In this article, let´s take a look at Bill Ackman (Trades, Portfolio), the man who is the founder and CEO of Pershing Square Capital Management LP, the hedge fund that has gained about 30% this year, well above the 2.5% hedge-fund industry average.
Ackman, who considers himself an activist investor, pushes for management change to boost stock prices. Let`s see some of his favorites stakes.
Burger King
On Monday, Ackman’s firm made $203 million on Burger King Worldwide Inc. (BKW, Financial) after the company agreed to buy Tim Hortons Inc. (THI, Financial) in a deal that creates the third-largest fast food company. The hedge fund´s stake (about 10.9%) in Burger King increased in value after this, to about $1.24 billion, according to Bloomberg.
In the next chart we can appreciate the stock price movement.
Burger King rose almost 20% to $32.40 after disclosing the news. The day after, both companies said they reached an agreement to merge, with Berkshire Hathaway Inc. (BRK.B) helping finance the deal.
We have to mention that the stock has more than doubled in a two-year period, since September 2012 when Pershing Square disclosed its stake.
Herbalife
We have discussed in a previous article, that Ackman accused Herbalife (HLF, Financial) of operating an illegal scheme. Last year, the New York Times published an article in which it detailed Bill Ackman (Trades, Portfolio)'s strategy to put pressure to investigate Herbalife's distribution model which he calls a "pyramid scheme," where a company makes most of its money by recruiting distributors rather than selling products to real customers. He spent about $50 million to investigate it.
Ackman has disclosed that his hedge fund, has sold short the company's shares. He sold short $1 billion of the firm’s shares before restructuring his investment withoptions. In November 2013, he admitted on Bloomberg TV that Pershing Square's open short position in Herbalife was "$400 million to $500 million."
His Pershing investigated 240 ofthe company’s clubs in several countries. Specifically, Pershing accuses Herbalife of misleading distributors, misrepresenting revenues and selling a commodity product at inflated prices.
At the moment there's almost nothing about whether Herbalife is indeed a pyramid scheme.
Fannie Mae and Freddie Mac
The fund disclosed last November that it bought stakes in Fannie Mae (FNMA, Financial) and Freddie Mac (FMCC, Financial). As we can appreciate in the next chart, shares rose 28% year to date.
With a stake of 10% in each stock, the fund is the largest shareholder. The stakes were valued at more than $689 million.
Valeant Pharmaceuticals
The next on the list is Valean Pharmaceuticals (VRX, Financial), which offered to buy Allergan Inc. (AGN, Financial) with Pershing´s support. So Ackman is backing a hostile bid and the fund has a 9.4% stake in Allergan.
Federal regulators are taking a look into whether that bid violates securities laws, sources told The Wall Street Journal. They will focus on collusion, with the aim to profit from trades ahead of the bid’s announcement using insider information of the offer.
Pershing said days ago, that the Securities and Exchange Commission is welcomed to review its takeover tactics and defended them.
In the next chart, we can see the stock price evolution.
As we can see, Allergan has risen 44% since the end of April.
Disclosure: Omar Venerio holds no position in any stocks mentioned.
