Billionaire Bill Ackman Divulges Major Q1 Equity Moves

Pershing Square Reduces Exposure to Mondelez International Inc. (NASDAQ:MDLZ)

The billionaire activist investor also cut his firm’s stake in Mondelez International Inc. (NASDAQ:MDLZ) during the first quarter, by 20.42 million shares. The remaining stake of 22.94 million shares was valued at $920.44 million and constituted 10.4% of the fund’s equity portfolio at the end of March. In the aforementioned quarterly letter to investors, Bill Ackman said that his firm reduced its stake in the maker of Oreo biscuits for “portfolio management reasons”, as the stake had become an outsized position, partly due to its outperformance relative to some of the fund’s other stock picks. Nonetheless, Mr. Ackman and his team believe that there is significant opportunity for productivity improvement and margin expansion at Mondelez. Earlier this year, Mondelez’s management announced its plans to reach an operating margin of 17%-to-18% in 2018, and Pershing Square says the company’s business “would be worth significantly more than its current public market valuation” if Mondelez were to achieve that target. Nelson Peltz’s Trian Partners reported owning 48.03 million shares of Mondelez International Inc. (NASDAQ:MDLZ) in its latest 13F filing.

Bill Ackman Continues to Stand Behind Embattled Valeant Pharmaceuticals Intl Inc. (NYSE:VRX)

Let’s have a look at Bill Ackman’s once-largest equity position, which has weighed significantly on Pershing Square’s performance in the past several months. Mr. Ackman’s fund increased its stake in Valeant Pharmaceuticals Intl Inc. (NYSE:VRX) by 5.00 million shares during the March quarter, to 21.59 million shares worth $567.85 million at the quarter’s end. The shares of the Canadian-based pharmaceutical company started to stumble last September due to criticism over exploitative price gouging and mounting questions about the practices of specialty pharmacy Philidor. Former Chairman and CEO of Perrigo Company plc (NYSE:PRGO), Joseph C. Papa, who took over the reins of leadership at Valeant in early May, is “an ideal choice for Valeant” according to the aforementioned quarterly letter to investors (read more details). Bill Ackman believes “Valeant has some of the best and most durable assets in the pharmaceutical industry, which do not require aggressive pricing in order to generate growth and substantial free cash flow”. John Paulson’s Paulson & Co. owns 13.28 million shares of Valeant Pharmaceuticals Intl Inc. (NYSE:VRX) as of March 31.

Mr. Ackman Acquires New Stake in Nomad Foods Limited (NYSE:NOMD)

Pershing Square added a stake of 33.33 million shares of Nomad Foods Limited (NYSE:NOMD) to its portfolio during the first quarter, which was valued at $300.33 million on March 31. The new position accounted for 3.4% of the hedge fund’s concentrated equity portfolio. Nomad Foods Limited is a manufacturer and distributor of branded frozen foods in Western Europe and has seen its shares drop by 27% since the start of 2016. The company completed the acquisition of European frozen food company Iglo Foods Holdings Limited in June 2015, as well as purchased the Findus Group, a frozen food company operating in continental Europe, in November 2015. The two acquisitions made Nomad the leading branded frozen foods business in Europe, which was described by Mr. Ackman as being “stable, high-margin, and cash-flow generative with low capex requirements and modest cash taxes”. According to Mr. Ackman, Nomad will keep working to consolidate the global packaged food sector over the long-term. Keith Meister’s Corvex Management LP owns 15.26 million shares of Nomad Foods Limited (NYSE:NOMD) as of the end of the first quarter.

Disclosure: None