Bill Ackman's Pershing Square Capital 13F Filing: Q4 2008 ~ market folly

Tuesday, February 24, 2009

Bill Ackman's Pershing Square Capital 13F Filing: Q4 2008

This is the 4th Quarter 2008 edition of our ongoing hedge fund portfolio tracking series. Before reading this update, make sure you check out the Hedge Fund 13F filings preface.

Next up we have Pershing Square Capital Management. Bill Ackman runs Pershing Square Capital, a well known value/activist based hedge fund that 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). But, he has recently closed those shorts. Recently, he also detailed his plans for Target to spin-off its real-estate to unlock value. His Pershing Square IV fund, which invests solely in Target (TGT), has seen abysmal performance, as Ackman apologized for in their recent letter. We'll have to see if this proposal picks up any steam, but so far it hasn't. A great quote from Ackman has arisen from all the Target hoopla. He states, “The investment business is about being confident enough to know that you’re right and everyone else is wrong. Yet you have to be humble enough that you recognize when you’ve made a mistake. Earlier in my career, I think I had the confidence part pretty solid. But the humbleness part I had to learn.’’ We track Ackman on the blog extensively and have a lot of resources on him and his fund. Pershing has been busy lately, filing a 13D on General Growth Properties (GGP) and a 13G on Barnes & Noble (BKS). Furthermore, you can view Pershing Square's Q3 2008 investor letter here. Besides their recent 13D/G filings, let's look at what they've been up to with the rest of their portfolio.

The following were their long equity, note, and options holdings as of December 31st, 2008 as filed with the SEC. We have not detailed the changes to every single position in this update, but we have covered all the major moves. All holdings are common stock unless otherwise denoted.

Some New Positions (Brand new positions that they initiated in the last quarter):
General Growth Properties (GGP)
Alexanders (ALX)

Some Increased Positions (A few positions they already owned but added shares to)
EMC Corp (EMC)
Target (TGT)

Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
Dr. Pepper Snapple Group (DPS): Reduced position by 51%
Wendy's (WEN): Reduced position by 15%
Sears Holdings Corp (SHLD): Reduced position by 39.5%

Removed Positions (Positions they sold out of completely)
Wachovia (WB)
Longs Drug Stores (LDG)
Barnes & Noble (BKS)
American International Group (AIG)
Mastercard (MA)

Top Holdings (by % of portfolio)

  1. Target (TGT): 37.91% of portfolio
  2. EMC (EMC): 25.19% of portfolio
  3. Wendys (WEN): 9.54% of portfolio
  4. Dr Pepper Snapple (DPS): 7.22% of portfolio
  5. General Growth Properties (GGP): 1.06% of portfolio
  6. Sears (SHLD): 0.48% of portfolio
  7. Borders Group (BGP): 0.17% of portfolio
  8. Greenlight Capital Re (GLRE): 0.13% of portfolio
  9. Alexanders (ALX): 0.09% of portfolio

Assets from the collective long US equity, options, and note holdings above were $2.4 billion this quarter. As you can tell, Ackman is running quite a slim, concentrated portfolio on the long side of things. His massive (and well documented) stake in Target continues to hurt him and the Pershing Square IV fund. While there has been much made over Ackman's foray into shares of GGP, you can also now see that he has added Alexanders into his portfolio, but at in small size relative to his portfolio as a whole. For more thoughts from Ackman, check out his insightful interview with Charlie Rose or his recent speech at the Value Investing Congress. This is just one of many funds in our hedge fund portfolio tracking series in which we're tracking 35+ prominent funds. We've already covered Paulson & Co (John Paulson), Carl Icahn, Warren Buffett, Stephen Mandel's Lone Pine Capital, and George Soros. Look for our updates as we cover a different fund every single day.

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