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Pershing Square Capital Management

Pershing Square Capital Management

New York City-based hedge fund management company, founded and led by Bill Ackman

Overview

Pershing Square Capital Management was founded in 2004 by William (Bill) Ackman, with personal funds and assistance from his former business partner Leucadia National. Ackman built a reputation for making interesting hiring decisions through onboarding new employees who had no prior financial background. One of his most well-known hires was a man Ackman "met in the back of a cab."

In 2014 Pershing Square launched its UK-based closed-end fund, Pershing Square Holdings, on the London Stock Exchange.

Investment history

Pershing Square Capital Management has invested in multiple industries and has also launched activist campaigns against three major organizations, including Wendy's, McDonald's, and most prominently Herbalife.

Wendy's International

In 2005, Pershing Square purchased a significant amount of shares in the fast-food chain Wendy's International and eventually pressured the company to sell its subsidiary Tim Horton's, a prominent doughnut and coffee chain. In 2006 Wendy's successfully spun off Tim Horton's through an IPO, raising a total of $670 million for Wendy's investors. After a dispute regarding executive succession, Ackman sold the Pershing-owned Wendy's shares, causing the stock price to collapse, leaving the company in a weaker stock position.

Target Corporation, Borders Group, and Barnes and Nobel

In December of 2007, Pershing owned a 10% share of the Target Corporation, which was valued at $4.2 billion. As of 2017, Pershing still owned a 7.8% stake in the company. In December of 2010, Pershing maintained a 38% stake in Borders Group, a national book and music retailer, and on December 6, 2010, Ackman stated he would finance a buyout of Barnes and Nobel for $900 million.

General Growth Properties

In January of 2009, Pershing Square announced a 7.4% stake of ownership in General Growth Properties (GGP) in documents filed with the Securities and Exchange Commission (SEC), which made Pershing the second-largest shareholder in the company behind Brookfield Asset Management. Pershing had made bets against the company, assuming it would file for bankruptcy. In November of 2010, Pershing assisted GGP in emerging from its Chapter 11 bankruptcy.

Valeant Pharmaceuticals International

In March of 2016, Ackman joined the Valeant Pharmaceutical International company board. However, Valeant reported major losses at the end of quarter one in 2016, which played a large role in Pershing's largest-ever quarterly loss of 25% of funds invested. Ackman commented on Valeant's 88% loss since August of 2015 but remained confident that a long-term investment would return the funds. However, after a controversial report of drug prices and concerning operations became public regarding the company, Ackman sold all of Pershing's 9% stake in Valeant, accepting a total loss of $4 billion.

Chipotle Mexican Grill

In September of 2016, Pershing Square purchased a 9.9% stake in Chipotle Mexican Grill. By March of 2018, the fund owned 10.3% after Ackman invested $500 million into the publicly traded arm while the stock was valued at approximately $15 per share, by September 2019, Chipotle stock had a return of 54.5% with shares priced at $19.10 per share.

Herbalife shorting

In December of 2012, Bill Ackman announced that Pershing Square had made a short bet against Herbalife, a global company for weight-loss and vitamin supplements. Ackman publicly referred to the company as a "pyramid scheme." In January of 2013, Carl Ichan bought a stake in the company, triggering a stock price rise of 13%. The investment was criticized by analysts as the firm's worst investment of all time. Ackman and Pershing Square launched a grassroots activism campaign against Herbalife, eventually leading the Federal Trade Commission to open an investigation which caused the company's shares to drop; at this point, Pershing was nearly even on its short bet. In April of 2014, Reuters reported that the Federal Bureau of Investigation (FBI) had done an investigation into Herbalife and its former distributors.

By March of 2015, U.S. District Court Judge Dale Fischer dismissed a suit filed by Herbalife investors that alleged the company was operating as an illegal pyramid scheme.

Timeline

December 2, 2020
Ackman's Pershing Square Holdings fund up 62.8% for the year
December 2020
Pershing Square Capital Management, L.P. selects Northern Trust for multi-jurisdictional fund administration services.
June 25, 2019
Ackman dumps Herbalife, ending a 5 year war with Carl Ichan.
March 1, 2018
Ackman ends public battle with Herbalife.
March 15, 2017
Bill Ackman lost $7.7 million per day on Valeant Stock totaling to $4 billion over the length of investment.

People

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Further reading

Title
Author
Link
Type
Date

Bill Ackman's Pershing Square Wants to Raise $4 Billion for Its SPAC

Nicholas Jasinski

Web

July 13, 2020

How a millennial's $57,700 charity lunch with Bill Ackman turned into a $46.5 million IPO

Julia La Roche

Web

December 22, 2020

Documentaries, videos and podcasts

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Companies

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References

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