Hedge Fund Tracking: Bill Ackman's Pershing Square - 13F Filing 3rd Quarter 2008 ~ market folly

Tuesday, November 18, 2008

Hedge Fund Tracking: Bill Ackman's Pershing Square - 13F Filing 3rd Quarter 2008

(Note: Before reading this update, make sure you check out the preface to the series we're doing on Hedge Fund 13F's here).

This is the 3rd Quarter 2008 edition of our ongoing hedge fund tracking series. We'll be bringing you the long equity portfolios of numerous prominent hedge funds. Hedge funds we track here at MarketFolly.com include: Tudor Investment Corp, Maverick Capital, Greenlight Capital, Blue Ridge Capital, Moore Capital Management, Lone Pine Capital, and literally many, many more. We're aiming to cover 35 or so prominent funds this time around and we'll be releasing the 13f analysis of each individual fund here in the coming weeks. We've already covered Whitney Tilson's T2 Partners and Peter Thiel's Clarium Capital.

Next up we have Pershing Square Capital Management. If you're unfamiliar with them, Bill Ackman runs Pershing Square Capital, a well known value/activist based hedge fund. The fund started in 2003 after Gotham Partners broke up. The past few years, he has had notable short positions in the bond insurers such as MBIA (MBI) and Ambac (ABK). Some of his activist positions include Target (TGT) and Borders (BGP). Simply put, Ackman is a smart man. Recently, he detailed his plans for Target to spin-off its real-estate to unlock value. We'll see if this proposal picks up any steam. We recently noted Pershing Square's portfolio performance, which was included in our September hedge fund performance update. Additionally, we've updated the performance of various hedge funds in October. Also, we wrote about Mr. Ackman's recent speech at the Value Investing Congress. Furthermore, you can view Pershing Square's most recent investor letter here. Lastly, Ackman recently sat down with Charlie Rose for an interview.

So, now that we've got a background on Ackman and Pershing, let's take a quick look at his portfolio highlights. Keep in mind that this is merely a brief summary of Pershing's top holdings. Due to the time sensitive nature of the 13F material, we wanted to get this information posted as soon as possible. The following were Pershing's holdings as of September 30th, 2008 as filed with the SEC.

New Positions (Brand new positions that Pershing initiated in the last quarter):
American International Group (AIG)
American International Group (AIG) Calls
Mastercard (MA)
Visa (V)
Wachovia Bank (WB)

Removed Positions (Positions Pershing sold out of completely last quarter):
Cadbury (CBY)

Notable Position Changes
- Sold 92.5% of their Sears Holdings (SHLD) Position

Pershing Square's Entire Portfolio (based on % of portfolio):

  1. Target (TGT): 24.7% of portfolio
  2. EMC Corp (EMC): 18% of portfolio
  3. Dr. Pepper Snapple (DPS): 15% of portfolio
  4. Wachovia (WB): 8.7% of portfolio
  5. Wendy's/Arby's (WEN): 7.5% of portfolio
  6. Long's Drugstores (LDG): 6.1% of portfolio
  7. Barnes & Noble (BKS): 4.4% of portfolio
  8. Visa (V): 4.2% of portfolio
  9. American International Group (AIG): 2.8% of portfolio
  10. Mastercard (MA): 2.6% of portfolio
  11. Target (TGT) Calls: 2.5% of portfolio
  12. Borders (BGP): 1.8% of portfolio
  13. Sears Holdings (SHLD): 1.2% of portfolio
  14. Greenlight Capital RE (GLRE): 0.1% of portfolio
  15. American International Group (AIG) Calls

Keep in mind that we have not detailed every tiny maneuver they have made with their portfolio. In some of their holdings they added shares, others they sold some shares, and some of their positions were left unchanged from last quarter. We are essentially capturing the major moves Pershing has made over the past quarter with regards to their portfolio.

This is the third hedge fund we've covered in our 3rd quarter 2008 edition of our hedge fund tracking series in which we're tracking 35+ prominent funds. We've already covered Whitney Tilson's T2 Partners and Peter Thiel's Clarium Capital. Stay tuned this week and next week as we detail the portfolio holdings of more funds. Overall, its been one of the worst years ever for hedge funds, as we noted in our recent October hedge fund performance update. Thus, the recent moves they've made in their portfolios become all the more interesting given the way the market has played out. Here are some funds to look forward to that we will be tracking: David Einhorn's Greenlight Capital, Lee Ainslie's Maverick Capital, Paul Tudor Jones' Tudor Investment Corp, Louis Bacon's Moore Capital Management, and many, many more.

More on Pershing Square and Bill Ackman:
- Pershing Square's 3rd qtr '08 investor letter
- Bill Ackman's recent interview with Charlie Rose
- Pershing Square's Bill Ackman speaks at Value Investing Congress
- Recent update on Pershing Square

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