters. The discussions with the FTC are in the advanced stages, but there are still a number of material open issues that could preclude reaching final agreement. If discussions with the FTC do not continue to progress, it is likely that litigation would ensue. Although we are confident in our legal position, litigation outcomes by their very nature are difficult to predict and there can be no assurance of a particular outcome.


  • Bill Ackman Comments on Herbalife

    On May 5th, Herbalife (NYSE:HLF) reported improved financial performance for the first quarter of the year and updated their regulatory disclosures as follows:

    “The Company is currently in discussions with the FTC regarding a potential resolution of these matters. The possible range of outcomes include the filing by the FTC of a contested civil complaint and further discussions leading to a settlement which would likely include a monetary payment and injunctive and other relief. The Company is cooperating with the investigation and at this time it is difficult to predict the timing, and the likely outcome, of these matters. The discussions with the FTC are in the advanced stages, but there are still a number of material open issues that could preclude reaching final agreement. If discussions with the FTC do not continue to progress, it is likely that litigation would ensue. Although we are confident in our legal position, litigation outcomes by their very nature are difficult to predict and there can be no assurance of a particular outcome.


  • Bill Ackman Comments on Fannie Mae and Freddie Mac

    Fannie (FNMA)’s and Freddie (FMCC)’s underlying earnings continued to progress modestly in the core mortgage guarantee business as the guarantee fee rate increased and credit costs declined. In addition, the non-core investment portfolio continued to shrink, resulting in a less risky and more capital-light business model. While underlying earnings improved, reported earnings remained volatile due to non-cash, accounting-based derivative losses in the non-core investment portfolio. As a result of the derivative losses and the Net Worth Sweep, the companies are at risk of requiring a capital draw from Treasury to maintain a positive net worth. As a result, there recently have been a number of proposals from policymakers, trade groups, and industry analysts that seek to have the GSEs retain capital so they are capitalized on a standalone basis.

    In the Perry case in the D.C. Court of Appeals, new evidence came to light that shows Treasury entered into the Net Worth Sweep immediately after learning from Fannie Mae’s CFO that the company expected to soon realize ~$50 billion of profits from reversing a deferred tax allowance and expected to become sustainably profitable over time. We believe this new evidence further bolsters the Perry and Fairholme cases and our contention that the Net Worth Sweep is illegal.


  • Bill Ackman Comments on Canadian Pacific Railway Limited

    On April 20th, CP (NYSE:CP) reported that first quarter revenue had declined 5%, as a result of the tepid macro-economic environment. On the earnings call, CP President Keith Creel highlighted that volumes will likely be down 6% for Q2, but that trends should improve in the second half of the year as comps get easier. Management expressed its view that Q2 will be the bottom for volumes and that the Canadian economy appears to be stabilizing.

    Despite muted growth, CP’s operational transformation continues, as the company announced that it had achieved a record Operating Ratio (“OR”) of 58.9%. This result was a 430 bps improvement over last year, largely due to reduced headcount which was down 13% year-over-year. The winter quarters typically have higher ORs, given the lower volume levels and more challenging operating conditions caused by weather, making this record OR feat all the more impressive.


  • Bill Ackman Comments on Air Products and Chemicals

    APD (NYSE:APD) delivered its seventh consecutive quarter of double-digit earnings-per-share (“EPS”) growth under the leadership of CEO Seifi Ghasemi, despite continued foreign exchange (“FX”) and other headwinds. In the first quarter of 2016 (APD’s fiscal 2Q), the company grew EPS by 17%, exceeding consensus estimates by a modest amount. Results were driven by a significant improvement in margins which increased 500 basis points (“bps”) during the quarter to 23.4%. Now halfway through its fiscal year, the company also increased annual EPS guidance modestly to $7.40 to $7.55 or 12% to 14% growth for Fiscal Year 2016.

