New Graham & Doddsville Issue: John Hempton, Yen Liow, Bill Stewart

Columbia Business School is out with the Spring 2019 issue of its Graham & Doddsville newsletter.  It features interviews with Bronte Capital's John Hempton, Aravt Global's Yen Liow, and Stewart Asset Management's Bill Stewart.

It also includes student investment pitches such as long Dollarama, long Align Technology, long Carsales.com, and long Dean Foods 6.50% senior unsecured.

Embedded below is the Spring 2019 issue of Graham & Doddsville:



You can download a .pdf link here.

Pershing Square Annual Report 2017: Sold Nike, Covered Herbalife Short

Bill Ackman's Pershing Square is out with its annual report for 2017.  For the year, they lost 4% net.

The report gives updates on their positions in Automatic Data Processing (ADP), Restaurant Brands (QSR), Mondelez (MDLZ), Howard Hughes (HHC), Chipotle (CMG), Fannie Mae & Freddie Mac, and Platform Specialty Products (PAH).

Pershing Square Sold Nike (NKE) Position Already

Pershing Square reveals they already sold their new Nike (NKE) position and explain the rationale below:

"During the course of our four-month ownership of Nike (we sold the position recently), the stock price appreciated by34%, reducing the returns to be earned from our investment to a level at which we believed our capital could be allocated to more attractive opportunities.  It is rare that we are a short-term investor.That said,we are always willing to redeploy capital if an investment appreciates to a level that no longer offers sufficient returns relative to other potential opportunities."


Rationale For Covering Herbalife (HLF) Short

They also outline why they covered their Herbalife (HLF) short position:

"While we have been correct in our belief that Herbalife’s business fundamentals would deteriorate as earnings per share, revenue growth, and other measures of business performance weakened substantially since we initiated the investment, we underestimated Herbalife’s ability to access debt capital and use financial engineering which–coupled with Mr.Icahn’s share purchases to materially reduce the company’s free float–has driven share price appreciation."


Embedded below is Pershing Square's 2017 annual report:



You can download a .pdf copy here.

Pershing Square Building United Technologies Stake; Covers Herbalife Short

Per CNBC, Bill Ackman's Pershing Square has reportedly been building a stake in United Technologies (UTX).  Ackman told Scott Wapner that he thought the company was "great."  The company has been awaiting the closure of its acquisition of Rockwell Collins (COL).  Additionally, UTX management has said they've been evaluating splitting up into a few different entities.

Secondly, Ackman has exited his bet against Herbalife (HLF).  He had previously been outright short shares, but then this past November restructured the short via put options.  Now, he's out of his short bet entirely.  

This comes after he said back in 2013 that he'd go to the "ends of the earth" to shut the company down, dubbing it a pyramid scheme.  Shares of HLF are already up 36% year-to-date after being up a similar amount already last year.

Pershing Square has been active lately, as it also recently revealed a new Nike (NKE) position.

For more from this investor, you can view a recent Pershing Square presentation here.

Pershing Square Portfolio Update Presentation: Nike, S&P Global & More

Bill Ackman's activist firm Pershing Square recently made a presentation to investors about the current state of their portfolio and how they're re-tooling the organization after a few years of poor performance.  In 2017, Pershing was down 4%.

The presentation provides brief updates on all their holdings, including their new Nike (NKE) stake.


Pershing Square on New Nike Stake (NKE)

They bought Nike because it's "a high quality business that should compound long-term earnings at a high rate due to strong revenue growth and margin expansion."

They see it as an iconic brand with a dominant market position.  The company has assets via patents, a huge marketing budget, brand loyalty, manufacturing skill, and leverage with suppliers and customers.

Pershing thinks the company can continue to grow revenue in the high single digits.  They note positive secular trends of health/wellness and emerging market growth as key contributors, as well as pricing power.

The firm sees Nike expanding margins via new manufacturing processes and growth in distribution channels with "more favorable economics."


Ackman Bought & Sold S&P Global (SPGI)

The presentation also reveals that Pershing Square was buying shares of S&P Global (SPGI) during 2017 but sold the stake because they couldn't build a full position size as markets rose.

