"Tracking Bill Ackman’s Pershing Square Portfolio – Q3 2017 Update"
"Ackman’s US long portfolio value decreased ~15% from $6.01B to $5.11B this quarter.Pershing Square dropped Nomad Foods while increasing Automatic Data Processing.The largest three 13F positions are Restaurant Brands International, Automatic Data Processing, and Chipotle Mexican Grill and together they account for ~69% 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 11/14/2017. Please visit our  article for an idea on how his holdings have progressed over the years and our  for the fund’s moves during Q2 2017.Ackman’s US long portfolio value decreased ~15% from $6.01B to $5.11B this quarter. The number of positions decreased from 7 to 6. The portfolio remains heavily concentrated with a few huge bets. The top three positions account for 69.26% of the total portfolio value: Restaurant Brands International, Automatic Data Processing, and Chipotle Mexican Grill.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:None.Stake Disposals: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 controlled ~19% (33.33M shares) of the company as of last quarter. The position was disposed this quarter at prices between $13.50 and $15.49. The stock currently trades at $14.64.Stake Increases:Automatic Data Processing (ADP): ADP is a top three ~19% of the 13F portfolio stake established last quarter at a cost-basis of $97.30 and increased by roughly four-times this quarter at prices between $101 and $119. The stock is now at $112.Note 1: Regulatory filings show Pershing Square’s beneficial ownership at 36.8M shares (8.3% of the business). The 13F report only lists 8.8M shares that are directly owned. The rest are in American Style OTC Call Options.Note 2: Earlier this month, Pershing Square lost a proxy battle at ADP – his three (including him) board nominations were rejected.Stake Decreases:Restaurant Brands International (QSR): QSR is currently the largest 13F position at roughly one-third of the US long portfolio. Pershing Square’s cost-basis is ~$16. This quarter saw a ~32% selling at prices between $59 and $66. The stock currently trades at $64.81. Pershing Square realized huge gains.Note 1: Pershing Square ownership stake in QSR is ~11% of the business.Note 2: The QSR stake 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.Mondelez International (MDLZ): MDLZ is a large ~11% 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 had seen another ~37% selling at prices between $42.50 and $47. The stock currently trades at $42.53. There was a ~4% trimming this quarter.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 ~5% of the business (~75M shares).Kept Steady:Chipotle Mexican Grill (CMG): CMG is a large (top three) 17.35% of the portfolio stake established in Q3 2016 at a cost-basis of ~$405 per share. The stock currently trades at $281. For investors attempting to follow Pershing Square, CMG is a good option to consider for further research.Note: Ackman controls ~10% of CMG.Howard Hughes Corp (HHC): HHC is a ~11% 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. Last quarter saw a one-third increase as a result of the conversion of warrants held. The stock is currently at ~$121.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.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 $9.52. Ackman controls ~20% of the business.Note: The stock was down ~45% in 2015, was flat in 2016, and is down ~3% 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 $2.94 and $2.83 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 Q3 2017:Regulatory Filings thru 8/14/2017: 13G/A – 8/10/2017 – QSR – 33.1M shares – 13.8%. 13D – 8/7/2017 – ADP – 36.8M shares – 8.3% - 1.75M listed in 13F at a cost-basis of $97.30 – rest in forward-purchase-contracts and options. 13D/A & Form 4 – 7/5/2017 – HHC – 4.7M shares – 10.9% - increase due to warrant cashless conversion – economic interest is at 10.1M shares (23.5%) including 5.4M notional common share exposure thru the swaps. 13D – 5/16/2017 – APD – sold 1.88M shares on 5/15/2017 at ~$145. Also unwound 1.12M shares in American Style call options. 10.8M shares of beneficial ownership still in OTC American style call options – 4.97% of business.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 Q2 2017 Letter - released x/x/2017: TO DO.8/4/2017: Ackamn  to control ADP - Pershing Square first contacted ADP on August 1, saying Bill Ackman owns 8% of the company - mostly in derivatives - and was requesting ADP extend the August 10 deadline for nominating directors by 30-45 days, with plans to nominate five, including himself. Also seeks to replace CEO. ADP Response: notes it has a clearly defined board nomination process and won't be agreeing to Pershing Square's last minute request. It also notes a total shareholder return of 202% since Rodriguez became CEO six years ago - topping the S&P 500's 128%, not to mention Pershing's 29%."