Bill Ackman’s Biggest Q3 Moves As He Seeks Elusive Turnaround

Pershing Square Capital Management is a New York-based hedge fund founded by billionaire investor Bill Ackman. Pershing’s 13F portfolio had a total value of $5.41 billion at the end of Q3. It has been a pretty tough year for Pershing as Ackman’s bets on Herbalife and Valeant disappointed investors, resulting in some money pullout. In October, Reuters reported that Pershing Square Capital Management had started offering new fee arrangements to avoid further investor flight.  In this article, we will talk about Ackman’s top moves in the third quarter.

Air Products & Chemicals, Inc. (NYSE:APD)

– Shares Owned by Pershing Square (as of September 30): 4.35 million

– Value of Pershing Square’s Holding (as of September 30): $605.14 million

Ackman’s fund sold nearly half of its stake in Air Products & Chemicals, Inc. (NYSE:APD), dumping over 3.86 million shares of the company in the third quarter. Pershing now has a $605.14 million stake in the Pennsylvania-based chemical company. The company spun-off its electronic-materials business as Versum Materials in October. Air Products said it expects 2017 adjusted earnings per share of $6.25 to $6.50 and first quarter adjusted earnings per share of $1.40 to $1.50. In the fourth quarter, the company earned $2.01 a share on $2.46 billion revenue, above the forecasts of $1.98 EPS and $2.45 billion revenue. A total of 56 funds tracked by Insider Monkey were bullish on Air Products & Chemicals, Inc. (NYSE:APD) at the end of the third quarter.

Valeant Pharmaceuticals Intl Inc (NYSE:VRX)

– Shares Owned by Pershing Square (as of September 30): 21.59 million

– Value of Pershing Square’s Holding (as of September 30): $530.06 million

Pershing surprisingly retained its position in the beleaguered Canadian pharmaceutical company, having amassed 21.59 million shares. The total value of this position was over $530.06 million at the end of Q3. The stock has lost over 84% so far this year. Valeant’s problems started last year when it increased the prices of its two major drugs. The company reported third quarter EPS of $1.55 on $2.48 billion revenue, worse than the estimates of $1.75 EPS and $2.49 billion revenue. The company expects full fiscal 2016 EPS to come in at $5.30-$5.50, versus prior guidance of $6.60-$7.00 and the consensus of $6.45. Ahmet Okumus’ Okumus Fund Management owned 4.1 million shares of Valeant Pharmaceuticals Intl Inc (NYSE:VRX), as of the end of the third quarter.

On the next page, we will discuss Ackman’s rest of the Q3 moves.

Chipotle Mexican Grill, Inc. (NYSE:CMG)

– Shares Owned by Pershing Square (as of September 30): 2.88 million

– Value of Pershing Square’s Holding (as of September 30): $1.2 billion

Bill Ackman’s hedge fund Pershing Square surprised the Street in September by disclosing a $1.2 billion stake in Chipotle Mexican Grill, Inc. (NYSE:CMG). The new position accounts for a whopping 9.9% of the company’s total float. Ackman believes that the food chain has a “differentiated offering” and growth opportunities. The billionaire is of the view that Chipotle’s stock is undervalued and some media reports suggest that Ackman is for to a management/board change in Chipotle. Recently, the company was reported to have hired experts to fend off hostile moves from activist investors.  A total of 41 hedge funds in our database held stakes in Chipotle Mexican Grill, Inc. (NYSE:CMG), as of the end of the third quarter.

Zoetis Inc (NYSE:ZTS)

– Shares Owned by Pershing Square (as of September 30):0

– Value of Pershing Square’s Holding (as of September 30):$0

Pershing has sold all 2.72 million Zoetis Inc (NYSE:ZTS) shares it had at the end of the third quarter. In its third quarter call to the investors, Pershing said Zoetis is a “great” company and has no element of aggressive politics. At the end of the second quarter, Bill Ackman’s hedge fund had a $1 billion stake in the New Jersey-based pets and livestock medicine company. The stock is up by over 3% so far this year. In the third quarter, Zoetis (NYSE: ZTS) earned $0.48 per share on $1.2 billion revenue, better than the estimates of $0.47 EPS and $1.22 billion revenue. 44 hedge funds in our system were long Zoetis Inc (NYSE:ZTS) at the end of September.

Canadian Pacific Railway Limited (USA) (NYSE:CP)

– Shares Owned by Pershing Square (as of September 30):0

– Value of Pershing Square’s Holding (as of September 30):$0

Pershing Square also unloaded all of its stake in Canadian Pacific Railway Limited (USA) (NYSE:CP) in the third quarter, selling over 9.84 million shares of the company. Canadian Pacific is facing a decline in revenues amid the slump in commodity prices. The company reported third-quarter adjusted earnings of C$2.73 ($2.02) a share, missing the forecasts of C$2.79 a share. Revenue fell 9% to C$1.55 billion from C$1.71 billion in the period, missing the consensus estimate of C$1.62 billion. John Armitage’s Egerton Capital Limited owned over 2.48 million shares of Canadian Pacific Railway Limited (USA) (NYSE:CP), as of the end of the third quarter. Despite Ackman’s sale Canadian Pacific stock is up 22% year-to-date.

Disclosure: None