Summary As of March 31, the top 5 holdings of Bill Ackman are: Target Corp. (TGT, Financial), EMC Corp. (EMC, Financial), Wendy's International Inc. (WEN, Financial), VISA INC (V, Financial), and Apartment Investment and Management Comp (AIV, Financial)
A Different Year for Bill Ackman
These days, Bill Ackman, Founder and CEO of hedge fund Pershing Square Capital Management LP., is fighting battles in multiple fronts. On one hand, his much publicized fight with the Target Corp. (TGT) management over the what strategies the company should be taking and recently proxy fight over board election prompt one think whether it is prudent to start a hedge fund and invest in just one stock. On the other hand, his investments in both common shares and debt and also his bridge loans to the now-under-chapter-11 General Growth Properties (GGWPQ.PK) make one wonder what exact he see that the rest of us we do not see.
In 2008, Bill Ackman was heralded as a hero (or villain, depending which side you are on) by shorting bond insurers such as MBIA and a few other now-failed financial institutions. It was until the end of 2008 when he disclosed he covered all the short position and ended the long-time war between the two parties. MBIA stock price dropped more than 90% from its peak of more than $70 per share to less than $5 per share, the shorting proved to be rather profit for Bill Ackman.
But that is so 2008. In 2009, Bill Ackman seems to be the underdog, with two of his leading holdings release less than stellar news almost on daily basis.
But there are more than just headline story to Bill Ackman. Here we review his top holdings as of March 31, 2009 and top purchases during the first quarter.
Sector Allocations
As of March 31, 2009, Bill Ackman owns 12 stock in three sectors.
According to Sector Weighting data provided by GuruFocus, in 1Q09, Bill Ackman increased weighting in Technology (25.2% to 33.5%) and Consumer Services (51% to 57%), and reduced Financials (16.6% to 9.5%) and Consumer Goods (7.2% to 0). As we will see later on, sector weighting could shift due to stock price fluctuation, not necessarily due to acquisition/distribution of shares in the sector.
As usual, Bill Ackman keeps a very concentrated sector and stock allocation. When you are a reputable active investor (corporate raider), diversification into hundreds stocks is a luxury you cannot afford.
1Q09 Top Holdings
The Top 5 holdings of Bill Ackman as of March 31, 2009 are: Target Corp. (TGT), EMC Corp. (EMC), Wendy's Abby's Inc. (WEN), VISA INC (V), and Apartment Investment and Management Comp (AIV)
No. 1: Target Corp. (TGT), Weightings: 42.9% - 24,873,329 Shares
Target Corporation operates large-format general merchandise and food discount stores in the United States which include Target and SuperTarget stores. They also operate their own credit card operations as an integral component of their core retail business. Target Corp. has a market cap of $29.49 billion; its shares were traded at around $39.3 with a P/E ratio of 14 and P/S ratio of 0.5. The dividend yield of Target Corp. stocks is 1.7%. Target Corp. had an annual average earning growth of 11.6% over the past 10 years. GuruFocus rated Target Corp. the business predictability rank of 5-star.
Bill Ackman started a single-stock hedge fund to invest in Target in 2007. GuruFocus historical data shows that he owned 82 million shares as of July’07 when the stock price was around $64. His ownership has reduced since as the stock price declined and some investors redeemed their shares. As of 1Q09, Bill Ackman controls about 58 million shares or 7.76% of Target Corp. At one time, his loss in the Target fund was reported to have exceeded 90%.
Since 2007, Bill Ackman did what an activist shareholder would do. He tried to persuade the management to adopt a number of his ideas that could unleash the value of the stock, including spinning off the credit card operation and sale of the real estates. As time passed by and he did not have the full ears of the management, he started recently a proxy fight, trying to put four of his own nominees on the board. That did go very well and shareholders voted for the slate of directors nominated by the management instead. If you find the corporate proxy fighting fascinating, you can read this article from NY Times columnist Joe Nocera and the response by Bill Ackman himself .
As of now, according to the article cited above, Bill Ackman said “We plan to continue owning the stock. We think this is a great company”. “But,” as he added, “we reserve the right to change our minds if other opportunities arise.”
No. 2: EMC Corp. (EMC), Weightings: 33.51% - 58,619,033 Shares
EMC Corporation designs, manufactures, markets and supports a wide range of hardware and software products and provide services for the storage management, protection and sharing of electronic information.. EMC Corp. has a market cap of $23.59 billion; its shares were traded at around $11.75 with a P/E ratio of 16.1 and P/S ratio of 1.6. EMC Corp. had an annual average earning growth of 39.1% over the past 5 years.
Bill Ackman started a substantial position in EMC in 2Q08 of 40 million shares when the stock price was around $14.69. He increased his shares to 58.6 million shares in 3Q08 and stayed there since, making EMC the second largest holding. Obviously stock price has since declined and Bill Ackman is at a loss here.
