Ackman’s Pershing Square Breaks Own Record With 70% Return
(Bloomberg) -- Bill Ackman’s Pershing Square Capital Management reported a second straight record performance in 2020, as a bet in the early days of the pandemic helped the fund return 70% on investments.
The billionaire investor said Pershing Square had a net return of 4.6% in December alone. The annual results eclipsed the 16% gain in the S&P 500, and surpassed Ackman’s 2019 record of about 58%.
Back-to-back wins mark an impressive return for Ackman, whose hedge fund previously racked up three consecutive years of losses after a disastrous bet on Valeant Pharmaceuticals Ltd. and an ill-fated short-selling campaign at Herbalife Nutrition Ltd., among other challenges. The year marked a return for human-run hedge funds, after years of being outclassed by computer-driven quantitative strategies.
Pershing Square’s 2020 performance was driven by a lucrative credit hedge Ackman put in place in the lead-up to the coronavirus crisis and the subsequent market selloff. Ackman said in April that he had been so concerned about the potential impact of the coronavirus that he had considered liquidating Pershing Square’s entire portfolio before instead opting for a credit-hedge strategy.
The bet paid off, returning about $2.6 billion to Pershing Square by the time it was sold in March, or roughly 100 times the size of the original investment. Ackman used the proceeds to make what he called a “recovery bet” on the economy, increasing stakes in portfolio companies and reinvesting in others including Starbucks Corp.
Ackman’s attention later turned to his blank-check company, Pershing Square Tontine Holdings Ltd. In July, the special purpose acquisition company, or SPAC, raised $4 billion in an initial public offering, plus a $1 billion commitment from Pershing Square, and is now seeking a private company to take public. Ackman had held talks with Airbnb Inc., Stripe Inc. and others.
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