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 Ackman's Pershing Square Holdings portfolio has lost 17.3 percent so
far in 2016, the fund told investors on Wednesday. Added to last
year, when it lost 20.5 percent in a relatively flat year for
markets, the fund's declines are now greater than its 2014 gain.
Valeant Pharmaceuticals, which was Ackman's main loser in 2015, was
also to blame for this year's drop. Valeant's stock declined 16
percent from Feb. 17 through Tuesday amid questions over its
earnings, providing the final bit of fuel for Ackman's fund to burn
through its gains.
Valeant, which has been part of Ackman's portfolio for only a year,
on Tuesday said it would restate earnings after having prematurely
accounted for some revenue, news which drove the stock to pare
recent losses.
Pershing Square Capital Management, which now oversees $12 billion,
did not detail exactly what caused its most recent losses and a
spokesman declined to comment.
For investors who got in before the 2014 gains, Ackman's record
remains strong with his flagship Pershing Square International fund
still earning an average 12 percent a year over the last decade.
"Long term, Bill Ackman has still made a lot of people a lot of
money and they will likely stick with him, having known that a ride
with him can be pretty up and down," said one long-term investor.
For clients who added money after 2014, helping Pershing Square's
portfolios grow to roughly $20 billion, the story could be more
nuanced.
Ackman, one of the industry's most prominent activist investors,
said in January that redemption requests had been modest late last
year when losses were already piling up.
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So far, activist investors are performing roughly in line with the
average hedge fund, which lost an average 3 percent in the last 12
months, data from Hedge Fund Research show. In the same period, the
broader stock market had bigger losses, with the Standard & Poor's
500 index down nearly 9 percent.
Despite lackluster returns, investors continue to put money into
hedge funds, saying they are performing relatively better than many
other asset classes including stocks.
Renowned for his brash investing tactics and unwavering
self-confidence, Ackman adopted a new tone in his most recent letter
to clients, saying he entered the new year humbled and having
learned a number of hard lessons.
"In 2016, we would like to generate results that reinforce the
confidence side of the equation. Humility and skepticism will help
get us there," he wrote.
(Reporting by Svea Herbst-Bayliss; Editing by Leslie Adler)
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