Pershing Square Trims Mondelez Stake ~ market folly

Friday, March 18, 2016

Pershing Square Trims Mondelez Stake

Bill Ackman's hedge fund firm Pershing Square Capital has filed an amended 13D with the SEC regarding its stake in Mondelez (MDLZ).  It seems that Pershing sold around 20 million shares. 

After these transactions, Pershing now owns 5.6% of the company with over 88.1 million shares.  This is broken down into 22.9 million shares of common stock and 65.25 million shares worth of exposure via call options.  Pershing listed all of their separate transactions in a filing here.

As to the reason for the sales, the filing notes that, "The Reporting Persons reduced their stake in the Issuer because the stake had become an outsized position of their portfolio in light of its initially large size and its outperformance relative to other holdings. The Reporting Persons are reducing the position size for portfolio management purposes only."

It is of course worth noting that Pershing is currently facing a big loss thus far this year, mainly due to its Valeant Pharmaceutical (VRX) position. 

The Wall Street Journal notes that Pershing was down 26% for the year and that "Ackman told investors Wednesday that the Mondelez sale would leave Pershing with 'substantial uninvested cash'  ... and assured investors that he had no immediate plans to sell other assets."

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