This article is part of a series that provides an ongoing analysis of the changes made to Pershing Square's U.S. stock portfolio on a quarterly basis. It is based on Ackman's regulatory 13F Form filed on 02/14/2013. Please visit our Tracking Bill Ackman's Pershing Square Holdings article for an idea on how his holdings have progressed over the years and our previous update highlighting the fund's moves during Q3 2012.
Ackman's portfolio increased marginally from around $8.90B to $9.15B this quarter. The number of positions went down from 9 to 8. The portfolio remains heavily concentrated with a few large bets: the top five positions account for close to 90% of the total portfolio value.
Alexander & Baldwin Inc (NYSE:ALEX): ALEX was a small (less than 0.5%) stake that was eliminated this quarter after it was reduced by around 60% last quarter. The stake disposals happened at prices between $26.39 and $34.25. The stock currently trades at around $35.14. ALEX position was purchased in Q2 2011 at prices between $44.83 and $54.47 and Matson Inc. (NYSE:MATX) was spun-off from ALEX on July 3, 2012 (1:1 ratio). MATX currently trades at around $26.30. The stake elimination indicates a bearish bias.
Procter & Gamble Co (NYSE:PG) & CALLS: PG is a huge 23.94% of the US long portfolio activist position established in Q2 2012 at a price-range between $59.27 and $67.57. The stake was increased by 28.55% last quarter at prices between $61.19 and $69.76. This quarter the long position was kept steady while the call options were reduced by one-third. The stock currently trades at around $76.78. Activist roles are effective when a good portion (over 10% ideally) of the outstanding shares are acquired or otherwise controlled by the investor concerned. This is not the case with Ackman's position in PG as he controls only about 1% of the outstanding shares. Even so, the position has worked so far, as the stock is trading well above his cost-basis. Call options account for 13.42% of the overall position in PG. 13F filings do not include details on the strike price and expiry dates of call options and so it is unclear how well he is doing on that part of the position.
The remaining eight positions were untouched during the quarter:
Burger King Worldwide (BKW): BKW is a 6.89% of the US long portfolio stake that was established last quarter at prices between $13.03 and $15.88. The stock currently trades just outside that range at $16.58. His investment in Burger King Worldwide started with a transaction to acquire 29% of the company for $1.4B in April 2012. The acquisition was done through Justice Holdings, a British company controlled by Ackman. That stake is not reported in the 13F filings as Justice Holdings is a UK listed investment vehicle - it is not a 13F security. Including that, the investment in BKW rivals his stakes in Procter & Gamble and Canadian Pacific Railway (NYSE:CP), his largest positions. For investors attempting to follow Ackman, BKW is a good option to consider.
Matson Inc. : MATX stake was acquired as part of its spin-off from Alexander & Baldwin Inc. . It is a small 0.98% stake and as such does not indicate a clear bias. The stock is trading at $26.30, just above its spin-off price of ~ $26 per share.
General Growth Properties (NYSE:GGP): GGP is one of Ackman's biggest wins at Pershing Square. He acquired the stake during bankruptcy in Q2 2009 in the $1 price-range and the stock currently trades at around $19.80! The stake was kept steady this quarter after it was increased by around 3.5% last quarter at prices between $17.20 and $20.99. The position accounts for 16.21% of Ackman's US long portfolio. Investors attempting to follow Ackman should wait for a better entry point.
J C Penney (NYSE:JCP): JCP is an 8.41% of the US long portfolio stake established in 2010 at a purchase price of around $25. JCP has been very volatile with the stock trading as high as $43 in February 2012 and dropping to as low as $16.28 last quarter. It currently trades at around $20. For investors attempting to follow Ackman, JCP is a good option to consider.
Canadian Pacific Railway and Beam Inc. (NYSE:BEAM): Ackman is sitting on huge gains on these two large positions: CP is a 26.82% stake first established in Q3 2011 with the bulk purchased in Q4 2011 at prices between $46.05 and $71.82. The stock currently trades at around $120. Ackman reigned in management and board changes at the company by winning a proxy battle in May last year. BEAM is a spin-off from Fortune Brands and the stock is up around one-third since the spin-off in September 2011. Ackman acquired the stake in Fortune Brands in 2010 and his cost-basis is well below the spin-off price. It currently accounts for 13.89% of the US long portfolio.
Howard Hughes Corp (NYSE:HHC): HHC is a small 2.85% of the US long portfolio position that was first purchased in 2010. The stake has remained untouched during the whole period. The stock price has doubled since that time. Ackman called HHC one of the best kept secrets on Wall Street at the Harbor Investor Conference this week and that resulted in a ~10% spike in the share price.
Bill Ackman has also disclosed a huge (20M shares) short position in Herbalife (NYSE:HLF) recently. Investors attempting to follow Ackman should consider the fact that Third Point's Dan Loeb and Carl Icahn are on the other side of that trade.
The spreadsheet below highlights changes to Pershing's U.S. stock holdings in Q4 2012:
Disclosure: I am long JCP. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.