BOSTON – Located on a double-digit loss that is the deepest in the firm’s history, billionaire investor Bill Ackman told investors he made mistakes this past year in not cutting two big positions but said he sees lots of new investment opportunities.
Ackman, whose Pershing Square Capital Management lost between 16 percent and 20 percent in the funds in 2015, said hello was a “very costly” mistake he didn’t sell drug maker Valeant Pharmaceuticals International Inc once the stock price rose to US$200 over the summer.
He also said that right together with Valeant’s tumble “the remainder of our portfolio entered free fall which continued up until the current.” His Pershing Square Holdings portfolio has lost roughly 14 per cent this season alone.
But Ackman said he couldn’t sell when he became aware of a sizable potential transaction that the Canadian drug maker Valeant was working on. Valeant’s stock price tumbled some 70 per cent amid questions regarding its business and accounting practices. With hindsight, Ackman said “We ought to have avoided becoming limited to preserve trading flexibility.”
Pershing Square ended up selling some Valeant shares at year’s end to consider a loss for tax purposes.
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Similarly, he feels the firm must have cut its stake in Canadian Pacific when it reached Canadian US$240 per share and that he said hello would be a mistake to buy more shares in Platform Specialty Products at US$25 a share to assist the organization finance an acquisition.
Ackman said last year’s sharp drop reminded investors that stocks can “trade at any price within the short term” which underscores why his firm shies from using margin leverage. “We expect there happen to be many margin loan liquidations in recent weeks that have led to dramatic stock price declines.”
Late last year, Ackman cut the firm’s position in candy maker Mondelez by selling forward contracts representing 15 million shares in an average price of US$44 a share. During the summer the firm built a sizable notional short position in the Chinese yuan to guard against weakness in the Chinese economy. But to date, he’s made merely a modest profit.
Ackman also said that Paul Hilal, someone in the firm and Ackman’s college roommate, is leaving the firm to pursue his own venture, which Ackman said he expects to participate in at some point. As for himself, Ackman is staying with his firm, noting he doesn’t have intends to step down.
? Thomson Reuters 2016