Their thesis was that "S&P is an annuity-like business with pricing power, strong secular growth and a margin opportunity."  It's a credit ratings and financial data services firm with the former comprising 55% of EBIT and the latter 45%.


Lastly, Pershing Square also bought an undisclosed position but sold that as well.  It's interesting that they aren't revealing the name.  Does this mean perhaps they might want to revisit it if the share price hits a level they're comfortable with? Who knows.

The presentation also includes updates on their stakes in: ADP, Chipotle, Howard Hughes, Mondelez,  Restaurant Brands, Fannie Mae/Freddie Mac, Platform Specialty Products, and their short of Herbalife (HLF).

Embedded below is Pershing Square's portfolio update presentation:



For more from this fund you can also read Pershing Square's Q3 letter.

Pershing Square Q3 Letter: Restructures Herbalife Short

Bill Ackman is out with Pershing Square's third quarter letter to investors.  Pershing Square returned -3.7% net in the third quarter and was down 4.2% for the year at that time.

Pershing has restructured its short position in Herbalife (HLF).  Rather than shorting common stock, they've covered that and are now short via put options.

Ackman is also quite bullish on Mondelez (MDLZ): "We believe MDLZ is currently substantially undervalued given its high business quality, long-term secular growth potential - especially in emerging markets - and substantial opportunity to improve profit margins.  Today, Mondelez trades at 17 times our estimate for 2018 earnings per share, a discount to the S&P 500 market multiple, for a business whose attributes are substantially better than the average company in the S&P 500."

The letter also provides updates on their holdings: Restaurant Brands (QSR), ADP (ADP), Howard Hughes (HHC), Chipotle (CMG), Fannie Mae / Freddie Mac, Platform Specialty Products (PAH).

Embedded below is Pershing Square's Q3 letter:



For more recent hedge fund commentary, we've also posted up Third Point's Q3 letter as well as Greenlight Capital's Q3 letter.

Carl Icahn's Herbalife Ownership Increases Due To Company Buyback

Activist investor Carl Icahn has filed an amended 13D regarding his position in Herbalife (HLF).  Per the filing, Icahn now owns 26.22% of the company.  This is up from his previous ownership stake of 24%, but it's not due to him buying more shares.  He still retains the same amount as he previously did: 22.87 million shares.

Herbalife recently announced results from its self-tender offer to buy around $600 million of its own stock.  It accepted over 6.73 million shares at $68 per share.

Sellers of stock received a contingent value right (CVR) for each share tendered that provides a right to payment should the company be taken private in the next two years.  After the tender completes, HLF will have around 87 million shares outstanding.

As a result, Icahn's ownership percentage increased without him doing anything.

And as we've highlighted previously,  Bill Ackman continues to be short Herbalife as well.

Per Google Finance, Herbalife Ltd. is "a global nutrition company. The Company develops and sells weight management, healthy meals and snacks, sports and fitness, energy and targeted nutritional products, as well as personal care products. Its operating segments are based on geographical operations in six regions: North America; Mexico; South and Central America; Europe, the Middle East, and Africa (EMEA); Asia Pacific, and China. The Company categorizes its products into five groups: weight management, targeted nutrition, energy, sports and fitness, outer nutrition, and literature, promotional and other. As of December 31, 2016, it marketed and sold approximately 140 products encompassing over 4,700 stock keeping units (SKUs) globally. Its product categories include meal replacement; protein shakes; drink mixes; dietary and nutritional supplements containing herbs, vitamins, minerals and other natural ingredients; facial skin care; body care; hair care products; sales tools, and educational materials."

Notes From Great Investors Best Ideas Conference (GIBI) Dallas 2017: Ackman, Einhorn & More

The 11th annual Great Investors Best Ideas (GIBI) Dallas Investment Symposium just took place where managers shared investment ideas to benefit The Michael J. Fox Foundation for Parkinson's Research and Vickery Meadow Youth Development Foundation.  Below are some brief notes on the event:


Notes From GIBI Dallas Conference 2017

David Einhorn, Greenlight Capital

Still owns a huge position in General Motors (GM) but has been trimming it since it's grown too large (risk management, position sizing, etc).  Still his largest position by a longshot though.  Still thinks it's very cheap and points to an opportunity for a new shareholder base to get into shares.  Likes they've gotten rid of its riskiest international business and is investing in autonomous cars and electric vehicles: the future.

