Pershing Square’s best-ever start to a year
After a dismal 2018, this year is turning out to be a blockbuster for Pershing Square. As per its annual report released yesterday, its year-to-date return up to March 19 stands at 31.9%. This return marks the fund’s best start to a year ever.
Pershing Square has outperformed the S&P 500 (SPY) year-to-date. Compared to its returns of 31.9%, SPY has returned 13.5% while the Dow Jones Industrial Average Index (DIA) and NASDAQ Composite (QQQ) have gained 11.0% and 16.1%, respectively.
The remarkable turnaround in 2019
The fund’s remarkable performance came after a series of disappointing years, with losses of 20.5%, 13.5%, 4%, and 0.7%, respectively, in 2015, 2016, 2017, and 2018. Ackman attributed this improved performance to:
- refocusing the fund’s investment strategy on its core principles
- restructuring the business as investment-centric rather than asset management, which “has freed up substantial time and renewed focus”
- taking advantage of 2018’s year-end downfall in markets and buying new investments rather than selling irrationally—Hilton Worldwide (HLT) is one of these opportunistic investments.
Contributors to the fund’s performance
A large contribution to Pershing Square’s outperformance year-to-date has come from Chipotle Mexican Grill (CMG). The stock has gained 54% as of March 19 and contributed 8.5% to the fund’s 31.9% gain. Restaurant Brands International (QSR) and Automatic Data Processing (ADP) follow with contributions of 4.2% and 3.5%, respectively.