    While the margin improvement was impressive, the company’s volume trends reflected the current economic environment and muted global growth. Sales were $2.3 billion, down 6%, due to decreased energy pass-through (-3%) and FX headwinds (-3%). Underlying growth was flat, on flat volume and pricing. In North America and Europe, APD continued to grow price 1% to 2%, a level it has achieved since Seifi joined. APD can control pricing more than volume, so we view this as a positive sign that the company should be able to sustain modest price growth if and when global growth and volume returns.


  • Bill Ackman Comments on Valeant

    We have made material progress at Valeant (NYSE:VRX) since our last communication. Shortly after Steve Fraidin and I joined the board in March, the company launched a search process for a new CEO. On May 2nd, Joe Papa, formerly the Chairman and CEO of Perrigo (NYSE: PRGO), joined Valeant as its Chairman and CEO. We believe that Joe is an ideal choice for Valeant as he has extensive senior leadership experience in all aspects of the pharmaceutical industry, a strong reputation for integrity, and an excellent track record at Perrigo as reflected by the company’s 24% compounded annual return to shareholders during his tenure. Joe is passionate about the opportunity for value creation at Valeant, and we are excited to have him on board.


  • Bill Ackman's 1st Quarter Letter to Shareholders

    Dear Shareholder:

    Performance of Pershing Square Holdings, Ltd. is set forth below1:


  • Bill Ackman Is Selling Zoetis but Other Gurus Are Jumping In

    Bill Ackman (Trades, Portfolio) is said to be preparing to partially withdraw from pet health care company Zoetis (NYSE:ZTS) where he had waged an activist campaign, but first-quarter portfolios rolling in this month already show several other well-known managers have piled in.

    Anonymous sources told The New York Times and Bloomberg that Ackman offered 16.9 million of his Zoetis shares up for sale starting Monday. The sell represented roughly 40% of his total stake of 41,823,145 shares.


  • Valeant's Formation of Drug Pricing Committee Sends Shares Down 9%

    Valeant Pharmaceuticals (NYSE:VRX) fell 9% by mid-afternoon Friday after announcing a new pricing committee that may limit its torrid growth.

    The Patient Access and Pricing Committee will decide prices of the company’s drugs. Valeant also acknowledged price gouging that came under scrutiny recently. One of its most vocal detractors, Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B)’s Charlie Munger (Trades, Portfolio) called it a “sewer,” and the U.S. Senate summoned its leaders to testify at a hearing on drug corporations’ pricing practices in the past two weeks. A major investor, Bill Ackman (Trades, Portfolio), has unwaveringly defended the company, joining its board last month to help restore its stock, which is down roughly 85% in the past year.


  • Ackman Defends Valeant From Buffett, Munger Criticism

    Pershing Square CEO Bill Ackman (Trades, Portfolio) appeared on CNBC Monday to defend against the latest criticism of Valeant Pharmaceuticals (NYSE:VRX), this time from the most well-known value investors themselves, Warren Buffett (Trades, Portfolio) and Charlie Munger (Trades, Portfolio).

    On Saturday at Berkshire Hathaway’s (NYSE:BRK.A) (NYSE:BRK.B) annual shareholder meeting, Munger referred to Valeant as a “sewer” in what will likely be a widely cited quote for the next few months. Speaking with Becky Quick on CNBC, Munger, who serves as chairman of the Good Samaritan Hospital in Los Angeles, said Valeant’s business practices have been “robbing” hospitals, for example by raising prices of a heart drug by 100%. Munger had scathing words for outgoing CEO Michael Pearson’s response to the controversy.


  • Ackman to Testify About Valeant Before Senate

    Activist investor Bill Ackman (Trades, Portfolio) will testify before the Senate Special Committee on Aging Wednesday regarding his involvement with Valeant Pharmaceuticals (NYSE:VRX), along with outgoing CEO Michael Pearson, just a day after Joseph Papa of Perrigo (NYSE:PRGO) was announced as Pearson’s replacement.

