Bill Ackman Posts Record Profits As IPO Nets $3 Billion

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Bill Ackman Posts Record Profits As IPO Nets $3 Billion
By HSBC Holdings plc (http://www.hsbc.com/1/2/) [Public domain], via Wikimedia Commons

William Ackman is a master indeed.

With his initial public offering of stock in sight and listing on the Amsterdam stock exchange just ahead, the activist hedge fund manager is reporting stunning performance and is having what can only be described to this point as a charmed year.

Ackman’s Pershing Square gains 31.5% in September

Ackman’s Pershing Square L.P. is reporting a 31.5 percent gain through September, when it added to its returns with a 1.4 percent rise in value, Reuters is reporting, citing an investor in the fund. The fund had gained 40.8 percent year to date on a gross basis, but after fees of nearly 25 percent hit the returns, the net was 31.5 percent. The late month selloff in stocks in Septermber hit many funds, who posted negative returns. But Ackman’s special glow rose above a negative market environment.

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Corsair CapitalCorsair Capital was down by about 3.5% net for the third quarter, bringing its year-to-date return to 13.3% net. Corsair Select lost 9.1% net, bringing its year-to-date performance to 15.3% net. The HFRI – EHI was down 0.5% for the third quarter but is up 11.5% year to date, while the S&P 500 returned 0.6% Read More

That glow was apparent as Ackman announced Wednesday he had raised more than $3 billion in an initial public offering on his company, which will be listed on the Amsterdam stock exchange later this month. The offering price was $25 per share, giving the fund a $6.2 billion valuation and providing Ackman dry powder to target larger game. By bringing the firm public, Ackman has a more permanent capital base as opposed to fund investors, who can pull their money from the fund.

Trading in Pershing Square Holdings is expected to begin on Oct. 13, according to a report. The fund was started in 2012 and targets large cap stocks in North America.

Ackman could go on an activist spree in 2015

While 2015 has been a stellar year for Ackman overall, moves the activist is currently making indicate 2015 could be the year he goes after much larger companies – firms generally considered too large for an activist to influence.

Activist investors are getting larger and are likely to become a growing threat to previously difficult to influence US mega-corporations, the next stage in activist hedge fund investing, say hedge fund sources close to the situation, a growing trend previously documented in ValueWalk.

This notion is re-enforced by the news that activist investor Dan Loeb, founder of the activist hedge fund Third Point LLC, recently raised $2.5 billion with apparent ease.  Other activists, including Jana Partners, Trian Fund Management, are preparing war chests to attack larger corporate targets.

The activist investing strategy has not only become the hedge fund world’s most profitable strategy, but also it’s most feared. Corporate executives are documented to change their long term plans at the behest of powerful activist investors, who are known to intimidate senior management and elite board of director targets.

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Mark Melin is an alternative investment practitioner whose specialty is recognizing a trading program’s strategy and mapping it to a market environment and performance driver. He provides analysis of managed futures investment performance and commentary regarding related managed futures market environment. A portfolio and industry consultant, he was an adjunct instructor in managed futures at Northwestern University / Chicago and has written or edited three books, including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008). Mark was director of the managed futures division at Alaron Trading until they were acquired by Peregrine Financial Group in 2009, where he was a registered associated person (National Futures Association NFA ID#: 0348336). Mark has also worked as a Commodity Trading Advisor himself, trading a short volatility options portfolio across the yield curve, and was an independent consultant to various broker dealers and futures exchanges, including OneChicago, the single stock futures exchange, and the Chicago Board of Trade. He is also Editor, Opalesque Futures Intelligence and Editor, Opalesque Futures Strategies. - Contact: Mmelin(at)valuewalk.com
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