Bill Ackman's Pershing Square: Portfolio Update

Pershing Square Capital Management, the hedge fund ran by Bill Ackman, has filed an amended 13D with the SEC and has disclosed a 33.62% ownership stake in Borders (BGP). According to the filing:

As of January 16, 2009, as reflected in this Amendment No. 9, the Reporting Persons are reporting beneficial ownership on an aggregate basis of 25,297,880 shares of Common Stock (approximately 33.62% of the outstanding shares). This includes warrants covering 14,700,000 shares of Common Stock, which represents 9,550,000 warrants received on April 9, 2008 and 5,150,000 warrants received on October 1, 2008 (each, as previously disclosed). The Reporting Persons own cash settled, total return equity swaps covering 4,805,463 notional shares of Common Stock (as previously disclosed). The notional shares that underlie such swaps are not included in the totals set forth in the charts earlier in the Schedule 13D. The aggregate economic exposure of the Reporting Persons to shares of Common Stock, including the aggregate shares of Common Stock beneficially owned by the Reporting Persons plus the aggregate notional shares underlying such swaps, represents approximately 40% of the sum of the outstanding shares of Common Stock and the shares of Common Stock underlying such warrants.

Additionally, Pershing has "extend the deadline for repayment of the $42,500,000 senior secured term loan" that is owed to it by Borders. The full text of the arrangement (a.k.a. fun legal jargon) is available in the SEC filing.

Taken from Google Finance:

Borders through its subsidiaries, operates book, music and movie superstores, and mall-based bookstores. The Company's operating subsidiaries include Borders, Inc. (Borders), Walden Book Company, Inc. (Waldenbooks) and Borders Australia Pty Limited. As of May 3, 2008, the Company operated 547 superstores under the Borders name.

Also worth noting is that Ackman's Pershing Square has covered its short position in bond insurer MBIA (MBI). It has closed its short position and sold its credit default swaps. This ends a long and well documented battle between the two parties.

Taken from Google Finance:

MBIA is "engaged in providing financial guarantee insurance and other forms of credit protection, as well as investment management services to public finance and structured finance issuers, investors and capital market participants on a global basis.

We've recently covered Ackman's recent SEC filings here and the rest of his portfolio holdings here.

Comments

[Tom Armistead]

Given the history of Ackman's vendetta against MBI, closing his short positions is bullish for the company. If there was a snowball's chance in hell they would go to zero he would still be in there, slinging mud and sowing misinformation. The 14 billion of losses he predicted is not going to occur.

2009 Jan 27 07:06 AM

[Ishortyou]

well looks like the housing market is trying to find a floor, as soon as the floor is reached the MBS/CDO's will have its floor as well, that will give them some appreciation and decrease the amount of liabilities insured on them.

2009 Jan 27 08:12 AM

[oldlures1]

Tom, I agree with you; Ackman is the king of "misinformation". His dubious (and dare I say, unethical) actions have destroyed companies, with negative consequences reaching far beyond their four walls. Frankly, in my humble, naive opinion, he should be counting his lucky stars that he's not a permanent resident of Club Fed. The fact that he's still out there, walking the streets, a continuing threat to our financial system (and the economy indirectly) is...well...unnerving, to say the least.

PS - the fact that Congress actually engaged him for testimony is bewildering -- talk about a fox in the hen house!

2009 Jan 27 06:11 PM

[mbi4ever]

Agree with Tom A.

2009 Jan 28 02:07 PM

[mbi4ever]

oldlures;

The fact that Congress actually engaged him for testimony is showing how corrupt and clueless our system is. Seeing Ackman in Congress is like seeing Osama Banana Monkey in Pentagon (in absence of a better mataphore).

2009 Jan 28 02:18 PM