Bill Ackman

Bill Ackman

Last Update: 05-16-2017

Number of Stocks: 7
Number of New Stocks: 0

Total Value: $5,961 Mil
Q/Q Turnover: 0%

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

Bill Ackman Watch

  • Where to Find Value in a Lofty Market

    You don't have to take my word for it. I've reported right here on GuruFocus how Bruce Berkowitz (Trades, Portfolio), Murray Stahl (Trades, Portfolio) and Bill Ackman (Trades, Portfolio) are warning about rich markets and the downsides of the investment landscape being shaped by ETFs. It's not just that a number of amazing investors are saying this either. There's more.

    The Shiller price-earnings (P/E) ratio is extremely high. It is only surpassed by the '99 record high:


  • Bill Ackman Comments on Herbalife Ltd.

    Herbalife Ltd. (NYSE:HLF) Short

    Despite weak financial performance in Q1, Herbalife’s share price has appreciated by more than 50% year-to-date. We believe this is due in part to Herbalife’s misleading portrayal of its first quarter operating performance and the company’s share repurchase program. Below, we summarize this quarter’s recent developments, and provide further detail in an attached exhibit for those who would like to learn more.


  • Bill Ackman Comments on Nomad Foods

    Nomad Foods (NYSE:NOMD) has begun to show meaningful progress in stabilizing its revenue trends under its new management team. Nomad’s initial revenue trends after its mid-2015 purchase of the Iglo asset were disappointing because of prior management’s investment in new product development at the expense of the company’s core offerings. The company’s current management led by Stefan Descheemaeker has redirected its resources behind core offerings or Must Win Battles (“MWBs”). While this strategy shift will take time to have full effect, recent results have been encouraging.

    Nomad’s Q4 results showed like-for-like sales declined 2.7% for the quarter, which marked the fifth consecutive quarter of improvement in sales declines. The company’s MWBs, however, showed like for like growth of 1.2% in the quarter, representing the first positive result in this important metric. Nomad’s management team continues to control and reduce costs while extracting synergies from its Findus acquisition, which has allowed the company to maintain strong profitability despite negative top-line growth. 2016 EBITDA of €325mm was down 2% despite a like-for-like sales decline of 4% for the year.


  • Bill Ackman Comments on Platform Specialty Products Corp

    Platform (NYSE:PAH) reported strong earnings growth for the first quarter. The company generated organic EBITDA growth of 18%, due to revenue growth in both of its businesses and improved cost efficiencies, both at the segment and corporate level. Organic revenue growth was 3%, due to 5% organic growth in Performance Solutions and 2% organic growth in Agricultural Solutions. Performance Solutions showed particular strength this quarter in its industrial and Asian electronics segments, as its end markets have improved and the integration of Alent has helped Platform gain market share. Agricultural Solutions growth was driven by strength in Latin America, but offset somewhat by weakness in Europe due to poor weather.

    Performance Solutions organic EBITDA grew 27%, due primarily to further cost synergies from the Alent acquisition and continued cost efficiencies. Agriculture Solutions organic EBITDA grew 8% due primarily to a larger sales mix of higher margin products and cost reductions related to its recently announced $100 million cost savings initiative.


  • Bill Ackman Comments on Fannie Mae and Freddie Mac

    Fannie and Freddie’s (FNMA)(FMCC) underlying earnings in their core mortgage guarantee businesses declined modestly in the first quarter, reflecting lower refinancing volumes driven by a large increase in interest rates in the fourth quarter of 2016. Despite this short-term, cyclical headwind, we believe that their long-term earnings power will continue to grow due to three factors: (1) an increase in guarantee fees as the fees on new mortgages exceed the average fees on the existing portfolio, (2) growth of the total guarantee portfolio along with mortgage originations, and (3) lower credit losses as the portfolio’s credit quality continues to improve. Fannie and Freddie’s non-core investment portfolio continued to shrink in the first quarter, resulting in a more profitable and lower-risk business model.