He also likes Tempur Sealy (TPX).  Thinks estimates are way too low (notes that management's incentives are way higher).  The company had a dispute with Mattress Firm and stopped selling its mattresses there.  Despite that, customers still actively sought out the TempurPedic brand, so the co is replacing its lost Mattress Firm sales elsewhere at higher margins.  Thinks there's also a reasonable chance MF comes back to them since MF has lost sales.

Einhorn said that his 'bubble basket' of shorts in highflying tech stocks like Amazon and Tesla are valued like profits don't matter ... ever.  He says eventually people will wake up and profits will matter and their stocks will crater.  He also pointed to somewhat of a cult following status that is attached to Tesla's stock with all the hype that Elon Musk continuously builds with various projects.  There's around 30 stocks in Einhorn's bubble basket.   He noted he owns a Tesla, but also points out that the company probably lost $20-30k selling it.  Says company hasn't figured out how to make cars profitable on a unit basis.  You can also read Greenlight Capital's Q2 letter here.


Bill Ackman, Pershing Square Capital

Pitched his newest long: Automatic Data Processing (ADP).  Has an activist position.  Thinks it's a quality business: simple, not capital intensive, secular tailwinds (sees lots of growth ahead).  Automating employees.  Ackman thinks the stock's a double.  We've posted Ackman's presentation on ADP previously.

Also mentioned the GSEs he's involved with: Fannie Mae & Freddie Mac.  Still owns and thinks there's huge upside there.  He originally pitched these plays three years ago at the same conference.  Thinks they will eventually trade multiples higher of where they are now.

He's still short Herbalife (HLF) and has lost millions on the bet as the stocks' up around 40% from his average short price.  Said that of the risk factors considered for the position, Carl Icahn coming in and buying 20+% of the company wasn't one he considered.

Noted he still owns Howard Hughes (HHC) and while he doesn't see any immediate catalysts, thinks it's a long-term play as a high quality business.

Says average investor can be plenty concentrated with 10-15 holdings.  Biggest mistake of his career?  Not selling when new information emerged that didn't jive with his investment thesis.  You can read Pershing Square's Q2 letter here.



Tom Russo. Gardner Russo Gardner

Spoke about global brands and various companies still controlled by the founding families.  His best idea was the company hit with a scandal and PR crisis: Wells Fargo (WFC).  Previously he had noted how his WFC stake has remain unchanged (around 6% of his assets) and that he thought the company simply became too fixated singly on one variable (cross-selling) which lead to a bunch of accounts being opened in customers names.  The company now suffers from poor optics but on a risk level, direct financial harm has been modest and he has faith in the legal process.



Andrew Wellington, Lyrical Asset Management

A couple of picks:  Flex Ltd (FLEX), co is seeing double digit growth in its bottom line and 50% of FCF going to shareholders.  Trading around 12x earnings.

Affiliated Managers Group (AMG): asset management play, owns equity stakes in boutique management firms.  Says they own really good managers.  Trading around 12x NTM earnings.



Van Hoisington, Wasatch-Hoisington US Treasury Fund

He concluded that we're heading to a recession as the Fed has restrictive policies already in effect and money and credit are slowing noticeably.  Structural impediments to growth are over-indebtedness globally as well as adverse demographics.  Thinks rates will stay lower. 



Jeanie Wyatt, South Texas Money Management

A few ideas: Citigroup (C) as a value play.  Thinks it could re-rate from almost 1x book value to closer to 1.4x.  Since the crisis the company has a better situation and less subprime.

KAR Auction Services (KAR):  notes 20% EPS growth, end markets that are accelerating as well.  Trading just over 22x next year's earnings but with a big opportunity ahead as various leases will be coming to term.

Electronic Arts (EA): video game stock that's benefited from going over the top (OTT) as it leads to higher margins than the typical video game distribution model of physical games, etc.  Accelerating sales growth.  Also sees new potential upside in e-sports. 

