Hedge Fund Portfolio Tracking: Bill Ackman's Pershing Square Capital, Q4 2008

This is the Fourth Quarter 2008 edition of our ongoing hedge fund portfolio tracking series. Before reading this update, make sure you check out the Hedge Fund 13F filings, preface.

We've already covered:

• Paulson & Co (John Paulson)
• Carl Icahn, Warren Buffett
• Lone Pine Capital (Stephen Mandel)
• George Soros

Next up is Pershing Square Capital Management, run by Bill Ackman. It is a well-known value/activist-based hedge fund, which started in 2003 after Gotham Partners broke up. The past few years, he has had notable short positions in the bond insurers such as MBIA (MBI) and Ambac (ABK). Recently, he closed those shorts, and detailed his plans for Target to spin-off its real estate in order to unlock value. His Pershing Square IV fund, which invests solely in Target, has seen abysmal performance, as Ackman apologized for in its recent letter. We'll have to see if this proposal picks up any steam, but so far, it hasn't. We track Ackman extensively and have a lot of material on him and his fund. Pershing has been busy lately, filing a 13D on General Growth Properties and a 13G on Barnes & Noble. You can view its Q3 2008 investor letter here. Let’s look at what they've been up to with the rest of its portfolio.

The following were its long equity, note, and options holdings as of December 31, 2008 as filed with the SEC. We have not detailed the changes to every single position in this update, but we have covered all the major moves. Unless otherwise denoted, all holdings are common stock.

Some New Positions (Brand new positions it initiated in the last quarter):

• General Growth Properties (GGP)
• Alexanders (ALX)

Some Increased Positions (A few positions it already owned but added shares to):

• EMC Corp (EMC)
• Target (TGT)

Some Reduced Positions (Some positions they sold some shares of - note not all sales listed):

• Dr. Pepper Snapple Group (DPS): Reduced position by 51%
• Wendy's (WEN): Reduced position by 15%
• Sears Holdings Corp (SHLD): Reduced position by 39.5%

Removed Positions (Positions it sold out of completely):

• Wachovia (WB)
• Longs Drug Stores (LDG)
• Barnes & Noble (BKS)
• American International Group (AIG)
• Mastercard (MA)

Top Holdings (by % of portfolio)

1. Target (TGT): 37.91% of portfolio
2. EMC (EMC): 25.19% of portfolio
3. Wendys (WEN): 9.54% of portfolio
4. Dr Pepper Snapple (DPS): 7.22% of portfolio
5. General Growth Properties (GGP): 1.06% of portfolio
6. Sears (SHLD): 0.48% of portfolio
7. Borders Group (BGP): 0.17% of portfolio
8. Greenlight Capital Re (GLRE): 0.13% of portfolio
9. Alexanders (ALX): 0.09% of portfolio

Assets from the collective long U.S. equity, options, and note holdings above were $2.4 billion this quarter. As you can tell, Ackman is running quite a slim, concentrated portfolio on the long side of things. His massive (and well documented) stake in Target continues to hurt him and the Pershing Square IV fund. While there has been much made over Ackman's foray into shares of GGP, you can also now see that he has added Alexanders into his portfolio, but at in small size relative to his portfolio as a whole.

For more thoughts from Ackman, check out his insightful interview with Charlie Rose or his recent speech at the Value Investing Congress.

Comments

[James Wilson:]

How many of the new homes, apartment complexes or whole subdivision will have to be stripped and remodeled to remove the Chinesse Sheetrock ?

The insulation is breaking down on electrical wiring, cooling coils springing leaks. chemical oders in air vents, and people getting sick.

Chinesse Sheetrock is the suspect.

Would be funny huh? If the over supply of housing disappeared and the overage had to be torn down because of chemical dumping with illegal chemicals in building products.

Feb 25 08:41 AM

[ROLEXDAYTONA:]

tgt goes straight to zero, they will have to file for chapter11 soon.
bill ackman is done, his career finished as money manager.

Feb 25 03:56 PM