The hedge fund titan that in recent years has endeared significant losses, and investor exodus and a failed activist campaign could be making a comeback, according to a recent article in Barron’s.
Ackman’s publicly traded investment vehicle Pershing Square Holdings, the article reports, has gained more than 20% in asset value since March and, through July 10th, and was up over 10% on the year, “about double the return on the S&P 500 index.”
The closed-end fund was battered by a long position in Valeant Pharmaceuticals and a short position on Herbalife. “Both positions have been closed out,” the article reports and, since going public in October 2014 at $25 a share, Pershing stock is off 40%. Over the same period, it adds, the S&P 500 saw a return of 60%.
But Ackman is betting on the fund, the article says, having purchased $292 million of its shares since early May—he now holds a 13% stake—and has “taken other steps to narrow the discount on the stock.” Although Ackman declined to comment for Barron’s, the article reports that his firm said the purchases “reflect the view that the fund ‘is substantially undervalued.’ ”
The article suggests that the fund could represent “a play on a small group of stocks with sizable upside potential, and that investors stand to get a double benefit if the discount narrows.” It also mentions other beat-up funds that could present opportunity, including Daniel Loeb’s ThirdPoint Offshore Investors and David Einhorn’s Greenlight Capital Re.