Is 2019 Bill Ackman’s Comeback Year after a Series of Losses?

2018 turned out to be a dismal year for hedge funds. The poor performance of hedge funds also led to large investor redemptions. Due to years of underperformance, Pershing Square’s funds under management dwindled from $18.3 billion at the end of 2014 to $6.8 billion at the end of 2018.

However, Pershing Square outperformed the broader markets with a loss of just 0.7% in the year. In comparison, the S&P 500 Index (SPY), the Dow Jones Industrial Average Index (DIA), and the NASDAQ Composite Index (QQQ) saw returns of -6.3%, -5.7%, and -1.0%, respectively, in 2018.

Daniel Loeb’s Third Point had its worst year since 2008 in 2018. His fund lost 11% in 2018, with a 6% loss in December alone. Read Dan Loeb’s Third Point Had a Weak 2018: Will 2019 By Any Better? for more information about the fund’s performance and holdings.

David Einhorn’s Greenlight Capital (GLRE) suffered its worst year in its 22-year history, with annual losses of 34%, in 2018. Read David Einhorn’s Biggest Bets in 2018 Didn’t Turn Out Well for more about Einhorn’s biggest stakes.

Steve Cohen’s Point 72 Asset Management fell ~5% from its launch in February to November. According to research company Hedge Fund Research, funds across the industry fell an average of 2% through November. In contrast, Pure Alpha, the flagship fund of Ray Dalio’s Bridgewater, posted a rise of 14.6% in 2018. Read How Ray Dalio Beat the Market and Peers in 2018 for more on his fund’s outperformance in 2018.

After a lukewarm 2018, Bill Ackman’s Pershing Square seems to be heating up rapidly in 2019. Year-to-date, as of February 12, the fund has seen a return of 24.7% compared to SPY’s, DIA’s, and QQQ’s returns of 9.7%. 9.1%, and 10.8%, respectively.

In this series, we’ll discuss what’s caused the fund to outperform the markets. Before that, though, let’s discuss what saw Ackman lose his fortunes in the preceding years.