"Tracking Bill Ackman’s Pershing Square Portfolio – Q2 2012 Update"
"This article is part of a series that provides an ongoing analysis of the changes made to Pershing Square’s US stock portfolio on a quarterly basis. It is based on Ackman’s regulatory  filed on 08/14/2012. 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 2012.Ackman’s portfolio decreased slightly from just over $8B in Q1 2012 to $7.59B in Q2 2012. The number of positions has come down from 10 to 8 making the portfolio even more concentrated than before. The Top-5 positions account for close to 95% of the total portfolio value.New stakes:Procter & Gamble Co (PG) & CALLS: PG is a huge ~25% of the US long portfolio activist position established this quarter at a price-range between $59.27 and $67.57. The stock currently trades at around $66.70. It is Ackman’s largest position just ahead of the Canadian Pacific Railway (CP) position. Activist roles are effective when a good portion (over 10% ideally) of the outstanding shares are acquired or otherwise controlled by the investor concerned. In the case of PG, even though it is Ackman’s largest stake, he still owns only about 1% of the outstanding shares and so it is unclear how effective he can be. In a CNBC interview on July 18, 2012 Ackman explained his position in PG saying he believes he can influence the management and board at the company even though his stake is less than 1%. He also maintained that there is very little downside risk with the company. One-third of his position is through call options. Although the 13F filings do not include details on the strike price and expiry dates of these options, it is clear Ackman is putting money where his mouth is - call options can lose the whole premium if the stock goes down but the upside is unlimited if it goes up.Stake Disposals:Kraft Foods (KFT): KFT was a relatively large stake first purchased in Q1 2010 when the price-per-share was in the high 20s. The stake was increased in Q2 2010 but from then on was consistently trimmed every quarter. It was a 7.3% position as of last quarter but was sold-off completely this quarter at prices between $36.87 and $39.87. The stock currently trades at around $40.90. The large stake elimination indicates a clear bearish bias.Fortune Brands Home & Sec (FBHS): FBHS was a ~3.5% stake that Ackman received following the split of Fortune Brands into Beam Inc. (BEAM) and Fortune Brands Home & Security (FBHS). The terms of the deal called for holders of Fortune brands to receive one share each of BEAM and FBHS for each share of Fortune Brands. Ackman had large gains on this position and has cashed out this quarter. He had trimmed the position by one-third in the last quarter as well. The stake elimination indicates a mild bearish bias.Family Dollar Stores (FDO): FDO was a 2% stake that was eliminated this quarter after reducing it by around 70% last quarter. The original position was a large 9% stake established in Q2 2011 when the price-per-share varied between $51.32 and $55.74. It had since been trimmed over the last several quarters. The stake elimination this quarter happened at prices between $62.85 and $73.26. The stock currently trades at around $63. The disposal indicates a bearish bias.Stake Increases:None.Stake Decreases:Citigroup (C): C was a large 11.8% stake that was almost completely eliminated this quarter. The remaining stake accounts for just 0.4% of the portfolio. The position was first acquired in Q2 2010 and was doubled in Q2 2011 at prices between the high-30s and low-40s. The stock sales this quarter were at prices between $24.82 and $36.87. The stock trades currently at around $28.80. Ackman realized significant losses on this position. Ackman probably sold this position to make room for the huge PG position that was built-up during the quarter.The remaining six positions were untouched during the quarter:J C Penney (JCP): JCP is a ~12% of the portfolio stake established in 2010 at a purchase price of around $25. JCP has had a wild ride this year with the shares trading as high as $43 in early February and falling below $20 last month. The stock currently trades at around $23 which is below the price-range Ackman acquired the bulk of the stake at.  For investors attempting to follow Ackman, JCP is a good option to consider.Canadian Pacific Railway (CP), General Growth Properties (GGP), and Beam Inc. (BEAM):  Ackman is sitting on huge gains on these three large positions: CP is a 23% stake first established in Q3 2011 with the bulk purchased in Q4 2011 at prices between $46.05 and $71.82. The stock currently trades well above that range at around $85. Ackman reigned in management and board changes at the company by winning a proxy battle in May this year. GGP is one of Ackman’s biggest wins at Pershing Square. He acquired the stake during bankruptcy in Q2 2009 in the $1 price-range and the stock currently trades at around $18.50! BEAM is a spin-off from Fortune Brands and the stock is up around one-third since the spin-off in September 2011. Ackman acquired the stake in Fortune Brands in 2010.Alexander & Baldwin Inc (ALEX) & Howard Hughes Corp (HHC): ALEX & HHC are small positions accounting for around 2.5% of the portfolio each. ALEX position was purchased in Q2 2011 at prices between $44.83 and $54.47. The stock currently trades at around $31 - Matson Inc. (MATX) was spun-off from ALEX on July 3, 2012 and MATX currently trades at around $26. HHC has been in the portfolio since 2010.Pershing Square also has a 12% interest in Burger King Worldwide (BKW), although that position is not in the 13F filing - the stake is held through Justice Holdings Ltd., a UK listed investment vehicle controlled by Ackman. The spreadsheet below highlights changes to Pershing’s US stock holdings in Q2 2012:"