Ackman's Pershing Square Holdings Slips to YTD Loss on China Woes

Aug 27 2015 | 5:03pm ET

Bill Ackman’s Pershing Square Holdings, the publicly traded vehicle that mirrors the famed activist investor’s hedge fund, has been slammed by the market volatility of the past several weeks and has fallen into the red for the year to date.

The decline was largely the result of the decline in Chinese markets surrounding the devaluation of the Chinese yuan earlier this month, according to an interim report released by the firm.

Concerns that China’s growth rate is slowing sharply have raised fears that businesses around the world and across multiple sectors will be negatively impacted.

The firm, which is structured as a closed end fund, noted that for the first half of 2015, the company returned 6.6% net of fees in July, which brought YTD performance through the end of July 2015 to 10.1%. AUM as of the end of July 2015 to $7.4 billion, compared to $6.6 billion on Jan 1.

However, the interim report also noted that the gain had subsequently been erased, and that the fund is down for the year. Subsequent to the release of the interim report, Pershing Square Holdings revealed that its portfolio was down 13.1% so far this month and down 4.3% for the year.

As for looking ahead, Pershing Square is betting that the situation will be relatively short-lived. “We do not believe that stock market and commodity price declines, currency devaluation, and/or economic weakness in China will have a material impact on the intrinsic value of the portfolio," noted Ackman in the report. 

“It is especially important in times of share price volatility to remember that PSH aims to invest in stable, cash-generative businesses that have limited exposure to macroeconomic events,” said the report’s Chairman’s Statement. 

“We believe [our] portfolio companies are well positioned to increase their long term intrinsic value, and this is not reflected in the current volatility in their share prices,” the report added. 

Ackman raised $3 billion when he listed Pershing Square Holdings as a permanent capital vehicle in Amsterdam in October 2014. His firm as a whole manages more than $20 billion. 

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