"Tracking Bill Ackman’s Pershing Square Portfolio – Q4 2015 Update"
"Ackman’s US long portfolio decreased from $13.95B to $12.46B this quarter.Pershing Square’s largest 13F stake is Air Products and Chemicals at ~22% of the US long portfolio.The largest three 13F positions are Air Products & Chemicals, Zoetis, and Mondelez 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 02/16/2016. Please visit our  article for an idea on how his holdings have progressed over the years and our  highlighting the fund’s moves during Q3 2015.Ackman’s US long portfolio decreased 10.68% from $13.95B to $12.46B this quarter. The number of positions remained steady at 8. The portfolio remains heavily concentrated with a few huge bets. The top three positions account for 53.15% of the total portfolio value: Air Products & Chemicals, Zoetis Inc., 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. 2014 was a blockbuster year with a 40% return while 2015 return was at negative 20.5% net-of-fees. Returns since the EOY2012 inception of Pershing Square Holdings are at 22.2% compared to 52.5% for the S&P 500 index over the same period. 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 “”.Stake Decreases:Valeant Pharmaceuticals (VRX): VRX was Ackman’s largest position at 24.90% of the US long portfolio as of last quarter. This quarter saw a ~15% reduction. The stake was established in Q1 2015 at a cost-basis of $196. The stock currently trades at $94.56.Note: A 2/5/2016 regulatory 13D/A filing showed Pershing Square owning 30.71M shares (9% of the business). This is compared to 16.59M shares in the 13F. The difference consists of 5M shares newly purchased in the mid-90s and 9.12M shares in call options.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 $133 and the stake stands at 21.46% of the US long portfolio - it is Ackman’s largest 13F position.Note: Pershing Square’s ownership stake in APD is ~10%. It is an activist stake - the CEO was replaced and three new board members were appointed in June 2014.Canadian Pacific Railway (CP):  CP is Pershing Square’s fourth-largest 13F position at 14.28% 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 $130. 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.Note: CP is a ~9% of the business activist stake. 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.Howard Hughes Corp (HHC): HHC is a small 3.24% 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 down ~25% since. It currently trades at $90.61.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 (top-three) 15.61% (43.37M shares) of the 13F portfolio stake established last quarter at a cost-basis in the low-40s. Beneficial ownership including forward purchase contracts and call options (2017 March thru August maturity/expiry) were at 120.27M shares as of September 2015 (~7.5% of business). Ackman’s 2015 letter (Jan 2016) said the MDLZ exposure was reduced to fund the purchase of more Valeant shares. The stock currently trades at $39.81.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 $7.01. Ackman controls ~20% of the business.Note 1: The stock was down ~45% in 2015 and is down another ~45% 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 a ~11.40% 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 $34.51.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 position is now a top-three stake at 16.09% of the portfolio. The stock currently trades at $41.80.Note 1: 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 both currently trade at $1.30 per share. In the Ira Sohn conference in August 2014, Ackman said his conservative case values FNMA & FMCC at ~$23 per share each. Other Hedge Funds involved include Perry Capital and Fairholme Capital.Note 2: Ackman 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.Note 3: In June, Pershing Square revealed a ~22% ownership stake in London listed SPAC Nomad Holdings at a cost of ~$350M. The latest 13G regulatory filing on 02/12/2016 shows Pershing Square owning 33.33M shares (18.7% of business) of Nomad Foods (NOMD).The spreadsheet below highlights changes to Pershing Square’s US stock holdings in Q4 2015:13G/D/A, Form 3/4 filings after 8/15/2015: 13D/A 10/22/2015 - CP - 13.94M shares - 9.1% of the business (increase due to repurchase). 13D/A 9/22/2015 - MDLZ - 120.27M shares - 7.5% of business. “The Reporting Persons (as defined below) beneficially own an aggregate of 120,265,238 shares of Common Stock (the “Subject Shares”), which number includes: (i) 43,366,342 shares of Common Stock; (ii) 26,898,896 shares of Common Stock underlying forward purchase contracts; and (iii) 50,000,000 shares of Common Stock underlying American-style call options.” On September 18, 2015, the Pershing Square Funds purchased 37,902,104 shares of Common Stock for an aggregate purchase price of $1,398,721,077 pursuant to forward purchase contracts described in the Original Schedule 13D. The source of funding for such purchases is the respective capital of the Pershing Square Funds.Note: 8/6/2015 -  - MDLZ - 120.27M shares - 7.5% (event date July 27). Constituents: ~5.5M common 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). 7/2/2015 -  - HHC - 5.48M shares - 13.2% of business.  6/30/2015 -  - PAH - 42.74M shares - 20.3% of business.6/3/2015 News: ."