    The hearing titled “Valeant Pharmaceuticals’ Business Model: the Repercussions for Patients and the Health Care System” will also include former Valeant CFO Howard Schiller, who was asked to resign last month due to improper conduct that led to misstatement of financial results.  

  • Why Bill Ackman Is Cutting Back on Canadian Pacific

    Bill Ackman (Trades, Portfolio) has been cutting back on Canadian Pacific (NYSE:CP) by selling a massive amount of shares as shown by GuruFocus' Real Time Picks. The move is somewhat surprising because on the recent quarterly call, the firm’s outlook was very bullish:


  • With Ackman Down It May Be Right Time to Back Him

    Pershing Square Holdings trades at a 10% discount to its NAV ($15.73 to $17.43). Historically, the discount has averaged around 5% since the IPO. The holding IPO’ed in 2014.

    It’s not uncommon for holding companies of star managers to trade at a slight premium when they go on a winning streak. Ackman is very much not on a winning streak. In fact, he is getting taken to the cleaners in a very public way because of his Valeant (NYSE:VRX) investment.


  • Canadian Pacific Ends Plans to Acquire Norfolk Southern

    This week Canadian Pacific (NYSE:CP) announced it would no longer be continuing its acquisition bid for Norfolk Southern (NYSE:NSC). After repeated refutes from Norfolk Southern, Canadian Pacific was preparing to bring the acquisition proposal to Norfolk Southern’s shareholders.

    A number of factors influenced Canadian Pacific’s decision to withdraw the takeover plan, however, one of the main influencing factors was Norfolk Southern’s repeatedly adamant view that its business strategy was successfully leading the company to greater shareholder value on its own. Norfolk Southern’s CEO James Squires, who was appointed in June 2015, has been implementing a restructuring plan for the company. The plan includes substantial revenue initiatives specifically focused on intermodal and merchandising sales. In terms of cost structures, the firm also has significant improvement plans in place for pricing discipline and increased operating efficiency. These plans appear to be winning the votes of shareholders, though the stock continues to trade volatilely, down 4.1% for the year.


  • Notes From the Pershing Square 1st Quarter Call

    Bill Ackman (Trades, Portfolio) of Pershing Square Capital just held his first quarter call discussing the fund’s holdings.

    Due to the fund’s concentrated position in Valeant Pharmaceuticals (NYSE:VRX), it had a disastrous 2015 and an even more disastrous first quarter of 2016. As of April 5 the NAV per share sat at $15.60 and the year-to-date return for the holding was -24.6%. Ackman called it a difficult quarter on a mark-to-market basis, implying intrinsic value of Pershing’s positions is much higher.


  • Highlights of Bill Ackman’s 1st Quarter Pershing Square Conference Call

    Head of hedge fund Pershing Square Management Bill Ackman (Trades, Portfolio) hosted his first-quarter conference call Wednesday where he provided details about his many losses and few gains in the past several quarters. He also outlined developments at his top investments and where he sees value versus the market.

    Ackman is down 25.6% for the first quarter with ill-fated bets like Valeant (NYSE:VRX) and a bet against Herbalife (NYSE:HLF), which he defends in the call. Due to a sell of Mondelez and transaction with Air Products and Chemicals, his fund is holding substantial cash.


  • In Search of Profitable Stocks Using Gross Profitability

    This metric is awesome.

    It's one of the newer metrics that has earned a firm spot in my toolbox.


  • Time To Buy Allergan

    Allergan (NYSE:AGN) stock has dropped a lot because of rumors Pfizer (NYSE:PFE) will walk away from their deal.

    Pfizer made no attempt to pretend the deal was about anything but lowering its tax bill by relocating its headquarters to Ireland, Allergan’s homestead. The Irish tax rate compares favorably to the U.S. at 12.5%; when you are making billions in profits, it’s worth it to pay a couple of lawyers to figure it out. It seems the U.S. Treasury is now inventing new ways to apply rules just to spite Pfizer, and it looks like that’s working.


