Bill Ackman (Trades, Portfolio) of Pershing Square reduced his stock position in payments services company Automatic Data Processing Inc. (ADP, Financial) by 9.7% on March 12, a Monday filing showed.
Ackman sold 856,485 shares, retaining 7,941,957 shares, or 1.98% of the company. The investor also owns 23,857,085 call options, which together give him a 7.2% stake in the company. The holding represents about 17.56% of his long portfolio, making it his second largest holding.
ADP shares have risen to $112.19 on Monday, giving Ackman a profit from his average purchase price around $106.
Ackman started his ADP position in the second and third quarter of 2017, launching a proxy contest in which he nominated himself and two representatives to the company’s board. Ultimately, none of the Pershing Square nominees was elected at ADP’s annual meeting. Instead, shareholders reelected all 10 of the company’s existing board members.
“While I and our other nominees did not get elected to the board this year, we have accomplished much of what we set out to do so far,” Ackman said in prepared remarks.
“ADP’s shareholders, management and board are now fully informed about the opportunities for improvement, and the risks of management’s failure to perform. Shareholders, including Pershing Square, can now hold management accountable for the company’s public commitments during this contest so that ADP remains the dominant company in the Human Capital Management industry,” he added.
ADP also released a list of rebuttals to what it called Ackman’s “false and misleading claims” about the company.
In ADP’s second fiscal quarter ended Jan. 31, posted $3.2 billion in revenues, an 8% increase from the same quarter a year prior. Net income beat the company’s expectations but fell 8% to $468 million, and diluted earnings per share declined 7% to $1.05.
Based on the strong results and expected benefits from corporate tax reform, ADP raised its full-year adjusted EPS guidance to 12-13% growth. It also projects full-year revenue growth in the range of 7-8%, up from 6-8% it previously expected.
ADP has a price-earnings ratio of 29.3, price-book ratio of 12.76 and price-sales ratio of 3.96. Each is near a respective multi-year high.
See Bill Ackman (Trades, Portfolio)'s portfolio here.
