Pershing Square, managed by billionaire Bill Ackman, recently filed with the U.S. Securities and Exchange Commission a Form 13F, in which the fund disclosed its equity portfolio at the end of the fourth quarter of 2014. The portfolio contains only 7 positions, and is valued at $16.04 billion. The fund’s strong focus during the quarter was on healthcare stocks, which accounts for 51.2% of its portfolio. Allergan Inc. (NYSE:AGN), Air Products & Chemicals Inc. (NYSE:APD), Canadian Pacific Railway Limited (USA) (NYSE:CP), Zoetis Inc (NYSE:ZTS) are the top four largest holdings, in terms of value. These holdings will be discussed in this article.
New York-based Pershing Square is the hedge fund founded by Bill Ackman. Ackman is a long term value investor, who takes advantage of short term downward moves in prices. He is particularly successful at special situations investments. Pershing Square had around $12 billion in assets under management in early 2014. The fund lost 1.1% in 2011 but gained 12.4% in 2012, and 9.7% in 2013. Pershing Square performed extremely well in 2014, with a 40.4% return. Last month, in an interview on Bloomberg Television, Ackman discussed his investment strategy, stating that the main target of his fund’s investments are high quality companies that run a predictable business model and are capable of generating free cash flow.
Allergan Inc. (NYSE:AGN) continues to be the largest holding of Pershing Square, and was its biggest success story of 2014. The fund reported owning 26.64 million shares, worth $5.66 billion, at the close of the fourth quarter, a decrease of 2.24 million shares. Previously, Ackman’s fund disclosed holding 28.88 million shares of the company. Allergan Inc. (NYSE:AGN) is a healthcare company that has a market cap of $68.43 billion. Ackman tried to acquire Allergan, Inc. (NYSE:AGN) jointly with Valeant Pharmaceuticals Intl Inc (NYSE:VRX). However, after a pretty rough proxy fight, Allergan was sold to Actavis plc (NYSE:ACT), though the investment still paid off in the end for Ackman.
Allergan Inc. (NYSE:AGN) seems to be a favorite stock of John Paulson’s Paulson & Co, which increased its position in the company during the fourth quarter to 6.37 million shares. Another shareholder that sees value in the stock is Pentwater Capital Management, led by Matthew Halbower, which boosted its share of ownership during the fourth quarter to 5.59 million shares.
On the second position is Air Products & Chemicals Inc. (NYSE:APD), in which Pershing Square’s stake remained unchanged over the quarter. The investor revealed holding 20.55 million shares of the company as of the end of 2014. The holding is valued at $2.96 billion. Air Products & Chemicals Inc. (NYSE:APD) is an industrial gases company, which has a market cap of $32.81 billion. Other investors betting big on Air Products & Chemicals Inc. (NYSE:APD) include OZ Management, run by Daniel S. Och, which held 5.47 million shares of the company as of the end of 2014. During the fourth quarter, Andreas Halvorsen’s Viking Global added more shares to its holding of the company, bringing its ownership to 5.36 million shares.
Like Air Products & Chemicals Inc. (NYSE:APD), Pershing Square did not change its stake in Canadian Pacific Railway Limited (USA) (NYSE:CP) during the fourth quarter. The fund disclosed owning 13.94 million shares, with a reported value of $2.67 billion. Alberta, Canada-based Canadian Pacific Railway Limited (USA) (NYSE:CP) is engaged in providing rail and intermodal freight transportation services. The company has a market cap of $31.81 billion. Share price of the company moved up by 22.03% during the last year. It is currently trading at $189.71.
Viking Global and OZ Management were both bullish on Canadian Pacific Railway Limited (USA) (NYSE:CP) last quarter as well, boosting their stakes to 4.05 million and 3.85 million shares respectively.
Lastly, Pershing Square was bullish on Zoetis Inc (NYSE:ZTS) during the fourth quarter. The fund upped its stake in the company by 36.03 million shares to 41.57 million shares from 5.54 million shares held previously. The stake is valued at $1.79 billion. Since February 2014, the company’s stock gained 52.78%. The stock moved up by 32.24% over the past six months. Last week, the company announced that it completed the acquisition of the animal health assets of Abbott Laboratories (NYSE:ABT) for $255 million, a deal Ackman said sounded like a good investment. Scott Ferguson’s Sachem Head Capital is one of the largest shareholders of Zoetis Inc (NYSE:ZTS), with the investor holding around 4.40 million shares as of the end of 2014. Soros Fund Management, led by George Soros, also likes Zoetis Inc (NYSE:ZTS), with the fund reporting ownership of 4.11 million shares as of the end of December, 2014.
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