"Tracking Bill Ackman’s Pershing Square Portfolio – Q2 2015 Update"
"Ackman’s US long portfolio decreased from $14.97B to $14.45B this quarter.Pershing Square’s largest stake is Valeant Pharmaceuticals at ~30% of the US long portfolio.The largest three positions are Valeant Pharmaceuticals, Air Products & Chemicals, and Canadian Pacific Railway and together they account for ~65% of the portfolio.This article is part of a series that provides an ongoing analysis of the changes made to Pershing Square’s US long portfolio on a quarterly basis. It is based on Ackman’s regulatory  filed on 08/14/2015. Please visit our  article for an idea on how his holdings have progressed over the years and our  highlighting the fund’s moves during Q1 2015.Ackman’s US long portfolio decreased ~3.5% from $14.97B to $14.45B this quarter. The number of positions decreased from 8 to 7. The portfolio remains heavily concentrated with a few huge bets. The top three positions account for 64.87% of the total portfolio value: Valeant Pharmaceuticals (29.95%), Air Products & Chemicals (19.46%), and Canadian Pacific Railway (15.46%).To learn more about Bill Ackman, check-out the book “”.Note 1: On August 6, 2015, Pershing Square filed a regulatory  disclosing a 7.5% of the business (120.27M shares) stake in Mondelez (MDLZ). Constituent and cost-basis details are as follows: ~5.5M common shares at $42.94 ($234.62M outlay), 64.8M shares in forward purchase contracts (net purchase price $2.5B - maturity dates range from March 29, 2017 to August 2, 2017 and the forward prices range from $37.07 to $46.59), and 50M shares in call options for $424M  (expiration dates range from March 3, 2017 to June 28, 2017 and the strike prices range from $36.64 to $41.39). The current net exposure is at ~$5.6B and that comfortably beats their largest 13F position (Valeant - $4.3B). MDLZ currently trades at $46.49.Note 2: In Q2 2014, Pershing Square unveiled plans to do an Initial Public Offering (IPO) as a means to increase the amount of capital that is permanent. Pershing Square Holdings (PSHZF) debut on Euronext Amsterdam in October 2014. At the time, Ackman said their total capital is $18B of which around one-third is Pershing Square Holdings.Note 3: Fannie Mae (FNMA) and Freddie Mac (FMCC) are other US long positions in the partnership - the holdings were disclosed in 13D filings on November 15, 2013 - as they are not , they are not listed in the 13F report. Ackman holds just under 10% of the outstanding shares of both these businesses - 115.57M shares of FNMA at a cost-basis of ~$2.30 and 63.5M shares of FMCC at a cost-basis of ~$2.14. The combined investment outlay was ~$400M. FNMA & FMCC currently trade at $2.31 and $2.20 respectively. In the Ira Sohn conference in August 2014, Ackman said his conservative case values FNMA & FMCC at ~$23 per share each. The stock prices of both these businesses experienced large price drops following a  in early October 2014. Investors had filed around 20 lawsuits against the US government over Fannie/Freddie and the Federal Housing Finance Agency’s actions as conservator. Other Hedge Funds involved include Perry Capital and Fairholme Capital.Note 4: Ackman also has large short positions although Herbalife (HLF) is the only one publicly known - there is no regulatory requirement to disclose short positions and so only the ones that Ackman voluntarily discloses are known.Stake Disposals:Allergan plc (AGN) previously Actavis plc: AGN is a 2.68% of the US long portfolio stake established last quarter at prices between $255 and $317 and disposed of this quarter at prices between $282 and $313. The stock currently trades at $314.Note: In March 2015, Actavis succeeded in a takeover battle for Allergan Inc. over Ackman backed Valeant Pharmaceuticals. In June 2015, Actavis changed its name to Allergan.Kept Steady:Air Products & Chemicals (APD): In Q2 2013, a new 8.44% of the US long portfolio APD stake was purchased at prices between $92.80 and $96.59. By Q4 2013, the position was more than doubled at prices between $91 and $107. It has since been