As noted yesterday
, activist investor
had a stunning success with his Canadian Pacific Railway
campaign. But the Pershing Square manager's all-in style has also
stalled and crashed in the past. The following surveys the recent
investing ups and downs of a guru who still managed to return 25%
on average annualized from 2004 to 2010.
Canadian Pacific Railway (
Ackman made his grand entrance to Canadian Pacific Railway by
buying 13.85% of the company, or 14,259,888 shares, for $1.4
billion and beginning a proxy battle to replace board members and
bring about the CEO's ouster. He won the fight in May 2012,
resulting in seven of his hand-picked directors joining the board
and Hunter Harrison replacing Fred Green as CEO. Ackman's pretext
was that the company could streamline operations and enhance
profitability for shareholders.
In an official release from Pershing, shares have nearly tripled
since Ackman's purchase, topping $142 in price in May. They have
since declined to $128.23 on Thursday after Ackman's announcement
this week that he would sell a portion of his holding in the
's holding history with CP:
Ackman and several of his colleagues will remain on the board
after the sale, but the reverse DCF calculator indicates that the
market expects a 24.6% growth rate over the next 10 years to
justify the share price. Such rapid growth is rarely seen in a
Company leadership has imposed great changes at the company since
Ackman's arrival, which led to some improved financial results.
Key financial results the quarter Ackman bought CP (third quarter
� Revenue - $1.3 billion
� Net income - $186.8 million
� Operating margin - 24.19%
� Operating ratio - 75.8%
Key financial results for most recent quarter (first quarter
� Revenue $1.495 billion
� Net income - $217 million
� Operating margin - 24.21%
Ackman disclosed short position of 20 million shares in Herbalife
at an Ira Sohn even in December 2012. As he walked investors
through a 120-page presentation dismantling the company and
accusing it of being "a pyramid scheme," its stock fell 12.14%.
It lost a further 9.75% the following day, to close at $33.60 per
Ackman's immediate gain on his short position can be seen in the
chasm in Herbalife's stock price in December, as the market felt
the effects of his short presentation:
The stock quickly began to recover when fellow hedge fund manager
Daniel Loeb of Third Point announced an opposing 3.1
million-share long position in Herbalife on Jan. 3. His quarterly
filing then revealed that he had purchased 3.1 million shares in
the company in the fourth quarter, for a total position of 8.9
Carl Icahn then infused more optimism into the stock, purchasing
14,015,151 shares on Feb. 28 and then increasing the stock up to
16,966,485 shares as of May 7 - a full 16.46% of the company.
Ackman, however, lodged a second attack on the company in a
presentation in March in which he again called Herbalife a
pyramid scheme and said he expects a government investigation and
failure of the company.
"We're prepared to spend whatever it costs and do whatever is
required to make sure that the world understands the facts about
this company," Ackman has said. "We can't imagine how the SEC or
the Federal Trade Commission or any other relevant regulator will
ignore what we have said."
Both a Hispanic group and the National Consumers League have
called on the Federal Trade Commission to launch an investigation
into Herbalife, but the agency has said that such an
investigation wouldn't be public.
Ackman's short price is unknown, but Herbalife shares traded for
around $46 at the beginning of December, before his short
announcement, and are priced at $43.50, making him approximately
even on this trade. Almost six months later, Ackman still seems
intent on his mission, telling the Financial Times on June 4 that
closing Herbalife would be "the greatest achievement of my life."
J.C. Penney (
Ackman amassed 39,075,771 shares of J.C. Penney from the third
quarter of 2010 through the first quarter of 2011. As of March
31, he owns 17.78% of the company, and the holding is 5.9% of his
highly concentrated portfolio.
The company's stock price as of Thursday has slid to $18.15, for
which Ackman's pick for recently fired CEO, Ron Johnson, has been
widely credited. See J.C. Penney's price, revenue, net income and
free cash flow history for the past three years in the chart
With average purchase prices of $23, $32, $36 and $38, and shares
down 30% over the past year, Ackman stands by a 37% average loss
on J.C. Penney as of Thursday.
Ackman's other top holdings in his present long portfolio have
performed well overall. On second largest holding Procter &
) established in the second quarter of 2012, he has an
approximate 19% average gain. Third-largest holding General
Growth Properties (
) has a 42% average gain, and his fourth-largest position, Beam
), is up 30% from his average purchase price in the fourth
quarter of 2011.
See Ackman's portfolio here. Also check out the Undervalued
Stocks, Top Growth Companies and High Yield stocks of Bill
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