Vodafone (VOD): Stock has traded sideways but the company has improved in end markets.  Thinks it offers good downside protection as sales growth has accelerated.


For more stock picks from recent investment conferences, we posted up notes from the Sohn San Francisco Conference yesterday.

Pershing Square Q2 Letter: Sold Undisclosed Hilton Stake

Bill Ackman's Pershing Square has put out its mid-year report which includes commentary on their investments.  They also disclose that they previously owned a stake in Hilton (HLT) but recently sold it after the spin-offs took place.

In the letter, they also write about their latest investment, Automatic Data Processing (ADP):

"ADP is a classic Pershing Square investment. It is a simple, predictable, free-cash-flow generative business that has under performed its potential. As a conservatively financed, capital-light business with long-term customer relationships in a sector with substantial positive growth, we believe it has modest downside. If it is able to achieve its potential, we believe it offers substantial upside. We acquired ADP for the funds along with a co-investment vehicle (PSVI) which we recently raised to increase our ownership of the company.  We believe that ADP is one of the highest quality businesses we have owned, and one which offers an enormous opportunity for operational improvement.

They also provide an update on their stake in Chipotle (CMG), noting that the company has battled another setback with a norovirus incident in Virginia.  That said, Pershing feels that the company is still on the right track.  They write,

"We made our investment in Chipotle anticipating that the sales recovery would be neither smooth nor predictable,but with a belief that the key drivers of Chipotle’s powerful economic moat and long-term success would remain intact. With the steps that the company has taken to improve its business, we continue to believe there is an enormous long-term growth opportunity for Chipotle given: (1) the significant potential to drive sales per restaurant higher through mobile and digital ordering, menu innovation, catering, and improved operations, (2) the opportunity to expand its vastly under penetrated restaurant base in the U.S., and (3) the considerable potential to build the brand internationally."

Their letter also touches on Mondelez (MDLZ), Howard Hughes (HHC), Air Products (APD), Restaurant Brands (QSR), Platform Specialty Products (PAH), Nomad Foods (NOMD), and Fannie Mae/Freddie Mac, as well its short position: Herbalife (HLF).


Embedded below is Pershing Square's Q2 letter:



You can download a .pdf copy here.

Pershing Square's Q1 Letter

Bill Ackman is out with Pershing Square's first quarter 2017 letter.  Pershing returned -2.6% net in the first quarter of the year.

We've already highlighted how Ackman pitched Howard Hughes at the recent Sohn conference. 

His Q1 letter provides updates on other stocks such as Mondelez (MDLZ), Air Products (APD), Restaurant Brands (QSR), Chipotle (CMG), Fannie Mae/Freddie Mac, as well as Platform Specialty Products (PAH), Nomad Foods (NOMD), and their short of Herbalife (HLF).



Embedded below is Pershing Square's Q1 letter:



You can download a .pdf copy here.

Graham & Doddsville Spring 2017 Issue: Begg, Sosin, Krishna

Columbia Business School is out with its spring 2017 issue of Graham and Doddsville.  It features:

- Interview with A. Rama Krishna of ARGA Investment Management who talked about investing in international markets and in particular, Russia.

- Interview with Cliff Sosin of CAS Investment Partners talking Herbalife (HLF) and World Acceptance (WRLD).

- Interview with Chris Begg of East Coast Asset Management, who we've featured on the site numerous times in the past.  He shares his thesis on TransDigm Group (TDG) and thoughts on Sherwin Williams (SHW).

The new issue also includes student investment pitches such as long Yum China (YUMC), long Alaska Airlines (ALK), long Corning (GLW), and long Dollarama (DOL).


Embedded below is the spring 2017 issue of Graham & Doddsville:



You can download a .pdf copy here.

For more of their past issues, we've also posted up their interview with Kingstown Capital as well as their interview with Meritage Group and MSD Capital.

Betting on Zero Trailer: Documentary on Bill Ackman's Fight Against Herbalife

Bill Ackman and Pershing Square's short bet against Herbalife (HLF) has been dragging on for quite some time now.  Simply put, he argues the company is a pyramid scheme.

