Pershing Square Updates Zoetis Position

Bill Ackman's hedge fund firm Pershing Square Capital has filed a 13D with the SEC regarding its position in Zoetis (ZTS).  Previously, we highlighted that Pershing was offering ZTS shares for sale.  Now, we get a sense as to how much of their position they've offloaded.

The 13D indicates Pershing now owns 3.8% of the company with 18.89 million shares.  This means they've sold 22.93 million ZTS shares since the end of the first quarter.

They were out selling Zoetis shares throughout June and into early July at prices $45.57 and $48.18.  ZTS currently trades around $48.47.

We've also highlighted some other recent Pershing Square portfolio moves.

Per Google Finance, Zoetis is "in the discovery, development, manufacture and commercialization of animal health medicines and vaccines, with a focus on both livestock and companion animals. The Company has a diversified business, marketing products across over eight core species: cattle, swine, poultry, sheep and fish (collectively, livestock), and dogs, cats and horses (collectively, companion animals), and within over five product categories: anti-infectives, vaccines, parasiticides, medicated feed additives and other pharmaceuticals. It operates through two segments: the United States and International. Within each of these segments, it offers a diversified product portfolio for both livestock and companion animal customers. In addition, its Client Supply Services (CSS) organization provides contract manufacturing services to third parties. It also offers other product categories, such as nutritionals and agribusiness."

Michael Keller Long Zoetis & Perrigo: London Value Investor Conference

We're posting notes from the London Value Investor Conference 2016.  Next up is Michael Keller of Brown Brothers Harriman who pitched long Zoetis (ZTS) and long Perrigo (PRGO).


Michael Keller's London Value Investor Conference Presentation

Brown Brothers Harriman are bottoms up, research intensive high quality franchise investors who look to hold stocks for at least five years. Too many investors are index huggers that charge large fees. They aim to beat the market on the way down. They focus on the full cycle even if it means missing out on some of the upside.


Investment idea: Zoetis (ZTS)

Tim Harch of Brown Brothers Harriman pitched Zoetis at the conference last year. They still like it. Zoetis is a global leader in animal health for livestock and pets. It offers a broad array of products for preventative care and disease treatment. Unlike human healthcare animal medicine does not suffer from a lack of government reimbursement issues. The secular trends in animal health are durable. Expect steady mid-single digit revenue growth.  (MF note: Bill Ackman recently sold ZTS shares.)


Investment idea: Perrigo (PRGO)

Perrigo produces white label consumer goods for chemists – pain medication, health products, branded products and generics. It holds royalty rights for Tysabri a mature MS drug with a large patient population. It is domiciled in Ireland.

There are three business drivers: the ageing demographic that favours pharma; store brand products; conversion of Rx to over the counter. The stock is down because:

- The long term CEO has left to join Valeant (VRX)
- Pricing pressures in generics
- The Omega acquisition has been less successful than expected

Keller believes the price weakness is overdone. The current valuation implies an 8% FCF.



Be sure to check out the rest of the presentations from the London Value Investor Conference.

Pershing Square Offering Zoetis Block of Shares For Sale

Yesterday it was rumored that Bill Ackman's hedge fund Pershing Square Capital was shopping an over 16.8 million block of shares of Zoetis (ZTS) and the NYTimes basically confirmed it. 

Bank of America and Credit Suisse are running the transaction which would net Pershing around $800 million.  After the sale, Pershing will still own around 25 million shares of ZTS.

Pershing's board member also stepped down at Zoetis recently.

Ackman has suffered a big blow with his investment in Valeant Pharmaceuticals (VRX) which has left him reshuffling the rest of his portfolio a bit.  Part of his thesis on ZTS was that perhaps VRX might be interested in buying it.

This is the second stake that the hedge fund manager has trimmed recently.  He sold some Mondelez (MDLZ) back in March.

For more on this firm, we also posted up Pershing's latest presentation on their holdings.

Pershing Square's Latest Presentation on Their Holdings

Bill Ackman's hedge fund firm Pershing Square Capital Management recently released its slideshow presentation from its European Investing Meeting.

In it, they update the status/progress of their investments with numerous slides on each name regarding their thesis and how it's playing out. 

The investments profiled include: Mondelez (MDLZ), Air Products (APD), Zoetis (ZTS), Restaurant Brands (QSR), Canadian Pacific (CP), Howard Hughes (HHC), Valeant Pharmaceuticals (VRX), Platform Specialty Products (PAH), Fannie Mae/Freddie Mac, Nomad Foods (NOMD), and their short of Herbalife (HLF).

