When Pershing Square Capital Management has been in the news lately, it's mostly been bad: huge losses and humiliating setbacks in major investments, such as J.C. Penney Co. and Herbalife. But the New York-based hedge fund has actually been riding a winning streak lately.
Despite roughly $1 billion in losses on Penney's and Herbalife, Pershing Square's other investments soared at the end of last year, leaving it up over 10% through November. Now, it's poised to make $342.5 million on yesterday's deal between distillers Suntory Holdings and Beam Inc.
Pershing Square owns 12.8% of Beam, which makes Jim Beam and Maker's Mark bourbon, Laphroaig Scotch, Courvoisier cognac and Cruzan rum, among other spirits. Suntory's $16 billion offer for Beam sent the latter's shares up 25%—and could earn Pershing Square even more if it sparks a bidding war.
And Pershing Square's William Ackman isn't just a prescient investor who saw value in Beam shares—his efforts helped create the company. Beam is what remains of Fortune Brands, whose breakup Ackman championed. Indeed, Pershing Square has already done well from the sale of Fortune's golf business and the spin-off of its home products business. The firm's share in Beam is currently worth about $1.7 billion; it paid only $765 million for its Fortune stake in 2010.