Bill Ackman is making a strong comeback in 2019
Bill Ackman, Pershing Square’s founder and CEO, spoke at a money manager conference in New York on April 16. This year is turning out to be a blockbuster year for Pershing Square after a series of disappointing years. The fund recorded losses of 20.5%, 13.5%, 4%, and 0.7%, respectively, in 2015, 2016, 2017, and 2018. Bill Ackman’s costly stake in Valeant Pharmaceuticals (BHC) and his famous short bet on Herbalife (HLF) cost his fund a fortune.
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In contrast, the fund is up 40% year-to-date, outperforming the S&P 500 (SPY) year-to-date. Compared to its returns of 40.0%, SPY has returned 16.0%, while the Dow Jones Industrial Average Index (DIA) and NASDAQ Composite (QQQ) have gained 13.9% and 21.5%, respectively.
Reverting to investing basics
The fund has reverted to the basics of investment analysis and investing in simple, predictable, cashflow-positive companies. As reported by Yahoo Finance, during the conference, Bill Ackman said, “I guess the way to think about it is — it’s very hard to lose money by buying great businesses if you pay a fair price.” He added, “For a while there, we forgot that our main job was to make money, so we woke up, and now we’re back in the money making business.”
Contributors to the fund’s performance
A large part of Pershing Square’s outperformance year-to-date has come from Chipotle Mexican Grill (CMG). The stock has gained 60% as of April 18. Restaurant Brands International (QSR) and Automatic Data Processing (ADP) are other major stocks driving the fund’s outperformance.