Hedge fund manager William Ackman's fund came roaring back in October and is now up 8.5 percent for the year, helping erase the memories of bruising losses only a few months ago.
Because of advances in Canadian Pacific Railway Ltd, Burger King Worldwide Inc and other investments, Ackman's Pershing Square Capital Management gained 7.9 percent last month, said two investors who are not permitted to discuss the returns publicly.
Ackman also said in a monthly report to investors that he added two short positions. That is up from one, which is a short bet on Herbalife Ltd, at the end of September, fueling speculation of what the new target might be.
Pershing Square's returns beat both the broader Standard & Poor's 500 stock index's 3.6 percent rise for October as well as the average hedge fund's 5.4 percent gain for the year to date.
This was a dramatic recovery from Pershing Square's losses in July and August, when ailing retailer J.C. Penney Co. Inc. weighed on returns. Ackman exited his J.C. Penney position at the end of August.
The New York-based fund told investors, including pension funds in New Jersey, New Mexico and Massachusetts, that it had long bets on 11 securities, up from nine at the end of September. Assets under management are at $11.45 billion, close to $12 billion at the start of 2013.
Ackman did not say what helped the portfolio and did not identify the new positions. Over the last several months, he has been trimming back some of his biggest holdings, raising cash for unspecified new investments.
Nearly a year ago, Ackman disclosed a $1 billion short position in Herbalife with a highly public announcement that raised eyebrows on Wall Street. While Herbalife's stock price initially fell, it quickly recovered and is up 84 percent this year, leaving Pershing Square with hundreds of millions of dollars in unrealized losses. But the stock price dipped in October, helping Ackman's portfolio.
Ackman is planning to make a new Herbalife presentation later this month, two sources said.
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