Pershing Square: the most exposed fund company

Our reporter Shi Wei / Wen

Many famous people are basically "famous in the world, full of the world", Bill Ackerman is no exception, he is the most exposed fund manager on Wall Street, he is considered a radical investor, many people He is considered to be an investment predator that can compete with Soros, Paulson and others.

In 2014, Pershing Square's net profit was as high as 4.5 billion US dollars. Since its establishment in 2004, its accumulated profit for the past 10 years has reached US$11.6 billion. Among the most profitable hedge fund managers in history, Bill Ackerman is ranked 19th. In October of that year, Pershing Square was listed on the pan-European stock exchange in Amsterdam, raising $3.07 billion.

For more than ten years, Bill Ackerman has led the Pershing Square, sometimes gaining a lot of money, sometimes returning to his feathers, but his publicity has never changed.

After entering 2016, Ackerman can be said to have a bad year, first of all, the huge loss in 2015, and then forced to lay off, and the biggest investment has no progress.

The most famous case of Pershing Square is that it holds a Canadian drug manufacturer Valeant, and Bill Ackerman even entered the board of Valeant, but the investment is far from success; in fact, it was established as early as Panxing Square. Previously, Ackerman had already made a name for himself in the bidding for the Rockefeller Center. It was because of this acquisition that Ackerman had tasted the sweetness of the exposure. Since then, it has been out of control. Since then, Akman has become famous because of the shortcomings of Herbalife. .

Gao Tan Partnership: Small Test Knife

In May 1966, Bill Ackerman was born in Chabak, New York. His father was the chairman of a real estate finance company in New York. He was the standard rich second generation.

In 1988, Ackerman graduated from Harvard University and received an MBA from Harvard Business School in 1992. Since then, he has established a partnership with another Harvard alumnus, mainly for small investments in listed companies.

In 1995, the time to change the fate of Ackermann came. This year, he and insurance and real estate companies came to Cartier to bid for the Rockefeller Center.

Although the bidding failed, it made Ackerman, a young man under 30 years old, famous, and investors flocked to the Gaotan partnership, which managed more than $500 million in assets in 1998.

Perhaps, in the bidding, Ackerman knew that the Gaotan partnership could not win the deal, but he still knew that it could not be done.

However, perhaps because the young Ackerman has not yet been able to control large funds, the Gaotan partnership fell into a series of lawsuits with outside investors in 2002 and attracted New York State Chief Prosecutor Elliot. Pize's investigation, although the final result is that Gaotan partnership is not inappropriate, but Ackerman still decided to close the company.

Shorting Herbalife

In 2004, Ackerman founded Pershing Square Capital Management and served as CEO. The company currently manages about $20 billion in capital.

In 2005, Pershing Square bought a large number of shares in the fast food chain Wendy. The latter succeeded in IPO in 2006, raising funds of 670 million US dollars, and then sold its Wendy shares, which received a good return.

Compared with the later attack on Herbalife, this investment is only a small fight. In December 2012, Pershing Square issued a short report, pointing to Herbalife's marketing model, arguing that its multi-level business model is essentially a pyramid scheme, and even extremely believes that the value of Herbalife shares should be zero, and in 2012 5 Selling Herbalife in the month. Ackerman believes that Herbalife has long used misleading financial information to cover up the essence of the company's business. By developing members to make money, rather than selling products, this is essentially a pyramid scam.

Herbalife is a US nutrition and health care company with more than 30 years of history. It has always adopted a direct sales model with operations in 84 countries and regions around the world. The company's stock is listed on the NYSE with a total share capital of 93 million shares.

Ackerman said that the Herbalife sales model is mainly for low-income families, while less than 1% of participants can profit from it.

However, Herbalife has a small number of fans on Wall Street, including another investor known for its radical investment, Carl Icahn. On January 25, 2013, Ackerman and Icahn conducted a 30-minute television debate.

As of the end of 2013, Pershing Square’s short position on Herbalife’s stock exceeded $400 million. Ackerman said that he will continue to short the company, and David Einhorn, of Green Light Capital, etc. The short-selling pool uses more than $1 billion in funds, and only the short positions held by Ackerman account for 20% of Herbalife's market capitalization.

Under the influence of sudden bad interest, Herbalife's share price once plunged 40% in 4 days, and even smashed around 30 dollars for a long time.

In order to quell the pressure from the outside to denounce Herbalife, in an interview with the media, Ackerman said that the personal profit generated by the short-selling will be donated to charity.

As a rival to Ackerman, Icahn continued to buy a large number of Herbalife. Within half a year after the start of the war, Icahn quickly increased its holdings to 16.03 million shares, accounting for 15.55% of Herbalife's outstanding shares; as of 2016, 11 On the 8th, Icahn held 22.5 million shares of Herbalife, with a shareholding ratio of 24.18%.

