A billionaire investor whose successes are legendary is quietly suffering a down year like no other and that naturally has client second-guessing the relationship
Legendary hedge fund manager Bill Ackman announced earlier this week that 2015 could be his worse year since opening Pershing Square Capital Management in 2004 and that’s got industry pundits wondering if clients will stick by the billionaire or defect to another high profile investment manager.
"If the year finishes with our portfolio holdings at or around current values, 2015 will be the worst performance year in Pershing Square's history, even worse than 2008 during the financial crisis," Ackman wrote in a 17-page letter obtained by Reuters. “Our net redemptions were nominal at $39 million or 0.2 percent of capital for the third quarter, and $13 million or 0.1 percent in the fourth quarter.”
So far Ackman’s clients are staying put despite the fact Pershing Square is on target to lose more than 10% in 2015. Heading into December Ackman’s fund had lost 19.7%, off significantly from his 40% gain a year earlier.
But Ackman’s not alone.
Hedge fund data suggests the average firm will lose 4% this year making it one to forget for most hedge fund managers, Ackman included.
While many hedge fund managers were burnt by misguided bets on energy stocks, Ackman’s troubles have come courtesy of Valeant Pharmaceuticals, which has seen its stock decline by 56% since reaching its 52-week high of $268 in early August.
However, it’s Ackman that may have the last laugh when it comes to Valeant.
“We do not believe that Valeant's long-term earnings prospects have materially changed,” Ackman said in his letter to investors adding that if the stock price rose to $165 or more by January 2017, "We will make more than 10 times our net investment over this period."
"If the year finishes with our portfolio holdings at or around current values, 2015 will be the worst performance year in Pershing Square's history, even worse than 2008 during the financial crisis," Ackman wrote in a 17-page letter obtained by Reuters. “Our net redemptions were nominal at $39 million or 0.2 percent of capital for the third quarter, and $13 million or 0.1 percent in the fourth quarter.”
So far Ackman’s clients are staying put despite the fact Pershing Square is on target to lose more than 10% in 2015. Heading into December Ackman’s fund had lost 19.7%, off significantly from his 40% gain a year earlier.
But Ackman’s not alone.
Hedge fund data suggests the average firm will lose 4% this year making it one to forget for most hedge fund managers, Ackman included.
While many hedge fund managers were burnt by misguided bets on energy stocks, Ackman’s troubles have come courtesy of Valeant Pharmaceuticals, which has seen its stock decline by 56% since reaching its 52-week high of $268 in early August.
However, it’s Ackman that may have the last laugh when it comes to Valeant.
“We do not believe that Valeant's long-term earnings prospects have materially changed,” Ackman said in his letter to investors adding that if the stock price rose to $165 or more by January 2017, "We will make more than 10 times our net investment over this period."