  • Avoid Piggybacking

    I don’t know how many articles you’ve read about Valeant (VRX) in the past few weeks, but it’s probably safe to say too many. This article, you might be happy to hear, has very little to do with Valeant – mostly because I have nothing new or intelligent to say about the company (it’s buried deep in my “too hard” pile). Instead, it’s about following the lead of others when investing.

    I had CNBC on a few days ago when some breaking news about Valeant was revealed. I turned up the volume in time to hear Jim Cramer say, in a nutshell, that Valeant is a complete disaster: there’s a lack of corporate governance, no one inside or outside the company has any sense for the numbers and so on. Later, on "Mad Money," Cramer rolled his eyes when talking about CEO “leadership” at Valeant. He summed up his thoughts on the saga a few days ago:


  • Bill Ackman Trims Position in Mondelez International

    Guru Bill Ackman (Trades, Portfolio) reduced his position in Mondelez International Inc. (NASDAQ:MDLZ) by more than 47% with the sale of 20,424,117 shares on March 16.

    Mondelez International was formerly known as Kraft Foods until the company completed the spinoff of its North American grocery business, Kraft Food Groups. Mondelez International manufactures and markets food and beverage products for consumers in 165 countries around the world. The company owns nine billion-dollar brands such as Oreo, Nabisco; Milka, Cadbury Dairy Milk and Cadbury chocolates; Trident gum; Jacobs coffee and Tang powdered beverages.


  • The Bromance at the Heart of the Valeant Disaster

    When, in April 2014, Bill Ackman (Trades, Portfolio) and Michael Pearson came on stage together at the Equitable Center in midtown Manhattan to unveil their unorthodox bid to buy drug company Allergan (NYSE:AGN), the two men couldn’t have appeared more different.

    Pearson, the CEO of Valeant Pharmaceuticals (NYSE:VRX), was frumpy, overweight and gruff. Hedge fund billionaire Ackman was, as always, impeccably groomed, trim and silver-tongued. What brought them together was their joint love of big deals – and big profits. Ackman seemed in awe of Pearson’s dealmaking and his legendary thriftiness. In his remarks, Ackman pointed out admiringly that Pearson wouldn’t allow Valeant shareholders to be on the hook for half of what it had cost to rent the auditorium they were using to announce the deal. Ackman had to pick up the tab himself.


  • Bill Ackman Explains Expanded Role at Valeant in New Letter


    Dear Pershing Square Investor,


  • What Is Downside?

    One of the most quoted sayings in investing goes like this: “If you take care of the downside, the upside will take care of itself.”

    This sounds so simple. People say they control risks by considering the downside in every investment and they make decisions based on the so-called risk-reward ratio – risk being the downside and reward being the upside. Very few investors appropriately implement the idea of taking care of the downside. Even many of the gurus listed on this forum failed to heed this piece of timeless wisdom.


  • An Attempt to Value Valeant Just for Fun

    Until last week, I had been just a casual observer of Valeant (NYSE:VRX). My knowledge of the company was limited to:


  • Valeant: Heads I Win, Tails I Don't Lose Much

    There are several reasons to dislike Valeant Pharmaceuticals (NYSE:VRX). Lack of management credibility, accounting irregularities and other legal investigations related to a price increase on a couple of drugs have caused its share price to fall from the high of $260 to $28.95. Investors in the company, including me, had a stomach-churning experience.

    It's always disheartening to see the value of the investment fall within a space of few months, or even days in this case. The market has a way of humbling even the best of hedge fund managers: Bill Ackman (Trades, Portfolio), Value Act, Sequoia and Lou Simpson (Trades, Portfolio) all have large stakes in Valeant. A few of them had a cost basis in the mid 100's.