On EMC, another Investment Guru, David Einhorn of Greenlight Capital has the following to say in his 1Q09 Letter to Partners:
David Einhorn, by the way, added significant long position in EMC corporation in 1Q09.
No. 3: Wendy's Arby's Group (WEN), Weightings: 8.15% - 32,324,580 Shares
Wendy's Arby's Group is the third largest quick-service restaurant company in the United States and is the franchisor of the Wendy's and Arby's restaurant systems. Wendy's International Inc. has a market cap of $1.96 billion; its shares were traded at around $4.2 with and P/S ratio of 1.1. The dividend yield of Wendy's International Inc. stocks is 1.4%.
According to this SEC filing, Bill Ackman has sold all his holding in WEN after the quarter end, on or shortly before May 11, 2009. In that case, Bill Ackman lost quite a bit of money here as he bought the stock at much higher prices.
No. 4: VISA INC (V), Weightings: 6.15% - 2,205,464 Shares
VISA operates the world's largest retail electronic payments network. VISA INC has a market cap of $57.15 billion; its shares were traded at around $67.71 with a P/E ratio of 25.1 and P/S ratio of 9.2. The dividend yield of VISA INC stocks is 0.6%.
Bill Ackman started to own Visa stocks in 3Q08 when he reported he had 2.7 million shares, then in 4Q08, he bought 4.4 million shares more. But during the first quarter of 2009, he sold almost 5 million shares so as of March 31, he owned 2.2 million shares.
No. 5: Apartment Investment and Management Comp (AIV), Weightings: 2.23% - 8,126,734 Shares
Apartment Investment and Management Company (Aimco) is a real estate investment trust headquartered in Denver Colorado. It owns and operates a geographically diversified portfolio of apartment communities through 19 regional operating centers. Aimco operates approximately 1800 properties including approximately 327000 apartment units and serves approximately one million residents each year. Aimco's properties are located in 47 states the District of Columbia and Puerto Rico. It has a market cap of $1.1 billion; its shares were traded at around $9.45 with a P/E ratio of 3.6 and P/S ratio of 0.7. The dividend yield of Apartment Investment and Management Comp stocks is 4.3%. Apartment Investment and Management Comp had an annual average earning growth of 8.2% over the past 10 years.
Bill Ackman bought 0.5 million shares of AIV in 4Q08 and another 7.6 million shares in 1Q09 at a much low price. The betting is paying off as today’s price is much higher than the 1Q09 price.
A Different Year for Bill Ackman
These days, Bill Ackman, Founder and CEO of hedge fund Pershing Square Capital Management LP., is fighting battles in multiple fronts. On one hand, his much publicized fight with the Target Corp. (TGT) management over the what strategies the company should be taking and recently proxy fight over board election prompt one think whether it is prudent to start a hedge fund and invest in just one stock. On the other hand, his investments in both common shares and debt and also his bridge loans to the now-under-chapter-11 General Growth Properties (GGWPQ.PK) make one wonder what exact he see that the rest of us we do not see.
In 2008, Bill Ackman was heralded as a hero (or villain, depending which side you are on) by shorting bond insurers such as MBIA and a few other now-failed financial institutions. It was until the end of 2008 when he disclosed he covered all the short position and ended the long-time war between the two parties. MBIA stock price dropped more than 90% from its peak of more than $70 per share to less than $5 per share, the shorting proved to be rather profit for Bill Ackman.
But that is so 2008. In 2009, Bill Ackman seems to be the underdog, with two of his leading holdings release less than stellar news almost on daily basis.
But there are more than just headline story to Bill Ackman. Here we review his top holdings as of March 31, 2009 and top purchases during the first quarter.
Sector Allocations
As of March 31, 2009, Bill Ackman owns 12 stock in three sectors.
According to Sector Weighting data provided by GuruFocus, in 1Q09, Bill Ackman increased weighting in Technology (25.2% to 33.5%) and Consumer Services (51% to 57%), and reduced Financials (16.6% to 9.5%) and Consumer Goods (7.2% to 0). As we will see later on, sector weighting could shift due to stock price fluctuation, not necessarily due to acquisition/distribution of shares in the sector.
As usual, Bill Ackman keeps a very concentrated sector and stock allocation. When you are a reputable active investor (corporate raider), diversification into hundreds stocks is a luxury you cannot afford.
1Q09 Top Holdings
The Top 5 holdings of Bill Ackman as of March 31, 2009 are: Target Corp. (TGT), EMC Corp. (EMC), Wendy's Abby's Inc. (WEN), VISA INC (V), and Apartment Investment and Management Comp (AIV)
No. 1: Target Corp. (TGT), Weightings: 42.9% - 24,873,329 Shares
Target Corporation operates large-format general merchandise and food discount stores in the United States which include Target and SuperTarget stores. They also operate their own credit card operations as an integral component of their core retail business. Target Corp. has a market cap of $29.49 billion; its shares were traded at around $39.3 with a P/E ratio of 14 and P/S ratio of 0.5. The dividend yield of Target Corp. stocks is 1.7%. Target Corp. had an annual average earning growth of 11.6% over the past 10 years. GuruFocus rated Target Corp. the business predictability rank of 5-star.