Herbalife's supporters include Chapman's founder Robert Chapman, and private equity firm third-place investor Dennis Loeb.

In addition to the media screams and short-selling reports, Ackerman sent a report letter to the US Securities and Exchange Commission in September 2013, and spent $3.6 million to buy an internal employee of Herbalife, who accused Herbalife.

According to the report for the first quarter of 2016, Pershing Square’s loss on Herbalife’s position was only 1.4%, while Herbalife’s share price was between $40 and $60 in the first quarter; this may be due to its third quarter of 2013. 40% of stock short positions are converted into derivatives such as over-the-counter put options.

On the occasion of the fierce battle between the two sides, the US Federal Bureau of Investigation and the Federal Trade Commission began investigations of Herbalife in April 2014, and reached a settlement agreement with Herbalife on July 15, 2016, and Herbalife will pay a fine of 200 million US dollars. And reorganize the US business to avoid being identified as a pyramid scheme. Since then, Herbalife's share price has risen sharply, hitting a record high of $72.22. On November 18, 2016, Herbalife shares closed at $50.86.

Determined to do more Valeant

Valeant is a global generics giant in Canada that previously developed, produced and marketed a wide range of pharmaceuticals for dermatology, neurology and branded generics, but in recent years it has expanded through acquisitions and strengthened its sales force. Significantly reduced R&D investment, so the financial statements show a high growth.

According to statistics, Valeant has made up to 50 acquisitions from 2011 to 2015, and its market value has soared from less than 20 billion US dollars to 90 billion US dollars, which is a master of market value management.

The twist of the story appeared on October 21, 2015. The short-selling organization's research report released that Valeant had a false increase in sales revenue. The company sold a large number of products through two chain pharmacies under its actual control. And deliberately fictitious sales prices.

Shannon believes that Valeant has created a product "sale illusion" for the outside world and called the company "environment in the pharmaceutical industry."

Previously, Jim Chanos, the founder of hedge fund Kynikos Associates and Wall Street's famous short-seller, had accused Valeant of hiding the company's own business growth with the accounting method of M&A-driven performance, and Shannon's report not only revealed its accounting behavior. The scope is expanded to its basic business.

After the report was released, Valeant's share price plummeted. It fell 40% on the day and the market value once evaporated by 20 billion US dollars. As of that close, the closing price still reached 20%.

In March 2016, Valeant cut its 2016 revenue forecast by 12%, and said that postponing the release of the annual report may lead to a default in debt, combined with the previous short-selling haze. On March 15, Valeant's share price plummeted by more than 50%.

On November 18, 2016, Valeant's share price closed at $17.95, which has plummeted more than 90% from the highest point of $263.81.

According to Wind information, Valeant's shareholder list includes well-known institutions such as BlackRock, Paulson, and JP Morgan Chase, and Pershing Plaza first appeared on the list of the top 20 shareholders of Valeant in 2015. At the end of the season, a total of 19.47 million shares were held, accounting for 5.69% of the total issued shares of Valeant, ranking the third largest shareholder of Valeant.

According to market speculation, the cost of holding Valeant shares in Pershing Plaza is about 196 US dollars per share. Based on the stock price of 20 million shares and the current price of 18 dollars, Pershing Square has already lost more than 3.5 billion US dollars.

In March 2016, Valeant announced the reorganization of the board of directors. Representative of Pershing Square and Vice Chairman of the Board, Steven Fu Langdi, settled on the board of Valeant.

Despite being trapped by Valeant, Ackerman’s investment in Elken’s investment confirms that “the east side is not bright and the west side is bright”, but this investment also faces many problems.

In April 2015, Pershing Square has begun to collaborate with Valeant to attack Alcon, a pharmaceutical company that manufactures botulinum and other anti-wrinkle drugs, and is a global leader in the cosmetics industry.

At that time, Pershing Square and Valeant jointly issued a $46 billion takeover offer to Elkin, and subsequently increased the chip to $53 billion. However, Elkin saw this as a hostile takeover and explicitly refused. The board decided to save himself and invited the "White Knight" Atvis to participate in the bidding. The two parties finally reached a merger agreement of $66 billion.

Before the offer was made, Pershing Plaza had secretly held nearly 10% of the equity of Alcon, at a cost of US$126.54 per share. After the offer was made, the stock price of Alcon rose 65%, and Ackerman earned half a year. 2.4 billion US dollars.

However, the move was quite criticized by the market, and Ackerman was accused of insider trading. Even Warren Buffett could not help but vomit. "Ackeman must have thought about the legal issues before making this deal. Clear, but if I sell stocks because I know the subsequent acquisitions in some way, then I may be in trouble."

However, the sleek Buffett later said, "If a company intends to acquire another company, it certainly has the right to buy the other's stock."

(Editor: Liu Suyuan HN091)