Bill Ackman (Trades, Portfolio), head of Pershing Square Capital Management, may be seeing the beginning of pull out of a long slog that submerged his fund for months.
Pershing’s year-to-date losses turned positive in January for the first time in 17 months, edging up 0.2%. In April, gross returns broke above a percent for the first time since July 2015 to end the month up 2.4%, Pershing reported, still underperforming the year-to-date S&P 500 gain of 6.7%.
The boost in Ackman’s performance comes after he unloaded losing position Valeant Pharmaceuticals (VRX, Financial), which tanked in 2015 on accusations of accounting misdeeds approximately six months after Ackman he bought it. At the time, Ackman’s portfolio was almost 26% Valeant, with 5.6% of its outstanding shares. His fund swung to a 19.3% loss that year from a 50.6% gain in 2014, and closed 2016 with a 12.1% decline.
The once fast-growing pharma juggernaut traded for $10.31 per share on Wednesday afternoon, down from its all-time peak near $260 almost two years ago. Ackman lost about $4 billion as the company’s market cap neared decimation and missed a further 13% slide since his March 13 sell, prompting an apology in his first-quarter letter.
“Clearly, our investment in Valeant was a huge mistake,” Ackman said. “The highly acquisitive nature of Valeant’s business required flawless capital allocation and operational execution, and therefore, a larger than normal degree of reliance on management. In retrospect, we misjudged the prior management team and this contributed to our loss. We deeply regret this mistake, which has cost all of us a tremendous amount, and which has damaged the record of success of our firm.”
Valeant was not the only culprit for Pershing’s underperformance. Though none had fallen nearly as far as Valeant, Ackman’s detractors outweighed his contributors by eight to two in the first quarter of 2015. The worst, Mondelez (MLDZ, Financial), had declined 3.5%, followed by Herbalife (HLF, Financial) at 1.4%.
The albatross gone, however, resurgence in the lesser holdings may give Ackman a turnaround. His replacement largest position, Restaurant Brands International (QSR, Financial) has risen 18% year to date, while his latest addition, Chipotle Mexican Grill (CMG, Financial), leapt 27%. Only two of his seven positions have declined year to date, Mondelez International (MDLZ, Financial) and Air Products & Chemicals (APD, Financial), each down less than a percent.
On Tuesday, Pershing Square started trading on the London Stock Exchange in order for Ackman to cull more investment capital to make his next big trade.
See Ackman's portfolio here.