  • Ackman Named to Valeant Board as Search for New CEO Begins

    Valeant Pharmaceuticals (NYSE:VRX) announced today that it will replace CEO Michael Pearson and name major shareholder Bill Ackman (Trades, Portfolio) to the board of directors. Pearson will continue to serve as CEO until a successor is named, and Katharine Stevenson will resign from the board to make room for Ackman.

    The company also said that CFO Howard Schiller has been asked to resign from the board due to improper conduct that resulted in incorrect information, but he has not yet done so. Valeant is already in the process of revising its numbers for fiscal 2014, and plans to include them with the 2015 report that will be filed with the SEC and Canadian Securities Regulators by April 29. Just last week, Valeant said the delayed filing would put the company at risk for defaulting on some of its debt.  

  • What We Can Learn Vicariously From Valeant Fiasco

    One of the most-read news of this week has been the Valeant (NYSE:VRX) statement on Tuesday, with a lower guidance for first quarter 2016, coupled with red ink across the fourth quarter results. To add scrutiny, the news have been followed with more interest as Bill Ackman, who was cherished by Wall Street last year as one of the most promising hedge fund managers, has 20% of its hedge fund capital invested in Valeant. So without saying who is wrong and who is right in this story, what are the lessons that we can learn vicariously, as Charlie Munger (Trades, Portfolio) suggests us to do?

    Know yourself: From Shakespeare's Hamlet, the following verse stems:


  • Bill Ackman Could Learn From Technical Analysis

    Taking concentrated fundamental bets is no different than playing craps in Vegas.

    By now you’ve heard about Bill Ackman (Trades, Portfolio) and his white whale — Valeant Pharmaceuticals (NYSE:VRX). In 2015, Valeant plummeted, and Ackman’s fund was down 20.5%. His misfortune continued into 2016 with his fund losing another 26% year to date after Valeant’s latest drop. Valeant’s share price was cut in half that day, and the troubled manager lost a cool billion on his position. Talk about a bad day at the office.


  • The Art of Finding, Analyzing and Researching Stocks Faster and Better


    Make fast and good decisions when picking and analyzing stocks.


  • Pershing Square Sells Mondelez to Raise Cash After Valeant Plunge

    Bill Ackman (Trades, Portfolio), after a string of misfortune including a 50% one-day drop in his holding Valeant Pharmaceuticals (NYSE:VRX), unloaded some of his stake in Mondelez (NASDAQ:MDLZ), he said in a letter to shareholders Wednesday.

    Ackman sold 20 million of his 43,366,342 shares in the company that he bought in the third quarter 2015 and continued to hold at fourth quarter-end. The investor has said in his latest shareholder letter he owned a total of approximately 105 million Mondelez shares and derivatives combined. In the past year, shares of Mondelez, the snack food company spun off from Kraft, gained around 21%.


  • Valeant Sinks 50%, Warns It Is at Risk of Debt Default

    Valeant Pharmaceuticals (NYSE:VRX) tumbled to almost half its valuation Tuesday afternoon after releasing preliminary results for the fourth quarter and guidance for the next 12 months that prompted fears of default from investors.

    The second largest guru shareholder Bill Ackman (Trades, Portfolio) released a letter to Pershing Square shareholders reiterating the firm’s belief in Valeant’s underlying value, writing that with the recent appointment of Pershing Vice Chairman Steve Fraidin to Valent’s board, Pershing will be taking a more active role in the company.


  • Bill Ackman Doesn't Stop Believing in Valeant, Gives Statement

    Ackman, leader of hedge fund Pershing Square, made a statement about his largest holding, Valeant Pharmaceuticals, which plunged Tuesday due to its revised earnings guidance and threat of debt default. Statement below:

    Amsterdam, 15 Mar. 2016 //- Pershing Square Holdings, Ltd. today released an email to investors. The text of the email is set forth below:


  • General Mills or Mondelez?

