PSH.L - Pershing Square Holdings

[giofranchi]

Bethany McLean, Bill Ackman Talk GSE Reform With Charlie Rose

 

http://www.valuewalk.com/2015/09/bethany-mclean-bill-ackman-talk-gse-reform-with-charlie-rose/

 

Cheers,

 

Gio

[mg0516]

FYI, you cannot buy in ERISA or IRA's.  Both are prohibited.  You need to buy in a taxable account and file the QEF election.

[Mephistopheles]

I own shares in an IRA

[Picasso]

A lot of volatility in NAV.  Down from a high of $29.27 to $23.06.  It's probably lower today as well. 

[leeway]

http://www.bloomberg.com/news/articles/2015-10-02/ackman-einhorn-lead-hedge-funds-on-track-to-rival-2008-losses

[Liberty]

If anyone was curious to hear what Ackman said on Bloomberg today, here's the video:

 

http://www.bloomberg.com/news/videos/2015-10-06/influencer-interview-bill-ackman

 

From memory, he talks about GE, 3G, Heinz, VRX, Mike Bloomberg running for president, and some other things I can't remember at the moment.

[Jurgis]

Edit: I am proud about the success of capitalism where such outstanding company as Sprout is recognized and acquired by such outstanding company as Valeant. Carry on.

[giofranchi]

If anyone was curious to hear what Ackman said on Bloomberg today, here's the video:

 

http://www.bloomberg.com/news/videos/2015-10-06/influencer-interview-bill-ackman

 

From memory, he talks about GE, 3G, Heinz, VRX, Mike Bloomberg running for president, and some other things I can't remember at the moment.

 

I think my view of the pharma and biotech industry is perfectly in line with his. Of course, I also agree with all he had to say about VRX.

A good interview imo.

 

Cheers,

 

Gio

 

[mg0516]

If you call IR and read the filings you'll discover that, although your broker may allow you to buy in an IRA...it is technically not allowed.  Not sure about their recourse...just a heads up.

[Guest Grey512]

If anyone was curious to hear what Ackman said on Bloomberg today, here's the video:

 

http://www.bloomberg.com/news/videos/2015-10-06/influencer-interview-bill-ackman

 

From memory, he talks about GE, 3G, Heinz, VRX, Mike Bloomberg running for president, and some other things I can't remember at the moment.

 

I have watched this video.

Curious to hear your thoughts.

 

Near the beginning of the interview, the host asks Ackman about the recent turbulence (with the barely concealed innuendo that Pershing Square took big hits in August and September). Ackman's response was kinda fluffy, with "people sell the the wrong things", "price movements get exaggerated", "we invest in businesses that are extremely robust", etc. The elephant in the room, IMO, is that a lot of the things on the long side in the Pershing portfolio were expensive, prior to the recent turbulence. Even after the market and those stocks (e.g. Zoetis, Mondelez) correcting 8-10%, Pershing's long picks are STILL expensive, IMO. The Pershing portfolio looks far from bulletproof in this choppy environment. I admire Ackman a lot so I do hope that he has a decent cash balance to pounce and recover the lost performance.

[obtuse_investor]

John Hempton (famous short seller) now has a thing for Pershing Square.

 

See his recent post: http://brontecapital.blogspot.com.au/2015/10/pershing-square-modifies-their.html

 

He has been tweeting regarding VRX, Ackman and Pershing lately. See:

[JBTC]

Anyone has any thoughts on PSH at the current level given the VRX drama?

 

 

[Phaceliacapital]

Good question, I actually think he is still positive on his VRX bet taking his AGN gains into account..

[Guest Grey512]

Buying into PSH today means you are also buying into HHC, GGP, Zoetis, all of which (in my humble opinion) are trading at stretched valuations...

[JBTC]

Buying into PSH today means you are also buying into HHC, GGP, Zoetis, all of which (in my humble opinion) are trading at stretched valuations...

 

Would you mind elaborating a little?

 

For example, HHC is overvalued because?

 

Are you suggesting most of the PSH holdings are expensive, or most of the market are expensive?

 

 

[Guest Grey512]

HHC - large multiple of tangible book value, incomprehensible cash-flow statement. Though I have not sharpened my pencil on that one. Similar story with GGP.

Zoetis  - 1-2% FCF yield.

Mondelez - expensive even if you assume massive cost cuts.

 

etc etc.

 

Regarding your last point: I agree with both statements. I.e. I think PSH holdings are expensive, and I think the market is also expensive. But not all of the market. E.g. in my opinion, funds such as Wedgewood, Greenlight, Abrams or Eminence have found some reasonable value on the long side.

 

On a tangent: am I the only one worried that Ackman's success and fame has messed with his head a little bit? Massive bets, massive concentration. Portfolio holdings sharing common risks (i.e. leverage fueling platform growth - VRX, PAH, AGN - check; leverage fueling high real estate values - HHC, GGP - check).  Massive bet on Mike Pearson. And so on. If Ackman blows up this year (or the next), people will look back and say "that was damn obvious".

 

 

 

[Guest Grey512]

I should also point out that I tend to stay away from "asset plays" and that automatically meant that I have not invested in RE-related stocks unless they reliably spat out high cash flow yields that are already there or will shortly commence (e.g. next year). For that reason, I've stayed away from Sears, and for that reason, I see Pershing Square's real estate investments as too expensive today. I hope that clarifies that a little bit.

 

 

[JBTC]

Hi Grey,

 

Some good points there - thank you.