kept steady. The stock currently trades at $147 and the stake stands at 19.46% of the US long portfolio - it is Ackman’s second-largest position after Valeant. Pershing Square owns 9.8% of the shares outstanding in APD and they are very bullish.Note: APD is an activist stake and Ackman has enjoyed some success - the  and three new board members were appointed in June 2014.Canadian Pacific Railway (CP):  CP is Pershing Square’s third-largest 13F position at 15.46% of the US long portfolio. The stake was established in Q3 2011 with the bulk purchased in Q4 2011 at prices between $46.05 and $71.82. The stock currently trades at around $159. The original position was reduced by ~26% in Q4 2013 at prices between $123 and $157 and ~19% in Q2 2014 at prices between $144 and $185. Ackman is opportunistically harvesting huge long-term gains from this position.Note: Ackman reigned in management and board changes at the company by winning a proxy battle in May 2012. Last year, CP discussed a merger with CSX Corporation (CSX) that ultimately did not work out. In April 2015, CP CEO commented that similar activist lead campaigns are long overdue at US rivals: a reference to CSX, Norfolk Southern (NSC), and Kansas City Southern (KSU).Howard Hughes Corp (HHC): HHC is a small 3.69% of the US long portfolio position that was established in 2010 as a result of its spin-off from General Growth Properties (GGP). The stake has remained untouched during the whole period. The stock returned ~63% in 2013 and ~16% since. It currently trades at $138.Note 1: A regulatory  on July 2, 2015 showed Ackman’s ownership at ~5.5M shares (13.2% of business) compared to ~3.6M shares in the 13F: that filing included ~1.92M in warrants that exercisable.Note 2: Ackman called HHC one of the best kept secrets on Wall Street at the Harbor Investor Conference in February 2013 when it was trading at around $77.Platform Specialty Products (PAH): On 01/23/2014, Ackman disclosed a huge new stake in Platform Specialty Products Corporation (PAH) in a 13G filing. Pershing Square was a PAH investor prior to its NYSE IPO. Q4 2014 saw a ~28% stake increase at prices between $20.97 and $27.74. Ackman’s cost-basis is around $14. The stock currently trades near the low-end of his most recent purchase price-range at $21.11. Ackman controls ~20% of the business.Note: Ackman had invested in Platform Acquisition Holdings, an investment vehicle incorporated in the London Exchange (since renamed Platforms Specialty Products). They acquired MacDermid (a US listed business that was taken private for ~$1.3B in an MBO transaction in 2007) in a $1.8B deal in Q4 2013. The NYSE IPO followed and the London listing was cancelled.Restaurant Brands International (QSR) previously Burger King Worldwide: QSR is a 10.05% of the US long portfolio stake. Tim Hortons and Burger King Worldwide merged and renamed the resultant entity as Restaurant Brands International. Pershing Square had a huge investment in Burger King and those shares got exchanged for QSR shares. The original Burger King stake was established in Q3 2012 at prices between $13.03 and $15.88. The stock currently trades at $42.60.Valeant Pharmaceuticals (VRX): VRX is Ackman’s largest position at 29.95% of the US long portfolio. The stake was established last quarter at prices between $143 and $205. The stock currently trades outside that range at $247.Note: In early 2014, Ackman collaborated with Valeant (VRX) in its effort to buy Allergan in a hostile takeover. That effort failed, but on November 17, 2014 Actavis plc (ACT) agreed to buy AGN. The deal closed in March 2015.Zoetis Inc. (ZTS):  ZTS was a small 1.52% of the US long portfolio position (5.5M shares) established in Q3 2014 at prices between $31.79 and $37.20. Q4 2014 saw a whopping 650% stake increase at prices between $35 and $45. The overall cost-basis is around $37. Ackman controls 8.3% of the business and the stake is now at 13.96% of the US long portfolio. The stock currently trades at $47.47.The spreadsheet below highlights changes to Pershing Square’s US stock holdings in Q2 2015:"