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Famous hedge fund manager Bill Ackman of Pershing Square Capital Management is watching his investors flee his fund. It may take them some time to leave due to rules allowing the withdrawal of only an eighth of their investment each quarter, but even that slow rate of withdrawal is reducing the fund’s assets under management. Scott Deveau writes at The Globe and Mail:
Bill Ackman’s Pershing Square Capital Management is facing more bad news as many of the institutional investors in its private funds have asked to redeem their money.
About two-thirds of the capital that investors could withdraw from Pershing Square private funds was redeemed at the end of last year, according to a person with knowledge of the matter. Blackstone Group LP has been pulling its money, while JPMorgan Chase & Co. has removed Bill Ackman’s Pershing Square from its list of recommended funds for clients, the person said.
Under the funds’ rules, investors are only able to redeem one eighth of their investment each quarter, meaning it could take more than two years to withdraw all of their money. Still, there’s been a steady decline in assets under management at Pershing Square since its $4 billion loss on Valeant Pharmaceuticals International Inc. and its losing short bet on Herbalife Ltd.
At the end of March, Pershing Square’s total assets under management sat at about $8.2 billion, down from about $18.3 billion in 2015. The redemptions are coming from a pool of capital that includes Pershing Square’s private and employee funds, which made up about $3.8 billion of its overall AUM at the end of March, according to a portfolio update at that time.
Last year was a particularly tough one for Ackman as his investment in Chipotle Mexican Grill Inc. continued to suffer setbacks. He also lost a high-profile proxy fight at outsourcing company Automatic Data Processing Inc., although he later took advantage of a jump in ADP’s share price to sell shares worth about $125 million at a profit.
Read more here.
Jeremy Jones, CFA
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