 

I agree Ackman is taking more risk given his concentration and dependence on certain types of management. Nonetheless his method worked in the past and he's now going through a downdraft. It's probably a bit early to form conclusions. Some managers you cited such as Wedgewood and Einhorn haven't performed that well either.

 

My point is there is really no rule in investment. It comes down the exercising of judgment. Even using a same method, some do well and some don't. Those who do well generally have performed sometimes and failed some other times.

 

On your focus on cash flow being already there. Nothing wrong with that. But on the other hand once you see it, everyone does it too.

 

 

[Guest Grey512]

There are some things to like about PSH such as Allergan. But still, my worry is that ever-growing AuM and ever-growing attention of the investor community along with ever-growing competition has resulted in Ackman (more frequently) making bets that have a more modest margin of safety compared to his prior behaviour. He did swing and miss occasionally (JC Penney) but for some reason his current holdings "feel" different than some of his older ones (McDonalds, Procter & Gamble, etc).

 

Re visible cash-flows: agreed. But sometimes the pendulum can swing too far the other way towards either incredibly complex theses or ideas where the return comes not from the cash-flow but from massive growth hopes or a hope that someone is going to come in and pay a lot for some "asset" (despite that asset not generating any cash flow). The big money is probably made somewhere "in the middle" - it's just likely that I do not have the sufficient analytical edge and therefore I play closer to the 'simple', cash-flow rich side of the spectrum.

 

And BTW, I believe the last time we saw aggressive theses / aggressive assumptions (circa 2006-2007) routinely used to make concentrated bets, it was a harbinger of massive market volatility.

 

 

[Gamecock-YT]

Ackman getting hit again as the PAH CEO is retiring. Stock is down ~20%.

[JBTC]

Life is unpredictable. I am sure Ackman will learn a lesson and apply it. So should we.

 

 

[abitofvalue]

Wow Ackman almost certainly top-ticked when to go public.  Good thing he did and has some permanent capital because the volatility / downturn in his fund the last few weeks is going to be pretty dramatic.

[doughishere]

Posted this on the VRX website...

 

 

Ackman will digest this. You can't keep him down. People keep equating this to "salad oil" Scandal. They are wrong. This may be his "Salomon Brothers" moment. Pershing Square shares are at discount. Get them while there's a fire sale. Put them in your retirement account. You be an "Ackman Millionare" some day

 

You can quote me on that.

 

From Carol Lumis circa 1997:

 

(FORTUNE Magazine) – As Sanford I. Weill, 64, the dealmaking CEO of Travelers Group, steps up to his biggest acquisition ever--the purchase of Salomon Inc. for $9 billion--a famous Wall Street figure, Warren E. Buffett, 67, steps out of Salomon. His days there began almost precisely a decade ago, in the early fall of 1987, when his company, Berkshire Hathaway, became Salomon's largest shareholder and he moved in as a director. But that was training-wheels stuff, nothing to the high-wire unicycle act that came later: Buffett was physically, emotionally, and really at Salomon for nine months in 1991 and 1992, when the firm's trading illegalities created a giant sucking sound that brought him in to run the place.

[plato1976]

Posted this on the VRX website...

 

Which broker can still buy PSH?

seems IB is no longer supporting buying b/c of clearing issues

 

 

 

///////////////////////////////////////////////////////////////////////

 

Ackman will digest this. You can't keep him down. People keep equating this to "salad oil" Scandal. They are wrong. This may be his "Salomon Brothers" moment. Pershing Square shares are at discount. Get them while there's a fire sale. Put them in your retirement account. You be an "Ackman Millionare" some day

 

 

 

You can quote me on that.

 

From Carol Lumis circa 1997:

 

(FORTUNE Magazine) – As Sanford I. Weill, 64, the dealmaking CEO of Travelers Group, steps up to his biggest acquisition ever--the purchase of Salomon Inc. for $9 billion--a famous Wall Street figure, Warren E. Buffett, 67, steps out of Salomon. His days there began almost precisely a decade ago, in the early fall of 1987, when his company, Berkshire Hathaway, became Salomon's largest shareholder and he moved in as a director. But that was training-wheels stuff, nothing to the high-wire unicycle act that came later: Buffett was physically, emotionally, and really at Salomon for nine months in 1991 and 1992, when the firm's trading illegalities created a giant sucking sound that brought him in to run the place.

[Spekulatius]

HHC - large multiple of tangible book value, incomprehensible cash-flow statement. Though I have not sharpened my pencil on that one. Similar story with GGP.

Zoetis  - 1-2% FCF yield.

Mondelez - expensive even if you assume massive cost cuts.

 

etc etc.

 

Regarding your last point: I agree with both statements. I.e. I think PSH holdings are expensive, and I think the market is also expensive. But not all of the market. E.g. in my opinion, funds such as Wedgewood, Greenlight, Abrams or Eminence have found some reasonable value on the long side.

 

On a tangent: am I the only one worried that Ackman's success and fame has messed with his head a little bit? Massive bets, massive concentration. Portfolio holdings sharing common risks (i.e. leverage fueling platform growth - VRX, PAH, AGN - check; leverage fueling high real estate values - HHC, GGP - check).  Massive bet on Mike Pearson. And so on. If Ackman blows up this year (or the next), people will look back and say "that was damn obvious".

 

Agreed, but the biggest issue for me is that Ackman is ethically challenged. Just look at the old history of Gotham partners and Gotham Golf. He drove his first fund into the ditch and my guess is that he will do it again.