Investors in Bill Ackman (Trades, Portfolio)’s Pershing Square scattered this month as the firm slid further in March, giving him a negative return of 8.2% for the quarter as most of his positions show lackluster performance rather than fizzle.
Ackman’s fund ended March with $8.2 billion in assets, down by more than half from its 2015 record. Funds drained as institutional investors, including Blackstone Group, pulled their money, according to CNBC. Longsuffering clients have watched the fund lose 4% in 2017, 13.5% in 2016 and 20.5% in 2015.
The investor’s most famous losing bets in recent years were his short position in Herbalife (HLF, Financial) and long position in Valeant (VRX, Financial). After taking a $1 billion short position against the multilevel marketing company Herbalife in 2012, Ackman closed the position in November. In that span of time, the company soared 110%, resulting in a loss for short sellers. Ackman sold out of Valeant Pharmaceuticals in the first quarter of 2017 after the company imploded due to faulty accounting and other infractions. From he started the position in the first quarter of 2015 to his sell in the first quarter of 2017, Valeant plunged 90%.
Less drama defined Ackman’s 2018 portfolio. His worst performers were Restaurant Brands International (QSR, Financial) and Platform Specialty Products Corp. (PAH, Financial), which each declined 10% respectively.
His largest position, Restaurant Brands International spanned 27.74% of Ackman’s long portfolio at the end of the fourth quarter. The company, which owns brands like Burger King and Tim Hortons, has had revenue growth of 28.6% per year and EBITDA growth of 41% per year over the past five years. It has other strong fundamentals, including operating margins of 37.86%, higher than 95% of the companies in the global restaurants industry, and a profitability and growth rating of 9 out of 10. It stumbles in financial strength, which GuruFocus rates a 4 out of 10, primarily related to its debt situation. Restaurant brands has $1.07 billion in cash and a sizable debt load of $11.8 billion.
In the fourth quarter, Restaurant brands reported increases in sales and net income but weakness in some of its comparable store sales. It had total revenues of $1.23 billion compared to $1.11 billion in the same period of last year. Net income totaled $395 million, or $1.59 per diluted share, versus $118.4 million, or 50 cents per diluted share.
Comparable sales increased by 0.1% at Tim Hortons and 4.6% at Burger King, but declined 1.3% for Popeyes Louisiana Kitchen, which it acquired in early 2017.
Platform Specialty Products, which makes chemicals and chemical-based products, has operating margins of 5.68%, lower than 62% of the companies in the global specialty chemicals industry. It also has a weak financial strength rating of 4 out of 10 and profitability and growth rating of 6 out of 10.
In the fourth quarter, the company reported record net sales of $1.1 billion, a 12% rise from the prior year, and an organic sales increase of 9%, exceeding its long-term target of mid-single-digit organic sales growth. Its net loss deepened to $142 million versus $2 million the previous year.
Ackman’s other positions’ first quarter performance:
- Chipotle +6%
- Nike +1%
- Howard Huges Corp. +3%
- ADP -2%
- Mondelez International -4%
See Bill Ackman (Trades, Portfolio)'s portfolio here.
