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Bill Ackman's Pershing Square Plunges Over 20% In Past Two Months, Loses Nearly $4 Billion In AUM

Tyler Durden's picture




 

It has been a cruel summer, with lots of leverage, for Bill Ackman and his Per(i)shing Square hedge fund.

After starting off the year with an AUM of $18.3 billion following a solid 2014 in which Pershing Square returned 40% mostly on the back of Ackman's aggressive - and questionably illegal - activism involving Valeant, payback arrived with a levered vengeance, and after rising 10.1% through the end of July, pushing Ackman's AUM to $20.2 billion, the past two months have been absolutely brutal for the last remaining "prominent" hedge fund manager (we profiled the performance of some of his key peers: David Einhorn, Dan Loeb and Barry Rosenstein yesterday).

Ackman may have hoped the pain would end in August when the fund lost nearly $2 billion in AUM, sliding 9.2% net, but September was a total bloodbath, and saw Pershing Square report one of its worst quarters in history outside of the financial crisis, tumbling by 12.5%, bringing the total loss over the past two months to a whopping -22%, the YTD drop to -12.6%, and the firm's AUM to $16.5 billion, a loss of nearly $4 billion in just the past two months, and the lowest it has been since early 2014.

And while virtually every stock of the fund's 11 long holdings tumbled in September (anywhere from Zoetis to Platform Specialty Products), it was the 23% plunge in Ackman's biggest holdings, Valeant where he owns nearly 20 million shares, that was mostly responsible for the collapse. The decline would have been even worse had it not been for the September 30 window dressing in VRX shares, which soared on nothing but month-end book marking.

The "hedged" end of Ackman's book is not helping either. Ackman is short just one company: Herbalife, which is up 44% in 2015.

And with hedge fund luminaries like Leon Cooperman blaming Ray Dalio's Bridgewater All Weather "risk parity" strategy for the August rout, we expect Ackman will blame none other than Martin Shkreli who did not make many friends with his bursting of the biotech bubble in the last two weeks of September.

Finally, considering that Morgan Stanley just downgraded Valeant, it may not be a good October either. Here is the punchline: "We now believe that large price increase (PI) drugs contributed more to 2Q:15 sales than we initially characterized in our Sept 29 Valeant note. We now estimate they represented 14% of 2Q:15 sales and 24% of EBIT. Had the PIs not occurred, we estimate EBIT from those drugs would have been about half (12% rather than 24%).... Transformational deals seem less likely now that VRX's multiple has stepped down from 15x to 10x '16E."

Source: Pershing Square

 

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Fri, 10/02/2015 - 07:12 | 6619690 Seasmoke
Seasmoke's picture

It's been a rough 2015 for Ackman.

Fri, 10/02/2015 - 07:16 | 6619699 Fukushima Fricassee
Fukushima Fricassee's picture

Bull shit, It's been arough 2015 for any shit who trusted him. Fuck Ackman.

Fri, 10/02/2015 - 07:26 | 6619719 moriarty
moriarty's picture

Does that mean that the dream about buyin' some land, giving up the booze and the one night stands, settling down, in a quiet little town and forgetting about everything is off the table for now. (apologies to the late Mr Rafferty)

 My heart bleeds for these folk.

 

Fri, 10/02/2015 - 07:32 | 6619737 Never One Roach
Never One Roach's picture

Ackman's missing out on the robust recovery, eh.

Fri, 10/02/2015 - 07:56 | 6619784 Four chan
Four chan's picture

my trades are in the hundreds, and even i have learned the trade can stay irrational longer than you can stay solvent. ps the herbalife scam breakdown was brilliant though.

Fri, 10/02/2015 - 09:19 | 6620148 bania
bania's picture

my dyslexic eyes always read "Perishing Square Capital"

Fri, 10/02/2015 - 08:01 | 6619796 ebear
ebear's picture

We all are

Fri, 10/02/2015 - 07:30 | 6619724 negative rates
negative rates's picture

It's doubtful you'll make it to the end alive.

Fri, 10/02/2015 - 07:39 | 6619756 cornflakesdisease
cornflakesdisease's picture

This guy has been a train wreck for year; Herb-a-crap and Target and the land grab before that.

Fri, 10/02/2015 - 08:06 | 6619808 ZH Snob
ZH Snob's picture

a hedge fund loses money?  I'll try to choke back my tears.

Fri, 10/02/2015 - 10:07 | 6620466 junction
junction's picture

It will even rougher if AG Loretta Lynch is forced to indict Ackman for Valeant insider trading.

Fri, 10/02/2015 - 07:14 | 6619695 NoDebt
NoDebt's picture

Yeah, but he's not gonna stop until he drives Herbalife out of business.  No, siree.  He's on a crusade to improve the world for all humanity.

Just the kind of zealot I want managing my money.  Second only to Bill "I like ruminating on death a lot" Gross.

Fri, 10/02/2015 - 07:19 | 6619703 Mr Poopra
Mr Poopra's picture

Ackman is one of those people that are so smart that he's actually an idiot.

