Ackman's Pershing Square reports second-straight record year

[NEW YORK] Bill Ackman's Pershing Square Capital Management reported its second-consecutive record performance in 2020 by returning more than 70 per cent on its investments.

The billionaire investor said Pershing Square had a net return of 4.6 per cent in December, bringing his overall returns for the year to 70.2 per cent and surpassing 2019's previous record of about 58 per cent. The results eclipsed the gains of the S&P 500, which rose 16 per cent in 2020.

Back-to-back wins mark an impressive return for Mr Ackman, whose hedge fund previously racked up three-straight years of losses after a disastrous bet on Valeant Pharmaceuticals and an ill-fated short-selling campaign at Herbalife Nutrition, among other challenges.

Pershing Square's 2020 returns were buoyed by a lucrative credit hedge Mr Ackman put in place in the lead-up to the coronavirus pandemic and the subsequent market selloff. Mr Ackman said in April that he had been so concerned about the potential impact of the coronavirus that he had considered liquidating Pershing Square's entire portfolio before instead opting for a credit-hedge strategy.

The bet paid off and returned about US$2.6 billion to Pershing Square by the time it was sold in March, or roughly 100 times the size of the original investment. Mr Ackman used the proceeds to make what he called a "recovery bet" on the economy, increasing stakes in portfolio companies and reinvesting in others including Starbucks.

Mr Ackman's attention later turned to his blank-cheque company, Pershing Square Tontine Holdings. In July, the special purpose acquisition company, or SPAC, raised US$4 billion in an initial public offering, plus a US$1 billion commitment from Pershing Square, and is now seeking a private company to take public. Mr Ackman had held talks with Airbnb, Stripe and others.

BLOOMBERG