Bill Ackman started a single-stock hedge fund to invest in Target in 2007. GuruFocus historical data shows that he owned 82 million shares as of July’07 when the stock price was around $64. His ownership has reduced since as the stock price declined and some investors redeemed their shares. As of 1Q09, Bill Ackman controls about 58 million shares or 7.76% of Target Corp. At one time, his loss in the Target fund was reported to have exceeded 90%.
Since 2007, Bill Ackman did what an activist shareholder would do. He tried to persuade the management to adopt a number of his ideas that could unleash the value of the stock, including spinning off the credit card operation and sale of the real estates. As time passed by and he did not have the full ears of the management, he started recently a proxy fight, trying to put four of his own nominees on the board. That did go very well and shareholders voted for the slate of directors nominated by the management instead. If you find the corporate proxy fighting fascinating, you can read this article from NY Times columnist Joe Nocera and the response by Bill Ackman himself .
As of now, according to the article cited above, Bill Ackman said “We plan to continue owning the stock. We think this is a great company”. “But,” as he added, “we reserve the right to change our minds if other opportunities arise.”
No. 2: EMC Corp. (EMC), Weightings: 33.51% - 58,619,033 Shares
EMC Corporation designs, manufactures, markets and supports a wide range of hardware and software products and provide services for the storage management, protection and sharing of electronic information.. EMC Corp. has a market cap of $23.59 billion; its shares were traded at around $11.75 with a P/E ratio of 16.1 and P/S ratio of 1.6. EMC Corp. had an annual average earning growth of 39.1% over the past 5 years.
Bill Ackman started a substantial position in EMC in 2Q08 of 40 million shares when the stock price was around $14.69. He increased his shares to 58.6 million shares in 3Q08 and stayed there since, making EMC the second largest holding. Obviously stock price has since declined and Bill Ackman is at a loss here.
On EMC, another Investment Guru, David Einhorn of Greenlight Capital has the following to say in his 1Q09 Letter to Partners:
We believe that EMC’s core information storage business has attractive recurring and secular growth characteristics. 2009 will be an extremely challenging year for all companies exposed to enterprise IT spending. However, we expect EMC to fare etter than most given the less volatile nature of storage spending. EMC should benefit from any normalization in enterprise IT spending given its large market share and presence.
David Einhorn, by the way, added significant long position in EMC corporation in 1Q09.
No. 3: Wendy's Arby's Group (WEN), Weightings: 8.15% - 32,324,580 Shares
Wendy's Arby's Group is the third largest quick-service restaurant company in the United States and is the franchisor of the Wendy's and Arby's restaurant systems. Wendy's International Inc. has a market cap of $1.96 billion; its shares were traded at around $4.2 with and P/S ratio of 1.1. The dividend yield of Wendy's International Inc. stocks is 1.4%.
According to this SEC filing, Bill Ackman has sold all his holding in WEN after the quarter end, on or shortly before May 11, 2009. In that case, Bill Ackman lost quite a bit of money here as he bought the stock at much higher prices.
No. 4: VISA INC (V), Weightings: 6.15% - 2,205,464 Shares
VISA operates the world's largest retail electronic payments network. VISA INC has a market cap of $57.15 billion; its shares were traded at around $67.71 with a P/E ratio of 25.1 and P/S ratio of 9.2. The dividend yield of VISA INC stocks is 0.6%.
Bill Ackman started to own Visa stocks in 3Q08 when he reported he had 2.7 million shares, then in 4Q08, he bought 4.4 million shares more. But during the first quarter of 2009, he sold almost 5 million shares so as of March 31, he owned 2.2 million shares.
No. 5: Apartment Investment and Management Comp (AIV), Weightings: 2.23% - 8,126,734 Shares
Apartment Investment and Management Company (Aimco) is a real estate investment trust headquartered in Denver Colorado. It owns and operates a geographically diversified portfolio of apartment communities through 19 regional operating centers. Aimco operates approximately 1800 properties including approximately 327000 apartment units and serves approximately one million residents each year. Aimco's properties are located in 47 states the District of Columbia and Puerto Rico. It has a market cap of $1.1 billion; its shares were traded at around $9.45 with a P/E ratio of 3.6 and P/S ratio of 0.7. The dividend yield of Apartment Investment and Management Comp stocks is 4.3%. Apartment Investment and Management Comp had an annual average earning growth of 8.2% over the past 10 years.
Bill Ackman bought 0.5 million shares of AIV in 4Q08 and another 7.6 million shares in 1Q09 at a much low price. The betting is paying off as today’s price is much higher than the 1Q09 price.