Now, a documentary has been released called Betting on Zero.  It details Bill Ackman's 'holy war' against the company and also touches on Carl Icahn's long position. 

The documentary is available on iTunes now, but here's a teaser of what you can expect.

Embedded below is the video trailer for Betting on Zero:



For more on this fund, we've detailed Pershing Square's 2016 annual report.

Pershing Square's 2016 Annual Report: VRX, APD, FNMA, HLF, HHC, MDLZ, NOMD, PAH, QSR

Bill Ackman's hedge fund firm Pershing Square Capital Management is out with its 2016 annual report.

Pershing Square lost 13.5% net in 2016.  The bulk of this loss was attributed to its previous position in Valeant Pharmaceuticals (VRX).

Ackman writes about why they ended up selling VRX:

"If the stock price had increased even very substantially from here, the impact on our overall performance would have been modest, and would not compensate  us for the human resources and substantial mindshare that this investment had and would have continued to consume  if we had remained a shareholder.  Furthermore, while Valeant has made significant progress and we expect  management to continue to do so, there is still a lot of work to be done.  

Clearly, our investment in Valeant was a huge mistake.  Th e highly acquisitive nature of Valeant’s business required  flawless capital allocation and operational execution, and th erefore, a larger than no rmal degree of reliance on  management.  In retrospect, we misjudged the prior management team and this contributed to our loss.  We deeply  regret this mistake, which has cost  all of us a tremendous amount, and whic h has damaged the record of success of  our firm." 

Despite the poor 2016, Pershing points out that they've generated a compound annual return of 14.8% compared to S&P returns of 7.7% over the same time period.

The report also details portfolio updates on numerous positions, including: Air Products & Chemicals (APD), Fannie Mae (FNMA) / Freddie Mac (FMCC), their short of Herbalife (HLF), Howard Hughes (HHC), Mondelez (MDLZ), Nomad Foods (NOMD), Platform Specialty Products (PAH), and Restaurant Brands (QSR).

They also touch on some of the positions they've exited.

Embedded below is Pershing Square's 2016 annual report:



You can download a .pdf copy here.

Carl Icahn Buys More Herbalife & Navistar

Activist investor Carl Icahn has submitted two SEC filings regarding his positions. 

Icahn Buys More Herbalife

Icahn added to his Herbalife (HLF) position, per SEC filings.  In a 13D filing, Icahn disclosed he now owns 24.57% of HLF with over 22.87 million shares.

This means he purchased 372,324 shares at a price of $51.35 on March 10th per the 13D.

For more on this investor, we also highlighted how Icahn started a Bristol-Myers Squibb stake.

Per Google Finance, Herbalife is "a global nutrition company. The Company develops and sells weight management, healthy meals and snacks, sports and fitness, energy and targeted nutritional products, as well as personal care products. The Company's segments include North America; Mexico; South & Central America; Europe, Middle East, and Africa (EMEA); Asia Pacific, and China. The Company markets and sells over 140 products, encompassing approximately 5,000 stock keeping units (SKUs) globally. Its product categories include Weight Management; Targeted Nutrition; Energy, Sports and Fitness; Outer Nutrition, and Literature, Promotional and Other. The Company's representative products include Formula 1 Healthy Meal, Herbal Tea Concentrate, Protein Drink Mix, Personalized Protein Powder, Total Control, Prolessa Duo, Protein Bars, Aloe Concentrate, Niteworks, Garden 7 phytonutrient supplement, Best Defense for improved immune system, COQ10 Plus and Herbalife SKIN line."


Icahn Adds To Navistar Position Too

Second,  Icahn now owns 17.02% of Navistar (NAV) with over 16.69 million shares, per a 13D filed with the SEC.

The filing notes Icahn bought 423,404 shares in total across March 8th, 9th, and 10th at prices of $25.47, $25.37, and $25.92.