    Bloomberg recently had an article entitled “3G's Next Meal: General Mills or Mondelez?” Highlights from the article included the following: 

  • Pershing Square Gains Board Seat on Valeant

    Activist investor Bill Ackman (Trades, Portfolio) of Pershing Square has landed a representative on the board of Valeant Pharmaceuticals (NYSE:VRX), the controversy-ridden company whose stock has tanked over the past year, possibly giving investors hope that Pershing can orchestrate a turnaround.

    Valeant announced Wednesday that Pershing Vice Chairman Stephen Fraidin will join Valeant’s board of directors, which expanded from 12 to 14 seats, along with Fred Eshelman, who founded Furiex Pharmaceuticals (NASDAQ:FURX), and Thomas Ross, president emeritus of the University of North Carolina.


  • How Do You Look for Stocks?

    If you need a list of stock-finding techniques, here is one I have compiled, organized from my least favorite to favorite.

    Recommendations from the mainstream financial media


  • Knowing When to Say 'When'

    In the winter of 1928, Joe Kennedy decided to stop to have his shoes shined before he started his day's work at the office. When the boy finished, he offered Kennedy a stock tip: "Buy Hindenburg." Kennedy soon sold off his stocks, thinking, "You know it's time to sell when the shoeshine boys start giving you stock tips. This bull market is over."

    Over the years we’ve all seen events that indicate the high in the stock markets – blockbuster deals by private equity that have absolutely no chance of ever making a return (at least positive) for their investors[1], commercials that imply a tow truck driver owns an island/country[2] or the wave of “bubble funds” that seem to crop up every time during a market peak[3].


  • Bill Ackman Reports Owning Stake in Euro Food Company Nomad

    Bill Ackman (Trades, Portfolio), the investor whose Pershing Square has suffered double-digit losses over the past year, has owned a large chunk of Nomad Foods Ltd. (NYSE:NOMD), he reported today.

    The filing shows Ackman with 33,333,334 shares of the company on Dec. 31. The company’s stock closed at $12 per share that day, and has had a precipitous 40% decline year to date. It closed Friday at $7.20 per share.


  • Munger on IBM, Life Advice, Why Valeant Comments Brought 'Nothing But Trouble'

  • So, Bill Ackman Makes Some Good Points on the Index Bubble…

    He’s often controversial, and usually pretty brash. But Pershing Square’s Bill Ackman is also usually quite insightful. He’s been at this game a long time, and he’s had his share of big wins, and big losses. Ackman has an ego on him. (What hedge fund manager doesn’t?) But he’s also his own biggest critics, and like all good investors he learns from his mistakes.

    Today, let’s take a look at Ackman’s latest letter to investors, which came out last week. Ackman, like a lot of hedgies, had a terrible 2015. Here were some of his takeaways:


  • Valeant's Share Price Continues to Decline

    Valeant Pharmaceuticals Inc. (NYSE:VRX), one of the best specialty drugmakers, has been trading down since September 2015 when the last rally was seen. Since then, the stock plunged to less than half of its value.


  • Bill Ackman’s Fund Falls by Double Digits Again in January

    The 12 positions in Bill Ackman (Trades, Portfolio)’s portfolio at his hedge fund Pershing Square Holdings declined a further 11.1% in 2016, extending his dismal 20% drop last year.

    Ackman’s pain worsened in January as even the three positions that ended the year on a positive note – Zoetis (NYSE:ZTS), Mondelez (NASDAQ:MDLZ) and Allergan (NYSE:AGN) – declined in the new year. Ackman’s losses were led by his second smallest position at 3.9% of his portfolio, Platform Specialty Products Corp. The company’s shares lost 42% of their market value in January alone and closed at $7.01 per share Tuesday, compared to Ackman’s average purchase price of $19 per share.