Fri, 10/02/2015 - 07:26 | 6619721 Calculus99
Calculus99's picture

Not suggesting Einstein was an idiot, far from it.

However, it was rumoured that he really struggled with simple arithmetic and times tables, things like that.

Interesting if true. 

Fri, 10/02/2015 - 07:40 | 6619758 Philo Beddoe
Philo Beddoe's picture

A lot of smart people can climb intellectual mountains but trip on pebbles on the way to the top.  So said my Physics prof.  I think he was right. 

 

 

Fri, 10/02/2015 - 10:00 | 6620425 3rdWorldTrillionaire
3rdWorldTrillionaire's picture

Have heard similar... including that he couldn't speak until he was four, leading doctors/teachers to tell his parents that he was mentally disabled.

 

Interesting, indeed.

Fri, 10/02/2015 - 07:31 | 6619734 negative rates
negative rates's picture

But he shorted the stock, which means he has less influence to do just that.

Fri, 10/02/2015 - 07:18 | 6619700 NoDebt
NoDebt's picture

My theme for investing this year has been anything not deemed "socially responsible".  Alcohol, tobacco, guns, gambling, companies that make landmines... that sort of thing.  Done better than average.

Fri, 10/02/2015 - 07:34 | 6619742 Froman
Froman's picture

That is my investing theme every year.  If you give a dollar to a panhandler on the street corner he does not take the cash and go out and buy a Chipolte burrito bowl because they use GMO free ingredients. Nor does he go to Starbucks for a $5 cup of coffee so he can discuss the state of race relations in the U.S. with the baristas.  And he definitely does not spend his newly found disposable income at Whole Foods or tobacco free CVS.  He takes the cash and goes to the nearest convenience store and buys cigarettes, booze and or porn; or, he buys a dime bag of weed or a few rocks of crack and if he has anything left gets his knob polished by one of the local dope whores. 

Fri, 10/02/2015 - 07:52 | 6619776 Pliskin
Pliskin's picture

Yeh, we do...good times!

Fri, 10/02/2015 - 07:18 | 6619701 Seasmoke
Seasmoke's picture

Look at all those peer names. Ackman. Einhorn. Loeb. Rosenstein.

Fri, 10/02/2015 - 07:22 | 6619711 NoDebt
NoDebt's picture

All characters from 'Ace Ventura'?

Fri, 10/02/2015 - 07:31 | 6619736 HowdyDoody
HowdyDoody's picture

Keeping it in The Family

 

Fri, 10/02/2015 - 07:36 | 6619747 Froman
Froman's picture

"Murderers Row"

Fri, 10/02/2015 - 07:20 | 6619704 OTMPut
OTMPut's picture

Hedge investors deserve to lose $.

No fucks given.

Fri, 10/02/2015 - 07:20 | 6619706 overmedicatedun...
overmedicatedundersexed's picture

 mr ackman and the rest of hedgefund overlords  from above: "david Einhorn, Dan Loeb and Barry Rosenstein yesterday)."

let me see what do they have in common besides lots of money??? can anyone guess??

janet makes sure they get funding, or am I a hater?

Fri, 10/02/2015 - 07:23 | 6619714 NoDebt
NoDebt's picture

Finkel is Einhorn.  Einhorn is Finkel!

Fri, 10/02/2015 - 07:48 | 6619771 HowdyDoody
HowdyDoody's picture

It is just one of those Amazing Coincidences, the result of God's Hidden Hand working in Mysterious Ways.

 

Fri, 10/02/2015 - 07:24 | 6619708 buzzsaw99
buzzsaw99's picture

And while virtually every stock of the fund's 11 long holdings tumbled in September...

well diversified i see. if any one one of those 11 goes tits up overnight his infestors are guaranteed to sustain a substantial loss.

Fri, 10/02/2015 - 07:31 | 6619735 Global Hunter
Global Hunter's picture

Pershing Square is probably one of the gayiest sounding names for a fund I've ever come across.  He deserves to lose it all for being a douchebag.

Fri, 10/02/2015 - 07:33 | 6619739 Able Ape
Able Ape's picture

Wow!  Down JUST 20%?  His salary will be doubled, tripled if you add in bonuses...It's a great business to be in!.....

Fri, 10/02/2015 - 07:35 | 6619745 Downtoolong
Downtoolong's picture

"Pershing Square Plunges Over 20%"

 

Oh, so that's what they meant by 2 and 20.

Fri, 10/02/2015 - 07:39 | 6619754 buzzsaw99
buzzsaw99's picture

he gets 20% of the gains. the losses his infestors eat. what a great racket.

Fri, 10/02/2015 - 08:03 | 6619803 flyingpigg
flyingpigg's picture

Nice one, 2% management fee for -20% return...I understand 2-20 now, but why does he call it a hedge fund?

Fri, 10/02/2015 - 07:39 | 6619755 deimos178
deimos178's picture

How did Hillary's son-in-law's fund do?

Fri, 10/02/2015 - 11:51 | 6621124 lynnybee
lynnybee's picture

...... poor guy.   poor Ackman (as i burst out laughing).

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