Monitoring Invoice Ackman’s Pershing Sq. Portfolio – Q3 2022 Replace (OTCMKTS:PSHZF)

Bryan Bedder

This text is a part of a collection that gives an ongoing evaluation of the modifications made to Pershing Sq.’s 13F portfolio on a quarterly foundation. It’s based mostly on Ackman’s regulatory 13F Kind filed on 11/14/2022. Please go to our Monitoring Invoice Ackman’s Pershing Sq. Holdings article for an concept on how his holdings have progressed over time and our earlier replace for the fund’s strikes throughout Q2 2022.

Ackman’s 13F portfolio worth elevated ~6% from ~$7.46B to ~$7.88B this quarter. The variety of positions decreased from 7 to six. The portfolio stays closely concentrated with just a few big bets. The highest three positions account for ~62% of the whole portfolio worth: Lowe’s Corporations, Chipotle Mexican Grill, and Restaurant Manufacturers.

Along with associate stakes, the fund additionally invests the capital from Pershing Sq. Holdings (OTCPK:PSHZF), a public entity that debut in Euronext Amsterdam in October 2014. This was arrange primarily to extend the quantity of capital invested that’s everlasting. Pershing Sq. Holdings had underperformed the S&P 500 since its EOY 2012 inception. This modified in 2019 as they compounded at ~50% within the three years by 2021. For 2022 by November 15th, they’re down 9.1%. Their unique flagship fund’s (2004 inception) observe document is great with annualized returns of ~16% in comparison with ~9.7% for the S&P 500 index.

Observe 1: Pershing Sq. Holdings has all the time traded at a reduction to NAV. It at the moment trades at ~$35 per share in comparison with NAV of $52.77.

Observe 2: This 12 months, they disclosed the next concerning their hedging technique, rules, and efficiency: “Ideas: uneven payoff buildings together with monetization that gives liquidity in periods of market dislocation. Technique: Rate of interest hedges from late 2020 to early 2022 as they believed Fed would increase charges sooner than anticipated. Efficiency: $5.2B of their P&L got here from hedging within the final three years. That is in comparison with their present capital base of ~$11.5B.”

Observe 4: Pershing Sq. has a ~10% stake in UMG Music Group (OTCPK:UMGNF) at a cost-basis of ~€18 per share. It at the moment trades at €21.57.

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Stake Disposals:

Domino’s Pizza (DPZ): DPZ was a ~11% of the portfolio stake established in Q1 2021 at costs between ~$330 and ~$375 and the inventory at the moment trades at ~$392. The place was bought this quarter at costs between ~$310 and ~$417. That they had a ~5.3% possession stake within the enterprise.

Stake Will increase:

Lowe’s Corporations (LOW): LOW is at the moment the biggest place at ~25% of the portfolio. It was established in Q2 2018 at costs between $81 and $101 and elevated by ~9% subsequent quarter at costs between $95 and $117. There was additionally a ~40% stake improve in Q1 2020 at ~$84 per share. The 4 quarters by Q2 2021 had seen a ~20% promoting at costs between ~$136 and ~$211. The inventory at the moment trades at ~$211. Previous couple of quarters have seen solely minor changes.

Observe: Pershing Sq.’s cost-basis on LOW is ~$85 per share.

Restaurant Manufacturers Worldwide (QSR): The QSR stake is a big ~16% of the portfolio stake. Pershing Sq.’s unique cost-basis was ~$16. Q3 2017 noticed a ~32% promoting at costs between $59 and $66. That was adopted with a ~22% discount in H1 2018 at costs between $53 and $64. The 4 quarters through Q3 2019 had additionally seen a ~28% promoting at costs between $52 and $79. In June 2020, they elevated the place by roughly two-thirds through ahead contracts at $44.20 cost-basis. The inventory at the moment trades at ~$67. Previous couple of quarters have seen solely minor changes.

Hilton Worldwide Holdings (HLT): The big ~15% portfolio stake was established in October 2018. It was bought at costs between $64 and $78. Q1 2020 noticed a ~30% stake improve at a cost-basis of ~$70. Q1 2022 noticed a ~20% promoting at costs between ~$129 and ~$158. The inventory at the moment trades at ~$139. Final two quarters have seen solely minor changes.

Observe 1: Their total cost-basis is ~$72 per share.

Observe 2: In This fall 2018, Hilton Worldwide Holdings got here again into the portfolio after a niche of eighteen months. The earlier place was bought in Q3 2016 and disposed a 12 months later. Pershing Sq. has mentioned that the brand new place was acquired at a greater valuation in comparison with their earlier buy. Additionally, the enterprise construction has reworked right into a capital-light mannequin following the spinoff in early 2017 of Park Accommodations & Resorts (PK) and Hilton Grand Holidays (HGV).

Canadian Pacific Railway (CP): CP is a ~13% of the portfolio place bought in This fall 2021 at costs between ~$64.50 and ~$78. The place was constructed this quarter at costs between ~$67 and ~$83. The inventory at the moment trades at ~$81.

Observe: the place was not of their This fall 2021 13F report however was disclosed in an amended submitting this March.

Saved Regular:

Chipotle Mexican Grill (CMG): CMG is a big ~21% of the portfolio place. The stake was established in Q3 2016 at a cost-basis of ~$405 per share. The place was bought down by ~30% in Q3 2018 within the high-400s price-range and that was adopted with a ~17% trimming over the subsequent 4 quarters. Q1 2020 additionally noticed a one-third promoting at ~$860 per share. There was a ~7% trimming in Q1 2021 at ~$1340 per share. Q3 2021 noticed a ~3% improve at ~$1910 per share. The inventory at the moment trades at ~$1509.

Howard Hughes Corp. (HHC): HHC is now a 9.58% of the 13F portfolio place. The stake was first established in 2010 on account of its spin-off from GGP Inc. The overwhelming majority of the present stake is from the addition of ~10M shares in Q1 2020 at ~$50 per share by a personal placement. Q1 2021 noticed a ~25% stake improve at costs between ~$78 and ~$102. The inventory is at the moment at ~$70.

Observe: They’ve a ~27% possession stake within the enterprise. In October, they introduced a young provide to buy 6.34M extra shares of Howard Hughes at a value between $52.50 and $60 per share. On November 11th, the tender was prolonged, and the worth vary elevated to between $61 and $70 per share.

Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC) are different lengthy positions within the partnership – the holdings have been disclosed in 13D filings on November 15, 2013 – as they don’t seem to be 13F securities, they don’t seem to be listed within the 13F report. Ackman held slightly below 10% of the excellent shares of each these companies – 115.57M shares of FNMA at a cost-basis of $2.29 and 63.5M shares of FMCC at a cost-basis of $2.14. The mixed funding outlay was ~$400M. FNMA & FMCC at the moment commerce at ~$0.43 per share. In March 2018, Pershing Sq. mentioned their Fannie/Freddie pfds now quantities to 21% of the whole funding within the two GSEs. Their This fall 2021 Annual Investor Presentation had the next concerning Fannie/Freddie: “Stays assured of long-term worth – believes re-privatization is an eventuality no matter court docket outcomes”.

The spreadsheet under highlights modifications to Pershing Sq.’s 13F inventory holdings in Q3 2022:

Bill Ackman - Pershing Square's Q3 2022 13F Report Q/Q Comparison

Invoice Ackman – Pershing Sq.’s Q3 2022 13F Report Q/Q Comparability (John Vincent (creator))

Supply: John Vincent. Information constructed from Pershing Sq.’s 13F filings for Q2 2022 and Q3 2022.

Supply hyperlink

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