    Housing finance reform is a top priority for both the new administration and Congress. Importantly, key constituents in the new administration, including Treasury Secretary Steven Mnuchin, have a thorough understanding of the critical role that Fannie and Freddie play in the health of the nation’s housing finance system. In contrast to vintage 2013 proposals that sought to replace Fannie and Freddie or wind them down, several proposals released over the last month, most recently a white paper from the Independent Community Bankers of America, recognize that preserving a reformed and restructured Fannie and Freddie is the only way to ensure the continued health of the secondary mortgage market, especially for a large number of community banks that are critical sources of financing for many homeowners.


  • Bill Ackman Comments on Howard Hughes Corp

    Pershing Square presented the Howard Hughes Corporation (NYSE:HHC) at the Sohn Conference on May 8th . Here is a link to the powerpoint presentation. HHC held its second quarterly conference call on May 4th and intends to conduct its first ever Investor Day on May 17th at the South Street Seaport. It also released detailed Supplemental Information for the first time, in an effort to provide the market with increased transparency into its business.

    HHC continues to make strong progress across its three business lines – Operating Assets, Strategic Developments and Master Planned Communities (MPCs). In its Operating Asset portfolio, Howard Hughes continued to lease up its existing operating portfolio, increased the stabilized net operating income (NOI) target to $240 million, and grew NOI in Q1 2017 by 42.4% to $44.7 million, as compared to the prior year. MPC segment revenue was $68.7 million, an increase of $19 million as compared to the first quarter of last year.


  • Bill Ackman Comments on Chipotle

    Since Steve Ells returned to the role of sole CEO in December of last year, Chipotle (NYSE:CMG) has implemented significant organizational and operational changes predominantly aimed at elevating the guest experience. This renewed focus on delivering a great guest experience has re-energized and motivated the organization, leading to better customer service scores, lower restaurant manager turnover, and improvements in many other key performance metrics.

    We saw some early indication of these improvements when Chipotle reported first quarter 2017 results with same-store sales increasing 17.8% year-over-year. This was the first quarter in which Chipotle fully lapped sales declines relating to food safety issues that began in late 2015. On a two-year cumulative basis that incorporates the impact of these declines as well as the ongoing recovery, same-store sales improved throughout the quarter from a 21% decline in January to a 16% decline in March. Online sales in the quarter increased significantly over the prior year.


  • Bill Ackman Comments on Restaurant Brands International

    QSR (NYSE:QSR) delivered strong earnings growth in the first quarter as the company maintained a high level of net unit growth and continued to achieve cost and capital efficiencies at Tim Hortons. Same-store sales growth decelerated from the pace of previous quarters and was roughly flat with prior year levels at both Burger King and Tim Hortons. QSR launched several new products during the second quarter including espresso-based drinks at Tim Hortons and the Steakhouse King hamburger at Burger King. These new offerings should help drive improved same-store sales results in future quarters.

    QSR achieved net unit growth of 5% at both concepts and continued to enter into development agreements in new markets. QSR made additional progress improving Tim Hortons’ cost structure as it increased margins in the distribution businesses by nearly 300 basis points and further reduced the company’s capital requirements. As a result of the net unit growth and further cost efficiencies, organic EBITDA grew 7% and EPS grew nearly 20%.


  • Bill Ackman Comments on Air Products and Chemicals

    Air Products (NYSE:APD) continues to deliver for its shareholders. Fiscal year Q2 results showed continued operating progress with underlying revenue growth of 7% and earnings per share growth of 4%. Revenue growth was driven by 7% volume and flat pricing. Excluding energy pass-through and mix factors, underlying EBITDA margins declined 40 basis points as productivity gains were offset by higher costs from maintenance outages of facilities in the U.S., delayed recovery of energy prices in Europe in the merchant market, and the ramp of lower-margin tonnage contracts in Asia.

    Management stated that it was “disappointed that our underlying productivity did not fully translate to the bottom line” and that “there is more to come in productivity.” These comments are consistent with our view that Air Products continues to have potential for further operating productivity and margin expansion.


  • Bill Ackman Comments on Mondelez

    Mondelez (NASDAQ:MDLZ) reported first quarter 2017 results on May 2nd. Organic sales growth for the quarter was 0.6%, driven by pricing growth of 1.1% and a volume decline of 0.5% that includes the impact of management’s efforts to cull low-margin, non-core products. All regions experienced growth with the exception of North America. Management expects North America to improve in the second half of the year due to the exit of a key competitor in direct store delivery, major innovation launches such as the new well-being cracker brand Véa, and a recent change in regional leadership.

