Pershing Square's 15% Return in November Sounds Fishy

Includes: C, GGP, HHC, JCP, MDLZ, TGT
by: Insider Monkey

Dealbreaker reported that Pershing Square returned 15% in November. Insider Monkey likes Bill Ackman even though he swam naked in Turkey. He’s a great hedge fund manager, but a 15% return in one month sounds suspicious even for the greatest hedge fund managers.

So…. we went through each long stock holding reported by Bill Ackman in his latest 13F form. Total assets reported were about $4 Billion. The largest position in the fund is Kraft Foods (KFT) with $852 Million at the end of September. KFT lost 4.8% in November. The second largest position in the fund is Target (NYSE:TGT) with $756 Million invested. Target returned 7% in November. Next is Citigroup (NYSE:C) with $571 Million invested. Citi returned 1.2% in November. The fourth largest position is JC Penney with $427 Million at the end of September. JCP returned 6.9% in November.

Do you see where we are going? The only position in the fund that had a greater than 15% return is General Growth Properties (NYSE:GGP). That company came out of bankruptcy and spun-off Howard Hughes Corp (NYSE:HHC). There’s a $3.589 per share distribution on November 10th for GGP, which should account for this spun-off. GGP returned 20.2% including this spinoff-related distribution in November. Considering most of the positions in Ackman’s portfolio had a smaller than 10% return in November (with the largest position returning -5%), mathematically Ackman’s portfolio can’t return 15% in November unless he increased GGP’s weight in the portfolio to 70% or so.

Our conclusion is either Ackman made another secret investment which returned a gazillion percent or… Dealbreaker was duped. Pershing Square returned 10.7% for the first 9 months of the year and now Dealbreaker is reporting that the cumulative return for the first 11 months is 35.5%.

Just doesn’t make sense…’sall we’re saying.

Disclosure: Long C