Per Google Finance, Navistar is "a holding company whose principal operating entities are Navistar, Inc. and Navistar Financial Corporation (NFC). The Company's segments include Truck, Parts, Global Operations (collectively, Manufacturing operations) and Financial Services, which consists of NFC and its foreign finance operations (collectively, Financial Services operations). The Truck segment manufactures and distributes Class 4 through 8 trucks, buses and military vehicles under the International and IC Bus brands, along with production of engines. The Parts segment supports its brands of International commercial trucks, IC buses and engines. The Global Operations segment includes operations of its subsidiary, International Industria de Motores da America do Sul Ltda. (IIAA). The Financial Services segment provides and manages retail, wholesale and lease financing of products sold by the Truck and Parts segments and their dealers."

Carl Icahn Buys More Hertz, Herbalife

Activist investor Carl Icahn has submitted a slew of filings to the SEC recently regarding his positions in Hertz Global Holdings (HTZ) and Herbalife (HLF). 

Also, in an interview with Bloomberg, he noted that he left Donald Trump's victory party to put about $1 billion to work betting on US equities as futures sold off sharply on the election news.  This comes only a few weeks after Icahn said companies were overvalued considering the risk premium.


Icahn Adds To Hertz Stake

Per an amended 13D, Icahn now owns 33.77% of Hertz with just over 28 million shares.  He bought on the recent sell-off on November 8th and in total purchased over 15 million shares at prices of $22.64 and $25.02.


Per Yahoo Finance, Hertz Global "engages in the car rental business in North America, Europe, Latin America, Asia, Australia, Africa, the Middle East, and New Zealand. It operates the Hertz, Dollar, Thrifty, and Firefly car rental brands in approximately 9,980 corporate and licensee locations"


Also Boosts Herbalife Holdings Again

We previously highlighted how Icahn recently bought $100 million worth of Herbalife shares.  And he's at it again, per a newly submitted 13D.  He now owns 24.18% of HLF with 22.5 million shares, up from the 21.44 million we previously reported on.  The filing was made due to activity on November 8th.

Per Google Finance, Herbalife is "a global nutrition company. The Company develops and sells weight management, healthy meals and snacks, sports and fitness, energy and targeted nutritional products, as well as personal care products."

Carl Icahn Buys $100 Million Worth of Herbalife (HLF)

Activist investor Carl Icahn has filed a 13D and Form 4 with the SEC regarding his investment in Herbalife (HLF).  Per the filing, Icahn now owns 23.05% of HLF with over 21.44 million shares.

The filing notes that on November 3rd specifically, Icahn bought over 1.83 million HLF shares at a price of $54.7, or over $100 million worth of stock.

For more on this investor, last month we highlighted that Icahn said companies are overvalued considering the risk premium.

Per Google Finance, Herbalife is "a global nutrition company. The Company develops and sells weight management, healthy meals and snacks, sports and fitness, energy and targeted nutritional products, as well as personal care products. The Company's segments include North America; Mexico; South & Central America; Europe, Middle East, and Africa (EMEA); Asia Pacific, and China. The Company markets and sells over 140 products, encompassing approximately 5,000 stock keeping units (SKUs) globally. Its product categories include Weight Management; Targeted Nutrition; Energy, Sports and Fitness; Outer Nutrition, and Literature, Promotional and Other. The Company's representative products include Formula 1 Healthy Meal, Herbal Tea Concentrate, Protein Drink Mix, Personalized Protein Powder, Total Control, Prolessa Duo, Protein Bars, Aloe Concentrate, Niteworks, Garden 7 phytonutrient supplement, Best Defense for improved immune system, COQ10 Plus and Herbalife SKIN line."

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.

Bill Ackman's Talk at Bloomberg Markets Most Influential Summit

Pershing Square's Bill Ackman sat down with Stephanie Ruhle for an interview at Bloomberg Markets Most Influential Summit yesterday.

It's around a 30-minute talk but here's the broad takeaways from the interview:

- Still owns Valeant Pharmaceuticals (VRX), but hasn't added to the position or sold any shares

- Looked at General Electric (GE) but passed because it wasn't cheap enough; thinks Nelson Peltz will do well with it

- More to come with his Herbalife (HLF) saga

- Notes Burger King (part of Restaurant Brands (QSR)) has cut costs, improved stores/experience and same store sales are doing well

- Thinks Bloomberg should run for President

Embedded below is the video of Ackman's Bloomberg talk:



For more from this manager, head to Pershing Square's semi-annual report.

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.