    Despite the modest top-line growth, operating profit margins expanded significantly to 16.8%, driven primarily by a reduction in overhead costs as a percentage of sales reflecting the implementation of zero-based budgeting and the rollout of global shared services. These gains were achieved despite investments in innovation, white space initiatives ahead of revenue that will build more meaningfully over the second half of the year, and headwinds from commodity costs and geographic mix. Management remains committed to its 2018 operating profit margin target of 17% to 18%, and has stated that it has good visibility to expand margins after 2018.


  • Bill Ackman's 1st Quarter Shareholder Letter

    Dear Shareholder:


  • Bill Ackman Comments on Zoetis

    On November 9, 2016, we sold our last shares of Zoetis (NYSE:ZTS), about two years after we publicly announced an 8.5% ownership stake. Despite the high quality nature of the business and its strong management team, we sold to redeploy the capital in certain new investments.

    We purchased our stake in Zoetis at an average cost of approximately $37 per share. Shortly thereafter, we met with the Zoetis management to discuss our views on potential initiatives to create shareholder value. On February 4, 2015, Zoetis agreed to add then-Pershing Square investment team member (and healthcare industry veteran) Bill Doyle and Actavis Executive Chairman Paul Bisaro to the board on April 13, 2015.


  • Bill Ackman Comments on Canadian Pacific Railway

    In our August 26, 2016 Investor letter, we reported the sale of our remaining 9.8 million shares of CP (NYSE:CP) on August 4, 2016, approximately five years from the inception of the investment. During the course of our investment, CP’s share price increased four times, its operating performance went from worst to nearly tied for first with Canadian National, and its credit rating improved from a weak Baa-/BBB- to a strong Baa+/BBB+. While critics often accuse activists of being short-term investors focused primarily on stock buybacks and dividends, CP is a paradigmatic example of the long- term sustainable business performance enhancements and shareholder value creation we have achieved in our core activist holdings.

    During our period of ownership, Canadian Pacific’s total shareholder return, including dividends, was 318.9%.


  • Bill Ackman Comments on Restaurant Brands International

    QSR’s franchised business model is best described as a capital-light, high-growth annuity. The company earns high-margin, brand royalty franchise fees (4% to 5% of unit sales) from Burger King and Tim Hortons franchisee operated stores which are relatively insulated from economic cycles. As a result of the business’ structure and the market in which it operates, significant unit growth requires no capital from QSR (NYSE:QSR).

    The company’s controlling shareholder 3G is an ideal operating partner and sponsor. It has installed an excellent management team and created a unique and impactful performance culture, compensation system, and business processes. We believe 3G’s highly scalable and replicable operating strategy can be applied to potential future acquisition opportunities.


  • Bill Ackman Comments on Platform Specialty Products Corp

    2016 was a year of stabilization and progress for Platform (NYSE:PAH). The company solidified its core leadership team, as key new hires, including CEO Rakesh Sachdev and Ag President Diego Casanello started in early 2016. Platform returned to positive organic growth despite continued softness in its end markets, delivered on synergy commitments from its recent acquisitions, and improved its capital structure through a $400 million equity issuance and a $3 billion debt refinancing that lowered the interest rate and extended the maturity of the company’s debt.

    PAH’s underlying EBITDA (adjusted for currency effects) grew 6% in 2016, due to improved results in both the Performance Solutions and Agricultural Solutions businesses. Underlying EBITDA in Performance Solutions division grew 9% due to strong performance in the Asian electronics and industrial markets and cost synergies from the recent acquisition of Alent, while Agricultural Solutions grew 3% due to strength in the European and Latin America regions and continued cost synergies. Overall, PAH’s EBITDA grew 4% in 2016 reflecting a modest headwind from foreign exchange.


  • Bill Ackman Comments on Nomad

    Nomad (NYSE:NOMD) has built the leading branded frozen food business in Europe with its acquisitions of Iglo and the non-UK assets of Findus. The frozen food business is generally stable, and Nomad enjoys high margins and strong cash-flow generation with low capital expenditure requirements and modest cash taxes.

