Saturday, 30 July 2016
Last updated 4 hours ago
Nov 5 2013 | 8:14am ET
Pershing Square Capital Management posted a huge return in October, transforming what appeared to be an extremely disappointing year into an extremely promising one at a stroke.
The firm's flagship International Fund jumped 7.9% last month and is now up more than 8% on the year. Returns were fueled by big gains among some of its biggest holdings, including mall owner General Growth Properties, Burger King Worldwide and Canadian Pacific Railway.
The New York-based hedge fund has had an up-and-down year in 2013, but recently it's been primarily down. After a difficult summer, Pershing Square was essentially flat, burned by big losses on J.C. Penney Co. and its $1 billion short against nutritional supplements company Herbalife.
Pershing Square booked a $500 million loss when it sold off its entire Penney's stake and has a similarly large paper loss on its Herbalife short, which it recently restructured to reduce risk. But its October surge was helped by a 7.1% drop in Herbalife's share price—although it remains up 84% on the year. Ackman is planning a new presentation on the company, which he believes is a pyramid scheme, later this month.
Of course, October wasn't without its missed opportunities: Pershing Square in September nearly halved its General Growth stake, only to see the stock jump 10% last month.
Pershing Square said in a letter to investors that it had added two short positions in October, although it did not identify them. It also added two long bets.