"Tracking Bill Ackman’s Pershing Square Portfolio – Q2 2017 Update"
"Ackman’s US long portfolio value increased from $5.96B to $6.01B this quarter.Pershing Square dropped Air Products while adding Automatic Data Processing.The largest three 13F positions are Restaurant Brands International, Chipotle Mexican Grill, and Mondelez International and together they account for ~71% 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 08/14/2017. 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 2017.Ackman’s US long portfolio increased marginally from $5.96B to $6.01B this quarter. The number of positions remained steady at 7. The portfolio remains heavily concentrated with a few huge bets. The top three positions account for 71.06% of the total portfolio value: Restaurant Brands International, Chipotle Mexican Grill, and Mondelez International.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. Pershing Square Holdings has widely 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:Automatic Data Processing (ADP): ADP is a ~3% of the 13F portfolio stake established this quarter at a cost-basis of $97.30. The stock is now at $110.Note 1: Regulatory filings show Pershing Square’s beneficial ownership at 36.8M shares (8.3% of the business). Only 1.75M shares directly owned is in the 13F report. The rest are in forward-purchase-contracts and OTC options.Note 2: Pershing Square is already in a proxy fight at ADP - earlier this month, Ackman nominated three (including him) to the board.Stake Disposals:Air Products & Chemicals (APD): In Q2 2013, a new ~8% of the US long portfolio APD stake was purchased at prices between $80 and $84. By Q4 2013, the position was more than doubled at prices between $78.50 and $94.50. It had since been kept steady. Q1 2016 saw a ~63% stake reduction at prices between $103 and $133. Last three quarters had seen another ~70% selling at prices between $126 and $149. The disposal of the remaining ~5% 13F portfolio stake this quarter happened at ~$145 per share. The stock currently trades at ~$147. Pershing Square realized long-term gains.Note 1: Pershing Square’s cost basis on APD was ~$82.50. Latest regulatory filings show Pershing square still having just below 5% beneficial ownership in APD thru call options (OTC American style, 10.8M shares, 4.97% of business).Note 2: The prices quoted above are adjusted for the spinoff of Versum Materials (VSM) that closed in October 2016. The terms called for APD shareholders to receive one share of Versum Materials for every two shares held.Stake Increases:Howard Hughes Corp (HHC): HHC is a ~10% 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 has returned over 3x since the spinoff. This quarter saw a one-third increase as a result of the conversion of warrants held. The stock is currently at ~$120.Note 1: Pershing Square’s economic interest is at 10.1M shares (23.5% of business) including 5.4M notional common share exposure that is not listed in the 13F.Note 2: Ackman  at the Ira Sohn conference in May - the thesis was focused around how Master Planned Communities (MPC) when developed patiently over a long period of time could create substantial value to shareholders.Stake Decreases:Mondelez International (MDLZ): MDLZ is a large (top three) 10.41% of the 13F portfolio stake established in Q3 2015 at a cost-basis of ~$39. Q1 2016 saw a ~47% reduction at prices between $36.50 and $45. Last two quarters have seen another ~37% selling at prices between $42.50 and $47. The stock currently trades at $43.70.Note: Pershing Square’s latest regulatory filings on MDLZ show them holding a huge position in American style OTC call options. Including that, the ownership stake is at 6.3% of the business (96.3M shares).Kept Steady:Restaurant Brands International (QSR): QSR is currently the largest 13F position at ~41% of the US long portfolio. Pershing Square’s cost-basis is ~$16. The stock currently trades at $60.04.Note 1: Regulatory filings from earlier this month show them owning ~33M shares (13.8% of the business). This is compared to ~39M shares in the 13F.Note 2: 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.Chipotle Mexican Grill (CMG): CMG is a large (top-three) ~20% of the portfolio stake established in Q3 2016 at a cost-basis of ~$405 per share. The stock currently trades at $322. For investors attempting to follow Pershing Square, CMG is a good option to consider for further research.Note: Ackman controls ~10% of CMG.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 ~30% stake increase at prices between $21 and $28. Ackman’s cost-basis is around $14. The stock currently trades at $12.46. Q4 2016 saw a ~5% trimming at $8.78. Ackman controls ~20% of the business.Note: The stock was down ~45% in 2015, was flat in 2016, and has returned ~27% YTD.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) in 2015, the business moved its listing from London Stock Exchange to New York Stock Exchange in January 2016. Pershing Square controls ~19% (33.33M shares) of the company. The stock currently trades at $14.53.  It has been on an up-swing this year and has returned ~50% YTD.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 $2.29 and 63.5M shares of FMCC at a cost-basis of $2.14. The combined investment outlay was ~$400M. FNMA & FMCC currently trade at $2.70 and $2.59 per share respectively.Bill Ackman also has a short book. Herbalife (HLF) with a capital allocation of 9% is the only one 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 2017:2/21/2017: Decided not to include this in the Q1 2017 update as Ackman had sold out. User suggested detailing the VRX option trades. Basically, the original trades are in the  under EX-99.5. The original 2017 expiries were moved to 2019 expiries in June 2016. Those trades are in the  under EX-99.2 - If you add the “Buy to Open” transactions, that is the difference of 9.12M shares between the 13F and the 13Ds. Also, note that with OTC options, the share count is listed and for listed options, you have to multiply the count by 100 to get the actual count. On the 9.12M share option position, he will make a profit if the share price is above ~$27 (Strike of $60 MINUS option premium received of ~$37 is $23 on the Puts sold and the $4 cost offset for the Calls he bought) before Jan 2019 expiry.Regulatory Filings thru 5/15/2017: 13D - 3/3 - CMG - 2.88M shares 10%. Bunch of VRX filings related to disposal at ~$11 per share.Info from  - released 5/11/2017: Commentary on the holdings."