  • Bill Ackman Comments on Canadian Pacific

    Many of the investment opportunities we have identified over time have been created by the fact that the market appears to value companies based principally on short-term factors rather than long-term changes in intrinsic value. For example, in light of China weakness, commodity price declines, and the events in the U.S. energy markets, current earnings and future expectations for railroad volumes have declined somewhat. We believe that this has reduced Canadian Pacific (NYSE:CP)’s intrinsic value by perhaps 10% or so while its stock price has declined ~35% from its August 2015 high. The value of a business is determined by the present value of the cash it generates over its lifetime, not based on what next year’s earnings are going to be. While the first year’s cash flows in a discounted cash flow valuation carry the most weight in the calculation, years two through 20 and thereafter contribute many multiples of year one’s value in determining the present value. This fact seems to be ignored by investors in today’s markets. The market’s short-term valuation approach coupled with the technical factors present in non-index supported companies can lead to short-term gross under-valuations and new long-term investment opportunities.

    From Bill Ackman (Trades, Portfolio)'s Pershing Square Annual Investor Letter 2015.  

  • Bill Ackman Comments on Mondelez

    As a result of relative stock price movements in our portfolio, Mondelez (NASDAQ:MDLZ) became a disproportionately large position in the funds, and Valeant became a smaller and, in our view, even more attractive investment. At year end, while we believed Mondelez was trading at a significant discount to intrinsic value, we reduced our stake in Mondelez through the sale of forward contracts representing 15 million shares at an average price of ~$44 per share, reducing our total ownership in stock and derivatives to ~105 million shares. We redeployed some of this capital by increasing our investment in Valeant through the net purchase of option contracts on the company, which we discussed in detail in our third quarter letter. We continue to be highly optimistic about the potential for Mondelez as it improves its operational efficiency and continues to grow while remaining an attractive merger candidate, and therefore, we expect to remain a substantial, long-term holder. While we are long-term investors, we always seek to optimize the risk/return profile of the portfolio by changing the weightings of existing holdings and comparing portfolio holdings with new investment opportunities, making adjustments and wholesale changes when appropriate.

    From Bill Ackman (Trades, Portfolio)'s Pershing Square Annual Investor Letter 2015.  

  • Bill Ackman Comments on Platform Specialty Products

    Our most glaring, albeit small, unforced error was buying additional stock in Platform Specialty Products (NYSE:PAH) at $25 per share to assist the company in financing an acquisition. We paid too much as we assumed the new transaction would create substantial value, and because we assigned too much platform value to the company. Our assessment was incorrect as execution difficulties, operating issues, currency effects, and financing issues have destroyed rather than created value.

    From Bill Ackman (Trades, Portfolio)'s Pershing Square Annual Investor Letter 2015.  

  • Bill Ackman Comments on Canadian Pacific

    We made a similar error in not trimming our Canadian Pacific (NYSE:CP) position when it reached ~C$240 per share. While we still believed CP was trading at a discount to intrinsic value at that price and there was the potential for CP to complete an industry-transforming, value-creating merger, in light of the size of the position as a percentage of the portfolio, and concerns we had about the Chinese economy, it would have been prudent to sell a portion of our investment.

    From Bill Ackman (Trades, Portfolio)'s Pershing Square Annual Investor Letter 2015.  

  • Bill Ackman Comments on Valeant

    When we purchased Valeant at an average price of $196, we bought the company at a modest discount to intrinsic value as represented by the company’s existing portfolio of products and businesses, but at a very substantial discount to fair value in light of its acquisition track record, the large number of potential targets, and its competitive advantages which include its low-cost operating model and favorable tax structure. When the stock price rose this summer to the mid-$200s per share, we did not sell as we believed it was probable the company would likely complete additional transactions that would meaningfully increase intrinsic value. In retrospect, this was a very costly mistake.

    Our failure to sell stock wasn’t entirely an unforced error as we found ourselves largely restricted from trading during this period. During the summer, we were made aware of a large potential transaction that Valeant was working on, and as a result, we were restricted from trading at a time when it would have been prudent to take some money off the table. In retrospect, in light of Valeant (NYSE:VRX)’s leverage and the regulatory and political sensitivity of its underlying business, we should have avoided becoming restricted to preserve trading flexibility, or alternatively, we should have made a smaller initial investment in the company.