Embedded below is Pershing's latest presentation:



You can download a .pdf copy here.

Pershing Square Semi Annual Report: Mondelez, Nomad Foods & More

Bill Ackman's hedge fund firm Pershing Square is out with its semi-annual report and second quarter letter.  Year to date through July 2015, Pershing Square Holdings was up 10.1% net.  This obviously doesn't include the volatility in August and they note they were down for the year as of recent activity, but still outperforming the indices.


Pershing's Thesis on Mondelez

Ackman's letter provides an update on their new position in Mondelez (MDLZ), writing

"We believe that now is an attractive time to invest in Mondelez because its profit margins are just beginning to expand after several years of limited improvement.  In addition, we believe that 3G Capital, through its ownership of Hertz, and now Kraft, has established new benchmarks for operational efficiency, organizational design and management alignment which have allowed 3G companies to be more profitable, nimbler, and better positioned to grow over the long-term.  We believe that 3G's higher standards for operating performance will catalyze a competitive response in the packaged foods industry, leading to greater operating margins and profitability for Mondelez and other companies in the industry."


Pershing's New Position in Nomad Foods

The firm also talked about their new purchase of Nomad Foods (NHL).  They purchased $350 million in a private placement of Nomad's common stock during its acquisition of Iglo Group in June, giving them a 22% ownership stake. 

Nomad is a specialty purpose acquisition company (SPAC) sponsored by Martin Franklin and Noam Gottesman.  Pershing has worked with Martin before in a previous SPAC (Justice Holdings) that then became Burger King (now known as Restaurant Brands).

The thesis here is a consolidation play as they believe Iglo is a platform investment to then acquire more of the packaged food industry.

Pershing writes,

"Iglo is the leading branded frozen food business in Europe with euro 1.5 billion in sales. It is a stable, high margin (20% EBITDA margin), free-cash-flow-generative business.  It has a leading share in European frozen foods at 2.2 times the size of the next largest competitor, with strong brand equity.  Historical growth in the business has been flat, but management sees opportunity for organic growth by expanding the company's great brand names into adjacent frozen food categories."


In its letter, Pershing also provides updates on Valeant Pharmaceuticals (VRX), Air Products and Chemicals (APD), Canadian Pacific (CP), Zoetis (ZTS), Restaurant Brands (QSR), their short of Herbalife (HLF), Fannie Mae/Freddie Mac (FMCC), and.


Embedded below is Pershing Square's semi-annual report / Q2 letter:



You can download a .pdf copy here.

For more on this firm, head to Bill Ackman's presentation at the Delivering Alpha conference.

Pershing Square's Presentation From European Investor Meeting

Bill Ackman's Pershing Square Holdings has just released a presentation on its portfolio from a recent European investor meeting.

In it, the hedge fund outlines their thesis on various portfolio companies and updates regarding those positions.  They also offer a look at their thinking on a recent addition to their portfolio: Valeant Pharmaceuticals (VRX).

Embedded below is Pershing Square's presentation from its recent European investor meeting:



You can download a .pdf copy here.

For more from this hedge fund, check out Pershing Square's annual report here.

Bill Ackman's Pershing Square Q3 Letter: Zoetis, Allergan & More

Bill Ackman is out with Pershing Square Capital's third quarter letter to investors.  Pershing is up 35% net for the year as of the end of October.  The Q3 letter outlines Ackman's thesis on his newest holding: Zoetis (ZTS). 

ZTS is a spin-off from Pfizer and is an animal health company.  Ackman took this position alongside Sachem Head Capital, another activist hedge fund run by Scott Ferguson (who previously worked at Pershing).

He likes that Zoetis has a durable product portfolio and is involved in markets with secular growth. Ackman writes, "We believe Zoetis is a scarce asset."

Additionally, Ackman outlines the Allergan (AGN) saga and also gives updates on his positions in Canadian Pacific (CP), Howard Hughes (HHC), Platform Specialty Products (PAH), Fannie & Freddie, Air Products (APD), as well as his Herbalife (HLF) short.

Embedded below is Pershing Square's Q3 letter:



For more from Ackman, check out some of his recent conference appearances: Ackman's fireside chat at Invest For Kids Chicago as well as Ackman's talk at Great Investors' Best Ideas Dallas.