Bill Ackman's Midas Touch

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Oct 10, 2014
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Outside the investment community, the name of Bill Ackman (Trades, Portfolio) of Pershing Square might not raise as many eyebrows as the name of a guru like Warren Buffett (Trades, Portfolio), but Ackman’s track record is still impressive. He seems to have the Midas touch, even more of one than many of the gurus followed by GuruFocus.

Ackman founded New York-based Pershing Square in 2004. So far in 2014, Pershing has gained 31.5%, including a 1.4% increase in September, a time when many of Ackman’s peers struggled. As GuruFocus pointed out in August, Pershing’s gain is “well above the 2.5% hedge-fund industry average.”

Credit for most of that must go to Ackman and his Midas touch, which really goes beyond financial investments. Most of his staff at Pershing have traditional finance-oriented backgrounds, but occasionally he hires nontraditional employees, like a fishing guide he met in Argentina more than 10 years ago. He seems to have an uncanny intuition.

Ackman, wrote Forbes recently, “has one of the best investing track records in the world. When you add back fees, Ackman has returned 1,199% since starting his fund in 2004. That compares to 119% in the S&P 500 for the same period. That’s ten times better than the S&P 500.”

After all associated fees have been paid, investors who have been with Pershing from the beginning still have seen a seven-fold return, but investors, Forbes continued, don’t have to pay Ackman fees to follow his activity as Pershing’s investors do.

His fund holds six publicly reported positions.

Ackman’s largest holding, in terms of numbers of shares, is in Burger King Worldwide (BKW, Financial). He holds nearly 39 million shares in the Florida-based fast food company, which he purchased in September 2012 at an average price of $14.72. The price has doubled in the last two years.

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Recently, Burger King made news with its merger with Canadian-based Tim Hortons Inc (THI, Financial).

His second-largest holding is in Platform Specialty Products Corp (PAH, Financial), a producer of high technology specialty chemical products and provider of technical services. Ackman bought 33 million shares for an average of $17.60 in March, then added to his PAH holdings earlier this month. His initial investment has gone up in value by 49%.

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Allergan (AGN, Financial), a California-based pharmaceuticals company, is Ackman’s third-largest holding. He has nearly 29 million shares in Allergan. Ackman first purchased shares in Allergan in March for $121.38 per share, then added to his holdings in April at a price of $120.89; the price has gone up more than 50% in the six months since that purchase.

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Air Products & Chemicals Inc (APD, Financial) is Ackman’s fourth-largest holding at 20.5 million shares. He first invested in APD in June 2013 at an average price of $90.87; those shares have gone up 36%.

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He added to his stake in APD at a price of $105.31 a month later; those shares have gone up 17% in value. He invested still more in APD a couple of weeks ago at an average price of $102.81; those holdings have gone up 20%.

Fifth in Ackman’s portfolio is Canadian Pacific Railway Ltd (CP, Financial). He has nearly 14 million shares in the Calgary, Alberta-based railroad. Ackman has been reducing his stake in CP in recent years, but his first purchase in the company was at $61.90 a share in October 2011; those shares have gone up 222%. He added to his stake in November and December 2011; those shares have gone up 246% and 216%, respectively.

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Ackman’s sixth-largest holding is in Howard Hughes Corp (HHC, Financial), a real estate development company headquartered in Dallas. Owner of 3.5 million shares in the company, Ackman first invested in HHC for an average price of $47.13 per share on New Year’s Eve 2010. Those shares have gone up 202%.

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He added to his holdings at a price of $118.04 per share in January, and those shares have gone up in value by 21%.