  • Bill Ackman's Pershing Square Annual Investor Letter

    2015 is a year we will not forget. There was no financial crisis except perhaps in the energy, commodity, and currency markets.1 There were no major new wars except for the rise of ISIS and growing global terrorism. The global economy has shown signs of weakness, most notably in China, but U.S. core growth appears sound. The substantial majority of our portfolio companies made continued business progress despite currency headwinds and a weakening global economic environment. Yet, the Pershing Square funds suffered their greatest peak-to-trough decline and worst annual performance ever. What happened?

    Mistakes and Lessons Learned in 2015


  • Share Your Year-End Performance, Best Picks for 2016

    It’s a new year and we’re interested in hearing how GuruFocus members fared in 2015, a rather tough year for the market. What were your best holdings, which stocks were your largest detractors and what is your best idea for 2016? Share your picks in the comments area below.

    The gurus posted performances all across the spectrum. Carl Icahn (Trades, Portfolio), who was recently voted Guru of the Year by a landslide, had a busy 2015 with a multitude of activist moves involving companies like AIG (NYSE:AIG), Pep Boys (NYSE:PBY) and Cheniere Energy (LNG). Despite being down 2.8% through the third quarter, Icahn’s fund is still outperforming the S&P 500, which declined 8% over the same time frame.  

  • Bill Ackman Slashes Stake in Valeant Pharmaceuticals

    Bill Ackman (Trades, Portfolio) made his second fourth-quarter transaction involving Valeant Pharmaceuticals International (NYSE:VRX) on the next-to-last day of the quarter. Ackman sold 5,027,429 shares – nearly 15% of his stake – on Dec. 30, 2015, for an average price of $102.33 per share.

    The sale had a -3.69% impact on Ackman’s portfolio and left him with more than 29 million shares in his portfolio.


  • 2 Stocks Super Investors Are Buying in Large Quantities

    GuruFocus provides tools and screens to look at 13-F filings in the aggregate and discover lots of information about the famous gurus of value investing. I used the aggregated portfolio tool to sort guru holdings on combined weighting percentage. Basically it shows us which stocks value investment gurus have allocated the most funds to.

    Since J. L. Kelly Jr. gave us the Kelly criterion in 1956, we know that means these are the highest conviction picks of these super investors. This is not quite true, however, because there are a few things messing up that logic. First, the U.S. tax code and long term capital gains tax and some stocks have multiple securities listed under different names.


  • Bill Ackman's 3rd Quarter Letter to Pershing Square Shareholders

    Dear Shareholder:


  • Ackman, Sequoia Stock Valeant Changes Course

    A pharmaceutical company fueling most of its rapid growth through acquisitions, Valeant (NYSE:VRX) responded to a short-seller’s accusations this week by announcing a change of business model at its 2015 Investor Day.

    Valeant, which resides in large quantities in the portfolios of major investors like Bill Ackman (Trades, Portfolio) and Sequoia Fund, endured criticism for its unconventional partnership with a specialty pharmacy distribution channel, Philidor, in November. The report, done by Citron Research, had crushed about half of the company’s market value by the end of October. Now, the company says it has cut ties with Philidor, started a relationship with Walgreens (NASDAQ:WBA) and significantly reduced its 2015 earnings forecast.


  • Bill Ackman Comments on Herbalife Short

    Herbalife (NYSE:HLF) Short

    Our thesis on HLF remains unchanged. We believe that Herbalife will ultimately be subject to regulatory action or will collapse because of fundamental deterioration in its business which relies on the continual recruitment of new victims. During the quarter, the potential for regulatory action increased while business fundamentals deteriorated.


Add Notes, Comments

If you want to ask a question or report a bug, please create a support ticket.

Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)