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Business

Bill Ackman’s summer has been pretty horrible

By
Carleton English
Published Aug. 20, 2016, 10:15 p.m. ET

Labor Day — and summer’s unofficial end — can’t come soon enough for Bill Ackman.

The hedge fund mogul’s Pershing Square has been scorched by bad news this summer — news that pumped up his short plays and pushed down his long positions.

Since Memorial Day, shares of the publicly traded Pershing Square Holdings, which mimic his funds’ investments, are down 13.6 percent as of Friday’s close.

Over the same span, the S&P 500 gained 4 percent.

For the year through July 31, Pershing shares are down 17.8 percent, while the hedge fund industry in general is in recovery mode.

The average hedge fund is up 3.67 percent through July, according to Preqin data.

For Ackman, the trouble is mostly Canadian drugmaker Valeant Pharmaceuticals and nutritional supplement company Herbalife.

Just this week, Valeant, in which Pershing Square has a 9 percent stake, was sued by investment manager T. Rowe Price for allegedly running a “fraudulent scheme” that destroyed billions of dollars of shareholder value.

Earlier in the year, TIAA-CREF filed a class-action suit with similar allegations.

News of the suit, revealed Aug. 18, knocked the shares down 7.8 percent over two days — just when they had hit a three-month high.

The shares have been flat since Memorial Day.

Also adding to Ackman’s summer in investing hell was the news last week that Valeant is being investigated by federal prosecutors for its ties to controversial specialty pharmacy Philidor.

While Valeant’s stock keeps going down, Ackman has had the opposite problem with Herbalife.

Nearly four years ago, Ackman made a $1 billion bet that Herbalife’s stock would go to zero, alleging that the company was a pyramid scheme.

But on July 15, the Federal Trade Commission found the Los Angeles company had plenty of shortcomings — but did not find that it was a pyramid scheme.

The FTC action buoyed Herbalife shares.

Its shares closed Friday at $63.31, up nearly 50 percent from when Ackman announced his short position.

They are up 9.4 percent since Memorial Day — further roasting Pershing’s performance this summer.

Representatives from Pershing Square declined to comment.