    Nomad’s recent results have been disappointing as revenue trends have been weak. The new management team believes this has been caused by legacy strategic decisions to focus on new product development at the expense of the company’s core offerings. As a result, they have redirected their resources behind the company’s core offerings, or Must Win Battles. While this strategy shift will take time to have full effect recent, initial results have been encouraging. Following significant declines in 2015, bottoming in Q3 2015, Nomad’s team has produced four straight quarters of sequential improvement in like-for-like sales declines through Q3 2016. Moreover, the management team has highlighted positive results in the Must Win Battle categories and countries where they have thus far activated their strategy.


  • Bill Ackman Comments on Mondelez

    Mondelez (NASDAQ:MDLZ) was created out of the breakup of Kraft Foods in 2012, and today is one of the largest global snacks companies with 2016 revenues of $26 billion. Branded biscuits, chocolate, and confectionary businesses are wonderful businesses because of their high category margins, large economic moats, high returns on capital, and attractive long-term global growth potential. Mondelez has the most attractive stable of sweet snack brands of any publicly traded food company with seven brands that each generate over $1 billion in annual sales, many of which have been building brand equity with consumers for over one hundred years. Despite owning some of the best brands in the industry, Mondelez has among the lowest profit margins in large cap packaged food, presenting a meaningful opportunity to increase efficiency that management is currently addressing.

    Mondelez made good progress on this productivity opportunity in 2016. Operating profit margins expanded by 220 basis points to 15.3%, driven primarily by a reduction in overhead costs as a percentage of sales reflecting the implementation of zero-based budgeting and the rollout of global shared services, as well as an increase in gross margin reflecting the company’s supply chain transformation. Management remains committed to its 2018 operating profit margin target of 17% to 18%, and has stated that they have good visibility to expand margins even further beyond 2018.


  • Bill Ackman Comments on Howard Hughes Corp

    The Howard Hughes Corporation (NYSE:HHC) was formed in November 2010 as a tax-free spinoff from General Growth Properties, with a collection of disparate real estate holdings designed to receive appropriate management attention and recognition in the public markets. Pershing Square helped orchestrate the spinoff, hired the management team, and has been the largest investor in HHC since its inception. Management has done a superb job growing asset value, yet, the company has not received the recognition it deserves, i.e., an appropriate valuation in the public markets. Despite a more than three-fold increase over the last six years, it remains undervalued in our view.

    HHC’s mission is to be the preeminent developer and operator of master planned communities (“MPCs”) and mixed-use properties. HHC’s management team has transformed the company’s disparate assets into a collection of high-quality core trophy assets. The majority of HHC’s value is now represented by the South Street Seaport, Ward Village in Hawaii and master planned communities in Houston, Las Vegas and Maryland. These assets are comprised of steady cash-flow generating properties and longer-term development opportunities that encompass more than 50 million square feet of real estate development potential.


  • Bill Ackman Comments on Herbalife

    On July 15, 2016 the FTC filed a damning Complaint against Herbalife (NYSE:HLF) and simultaneously entered into a Stipulation to Entry of Order for Permanent Injunction and Monetary Judgment (the “Permanent Injunction”). The FTC alleged that Herbalife operates illegally and alleged violations of Section 5(a) of the FTC Act. Notably, the findings of the FTC substantially agree with our long held assertion that Herbalife operates as a pyramid scheme. Select assertions by the FTC include that:

    • “[Herbalife] does not offer participants a viable retail-based business opportunity.”

  • Bill Ackman Comments on Fannie Mae and Freddie Mac

    The 30-yr fixed rate mortgage is a unique feature of the US mortgage market that significantly improves affordability and is vital to maintaining current home values. Fannie (FNMA) and Freddie (FMCC) have historically been, and continue to be, essential to allowing for widespread access to the 30-year fixed rate mortgage at a reasonable cost.

    Since Fannie and Freddie were put into conservatorship in 2008, there have been a variety of proposals to replace or wind them down, however, none of the proposals have been adopted because there is simply no credible alternative to Fannie and Freddie. Fortunately, there is a relatively quick and simple solution to the current situation: Fannie and Freddie’s business models can be reformed by significantly increasing the GSE’s capital requirements, eliminating their fixed- income arbitrage business, substantially strengthening their regulatory oversight, and developing appropriate compensation and governance policies.


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