"Tracking Bill Ackman’s Pershing Square Portfolio – Q2 2016 Update"
"Ackman’s US long portfolio decreased from $8.85B to $7.51B this quarter.Pershing Square decreased Canadian Pacific Railway and Zoetis Inc. stakes substantially during the quarter.The largest three 13F positions are Restaurant Brands International, Canadian Pacific Railway, and Air Products & Chemicals and together they account for ~53% 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 08/15/2016. Please visit our  article for an idea on how his holdings have progressed over the years and our  for the fund’s moves during Q1 2016.Ackman’s US long portfolio decreased 15.14% from $8.85B to $7.51B this quarter. The number of positions remained steady at 9. The portfolio remains heavily concentrated with a few huge bets. The top three positions account for 52.92% of the total portfolio value: Restaurant Brands International, Canadian Pacific Railway, and Air Products & Chemicals.In addition to partner stakes, the fund also invests the capital from Pershing Square Holdings (PSHZF), a public entity that debut in Euronext Amsterdam in October 2014. This was set up primarily to increase the amount of capital invested that is permanent. 2014 was a blockbuster year with a 40% return while 2015 return was at negative 20.5% net-of-fees. Pershing Square Holdings has underperformed the S&P 500 since its EOY 2012 inception. Their original flagship fund’s (2004 inception) track record is outstanding with returns of ~20% per annum.To learn more about Bill Ackman, check-out the book “”.New Stakes:None.Stake Decreases:Canadian Pacific Railway (CP):  CP is Pershing Square’s second-largest 13F position at 16.87% 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 $149. 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. This quarter saw another ~29% reduction at $148.25.Note 1: The position was eliminated after the quarter ended. Regulatory 13D/A & Form 4 filings on 08/05/2016 show them no longer owning any shares. 9.84M shares sold at $141.68.Note 2: Ackman discussed the position in his 2015 letter to investors. Basically, he admitted choosing not to reduce the stake when the stock traded at C$240 per share as a mistake.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. This quarter saw an about turn: ~49% sold at prices between $44.33 and $48.64. The overall cost-basis is around $37. The remaining position is still a top-five stake at 13.38% of the portfolio. The stock currently trades at $52.09.Note: The position was further reduced after the quarter ended. Regulatory Form 4 & 13D/A filings from 7/8/2016 show them owning 18.89M shares (3.8% of the business). Around 2.28M shares sold.Stake Increases:None.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 had since been kept steady. Last quarter saw a ~63% stake reduction at prices between $116 and $145. The stock currently trades at $153 and the stake stands at 14.37% (top three) of the US long portfolio.Note 1: Pershing Square also has a 12.95M share position in APD American style call options. Including that, the ownership stake is at 9.5% of the business (20.55M shares).Note 2: Pershing Square’s activism led to the replacement of the CEO and the appointment of three new board members in June 2014. Last year, Air Products announced plans to spinoff Versum Materials on or before September this year.Howard Hughes Corp (HHC): HHC is a small 5.43% 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 but is flat since. It currently trades at $116.Note: A regulatory 13D/A filing on Jan 4, 2016 showed Ackman’s ownership at ~5.48M shares (13.2% of business) compared to ~3.6M shares in the 13F: the filing included ~1.92M shares in currently exercisable warrants.Mondelez International (MDLZ): MDLZ is a large 13.90% of the 13F portfolio stake established in Q3 2015 at a cost-basis in the low-40s. Last quarter saw a ~47% reduction at prices between $36.34 and $44.84. The stock currently trades at $42.70.Note: Pershing Square also has a 65.26M share position in MDLZ American style call options. Including that, the ownership stake is at 5.6% of the business (88.2M shares).Nomad Foods Ltd. (NOMD): In June 2015, Pershing Square revealed a ~22% ownership stake in London listed SPAC Nomad Holdings at a cost of ~$350M. After a couple of acquisitions (Iglo Group & Findus Group) last year, the business moved its listing from London Stock Exchange to New York Stock Exchange in January this year. Pershing Square controls ~19% (33.33M shares) of the company. The stock currently trades at $9.60.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 well below that at $9.04. Ackman controls ~20% of the business.Note 1: The stock was down ~45% in 2015 and is down another ~29% YTD. Ackman discussed the position in his 2015 letter to investors: it was a mistake to increase position at $25 per share - assigned too much platform value to the business - “’platform value’ is an ephemeral form of value as it requires low-cost capital, uniquely talented members of management, and the pricing environment for transactions.”Note 2: PAH has seen significant churn in upper management: CEO Dan Leever (~30 years at MacDermid) announced his retirement and there were several other resignations and role changes.Restaurant Brands International (QSR) previously Burger King Worldwide: QSR is currently the largest position at 21.68% of the US long portfolio. The original Burger King stake was established in Q3 2012 at prices between $13.03 and $15.88. The stock currently trades at $47.43.Note: Restaurant Brands International came about through the merger of Tim Hortons and Burger King Worldwide. Pershing Square had a huge investment in Burger King and those shares got exchanged for QSR shares.Valeant Pharmaceuticals (VRX): VRX was Ackman’s largest position at 24.90% of the US long portfolio as of Q3 2015. The following quarter saw a ~15% reduction while there was a ~30% increase last quarter. The stake was established in Q1 2015 at a cost-basis of $196. The stock currently trades at $26.60.Note: A 3/28/2016 13D/A regulatory filing shows Pershing Square owning 30.71M shares (9% of the business). This is compared to 21.59M shares in the 13F. The difference is the 9.12M shares in options.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 held 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 $1.96 and $1.78 per share respectively.Bill Ackman also has a large short book. It was disclosed earlier this year that he is short the Chinese Yuan (thesis: protection to the portfolio in the event of unanticipated weakness in the Chinese economy) and the Saudi Riyal (thesis: inexpensive way to hedge against a continued decline in energy prices). Herbalife (HLF) is the only other short that is publicly known. There is no regulatory requirement to disclose short positions and so only ones that Ackman voluntarily discloses are known.The spreadsheet below highlights changes to Pershing Square’s US stock holdings in Q2 2016:13G/D/A, Form 3/4 filings thru 5/18/2016: ZTS - 05/09-12/2016 Form 4 & 13D/A - 24,973,145 shares - 5% - 16,850,000 disposed @ $46.55 in a block sale. CP - 4/22/2016 13D/A & Form 4- 9.84M shares - 6.4% - 4.1M shares disposed @ $148.25. VRX - 3/28/2016 13D/A -- 30,711,122 shares - 9%. MDLZ - 3/17/2016 13D/A - 88,197,225 shares - 5.6% - 22,942,225 common stock & 65,255,000 in American style call options. APD - 3/9/2016 13D/A - 20,549,076 shares - 9.5% - 7,601,140 in common stock and 12,947,936 in American style call options.3/1/2016: Regarding APD: They are spinning off Versum Materials on or before September 2016. Something to mention…"