LDN - Business

Ackman says owned stake in Hilton, a previously unnamed bet

[August 17, 2017] By Svea Herbst-Bayliss

BOSTON (Reuters) - Investor William Ackman said on Wednesday his hedge fund had bought and sold a stake in Hilton Worldwide Holdings, identifying the portfolio company that recently earned him a double digit return.

Ackman and one of his partners told investors on a conference call that they have long admired the hospitality company and made the investment last year as Hilton was trading at a temporarily depressed valuation.

Pershing Square Capital Management owned a roughly 5 percent stake but sold out within the last two months, Ackman said, noting that the stock price ran up too quickly and prevented him from buying more.

"Our big disappointment here is we were never able to make it as large a position as we would have liked," Ackman said, adding that it finished up "about 30 percent versus our average cost where we exited."

Despite the gains from Hilton, Ackman's funds are flat to down nearly 2 percent for the year, he said, adding that Chipotle Mexican Grill, Herbalife and government sponsored enterprises Federal National Mortgage Association and Federal Home Loan Mortgage Corp have weighed on performance.

For years any word from Ackman about a new idea could send the company's stock racing. But after two years of double-digit losses, Ackman is looking for a win and has tried to keep some bets under wraps.

That includes his most recent investment, a $4 billion bet on human resources software company Automatic Data Processing Inc which Pershing Square previously owned between 2009 to 2011.

[to top of second column]

William 'Bill' Ackman, CEO and Portfolio Manager of Pershing Square Capital Management, speaks during the Sohn Investment Conference in New York City, U.S., May 8, 2017. REUTERS/Brendan McDermid

To make that bet, Ackman said he raised $500 million in a special purpose vehicle to invest in ADP.

While Ackman will lay out his case for improving performance at ADP on a conference call on Thursday, he said on Wednesday that if management had been quiet he might have worked more collaboratively with the firm.

"Had they given us a week, I don't think we'd be in a proxy contest," Ackman said just days after proposing three people, including himself, as independent board directors.

The company announced Ackman's investment earlier this month and said he was seeking to fire Chief Executive Officer Carlos Rodriguez and control the company. The CEO later called the fund manager a "spoiled brat" on television.

Ackman hit back on Monday in a filing which disclosed that Rodriguez had accidentally sent him an email intended for the ADP legal team in which the CEO dismissed Ackman's pledge to work collaboratively as not credible.

(Reporting by Svea Herbst-Bayliss; Editing by Chizu Nomiyama and Tom Brown)

Back to top